What does active contingent mean for home buyers?

Are you one of those people who's constantly browsing online real estate listings? At some point, you might have come across a property listed as "active contingent." As a potential buyer, you'll want to know whether this home is still within reach, or if you should keep looking.

A home for sale that has a contingent status is in the midst of being sold to an interested buyer -- but nothing is finalized yet. You can and should keep an eye on this home until the sale is final, in case things fall through.

What does an active contingent status mean?

Active contingent is one of the many status updates given to an active listing. If a property has an active contingent status, it means the seller has accepted an offer from a buyer. However, the home sale isn't finalized yet because certain contingencies need to be met.

In a typical real estate market, a buyer can make an offer on a home that is "contingent" on other factors. There are many types of contingencies, but the basic idea is that a contingent offer is conditional. It's a bit like being offered a job at a new company, but first the company needs to run a background check. Assuming you pass the background check, the new job should be yours.

What does a pending status mean?

Additionally, you may see a property listed as pending instead. A pending status means that the seller has accepted an offer, and all of its contingencies have been satisfied, addressed, or waived. The home will remain in pending status until all the paperwork is processed and the deal officially closes.

Keep in mind that pending real estate sales aren't active listings. So what's the point of a pending status then? This label gives listing agents a way to let other agents know what's happening with the sale and leaves a window of opportunity if the accepted offer and subsequent deal somehow fall through.

→Learn more about various home status updates

What are common contingencies in real estate?

There are many types of possible contingencies in a real estate contract. Home buyers often add contingencies to their offer in order to protect themselves if something goes wrong during the sale. More specifically, these contingencies allow the buyer to back out of the contract under specific conditions without losing their earnest money deposit.

Financing contingency

A financing contingency , also known as a loan contingency, means that if the buyer has trouble getting a mortgage for the home purchase, they can drop out of the contract with no penalty.

Home sale contingency

A home sale contingency lets existing homeowners make an offer on a new home that's contingent on selling their old house. That way, they can avoid overlapping housing costs.

Inspection contingency

An inspection contingency gives buyers the ability to negotiate repairs or cancel the contract based on the results of a home inspection.

Appraisal contingency

An appraisal contingency states that if the appraised value of the home is lower than the purchase price, the buyer can negotiate the purchase price or walk away at no cost.

Can you make an offer on active contingent properties?

Let's say you fall in love with a house, only to find out that it's active contingent. As the buyer, what does this mean for you? Can you go ahead and make an offer to the seller anyway?

Technically, there's nothing stopping you from making an offer on one of these homes. You won't be stealing the house from under the current buyer. As long as the seller's agent isn't explicitly refusing offers, then it's fair game to make an offer.

Here's why: If the contingency period doesn't go smoothly, the seller may need to entertain a backup offer. However, keep in mind that most active contingent listings do eventually sell to their original buyer, so it's important not to get your hopes too high.

Making non-contingent offers on a home

Contingencies present a sort of dilemma. While they help buyers avoid surprises during their home purchase, they can also make a buyer's offer less competitive. Sellers may look to avoid contingent bids since there's a chance the sale could fall through at the last minute.

If you work with Orchard when buying a home, you can get many of the benefits of a non-contingent offer. For current homeowners looking to buy their next home, we help you make a strong, competitive offer without a home sale contingency.