If you see “active contingent” on a home listing, it means the seller has accepted an offer with conditions.
By Liz Gallagher
“Active contingent” is a status you might see on a home for sale. The short story here is that the home’s seller has accepted an offer from a buyer, but the offer isn’t a sure thing. For the deal to close, conditions must be met.
Things to know about a home listed as active contingent
- The seller has accepted a conditional offer.
- The expected buyer may end up not buying the home.
- You can make an offer on an active contingent property, but the current buyer is first in line.
What is active contingent?
A contingency is a condition that must be met during a specified period of time. Once the condition is met, the contingency is cleared and the sale moves forward.
“Active contingent” means the seller accepted an offer that includes one or more contingencies. The buyer now has a period of time to clear the contingencies. After the contingencies are cleared, the home will switch to pending status as the buyer and seller enter the closing period.
What happens if the contingency isn’t cleared in the specified timeframe? For the seller, it means starting back at square one to find a buyer for their home. The prospective buyer can walk away from the deal without losing their earnest money.
This brings us to another question: what is earnest money? Earnest money is an up front payment from the buyer to the seller that basically shows the buyer seriously intends to buy the home. Without a contingency, the seller keeps the money if the buyer backs out.
Homebuyers can include one or more contingencies with their offer to purchase a home. People often choose to include a contingency to account for something they are dependent on to be able to buy a new home, such as selling their current home or making sure their mortgage loan is approved.
Here are four common types of contingency.
- Sale contingency. A sale contingency gives the buyer a certain amount of time to sell the home they currently own before buying a new one. It’s often used when a buyer needs the sale proceeds to fund their new purchase.
- Financing contingency. Sometimes referred to as a “mortgage contingency” or a “loan contingency,” a financing contingency provides time for the buyer to secure a mortgage loan, usually from a specific lender and sometimes even at a specific rate.
- Appraisal contingency. An appraisal contingency is active until a professional appraiser has evaluated the home and determined its value to ensure that the appraised value isn’t lower than the purchase price. A low appraisal can be a big problem for a buyer because mortgage lenders won’t loan more than the appraised value.
- Inspection contingency. This one may also be called a “due diligence” contingency. It allows time for an inspection to give the buyer a better idea of the condition of the home.
Contingencies provide a safety net for buyers. However, sellers typically want to avoid having to wait out the contingency. A contingency prevents the seller from having certainty that their home sale is going to close, so sellers are usually not inclined to accept contingent offers. As a buyer in a competitive market, look to your agent for savvy ways to safely avoid contingencies to give you a better chance that the seller will accept your offer.
Know the local scenario
It’s important to talk to your agent about what a home’s status means for your ability to make an offer.
While the details about what each status means for you as a buyer vary state by state, the general statuses you may see on listings are:
- Active – The home is for sale, listed on the Multiple Listing Service (MLS).
- Contingent – The seller has accepted a conditional offer and the contingency or contingencies have not yet been removed.
- Pending – The home sale is moving toward finalization.
- Sold – The sale is officially closed and recorded by the county.
Depending on where the home you’re buying is located, contingent status may have a different meaning than the same status somewhere else. Every MLS has its own definitions.
For example, in Washington, a sale contingency is the only contingency that marks a home contingent. Homes with other contingencies show up as pending.
Seattle-based real estate agent Andy Randles explains, “If a home is in contingent status, the home’s sale is dependent on the buyer getting the proceeds from their home sale.”
“The buyer’s offer includes a certain amount of time to list their home and sell it,” he continues. “If those conditions aren’t met, the home will become active again. In the meantime, any other buyer can come along and make an offer. The original buyer is still first in line, but a new buyer has the chance to bump them. In the NWMLS, the first party has five days to come up with the funds to close or the home goes to the second buyer.”
In Dallas-Forth Worth, the scenario Andy describes would be listed as “active kick-out,” not contingent. Active contingent is used in that area as we’ve described above: the seller has accepted an offer with any one of a variety of contingencies.
Can you make an offer on a contingent home?
If you fall in love with a contingent home, talk with your agent about whether or not it makes sense to offer. The answer to this question can also vary by location.
Generally, because the deal isn’t done, the seller may be open to reviewing your offer. Even if the seller can’t officially accept your offer while the home is contingent, there’s a chance that the home will become available and go back to active status. Sellers may also accept your offer as a backup to put you into first place if the existing pending offer falls through
When you see a home listed as contingent, you may see additional qualifiers. One of these is “Contingent – With Kick-Out,” which means the seller is open to accepting another buyer and indicates that they aren’t bound to the buyer who submitted the contingent offer. “With No Kick-Out” means the opposite; the seller can’t accept your offer while the home is contingent even if they want to.
In Washington, sellers with contingent homes are typically open to reviewing new offers. There is language in the contingency stating that a new buyer may bump the contingent buyer (with five days for the first buyer to meet their conditions or waive their contingency before being bumped.)
Contingent vs. pending
“Contingent” and “pending” are two different statuses.
A home is in contingent status during the period when a contingency is in place.
Pending status is the step when a home is going through the closing process. The chances of a pending home going back to active status are slim.
Pending status may also come with some informational qualifiers. The one to look out for if you’re interested in a pending home is “pending – taking backup offers.” This status means issues have come up during the final stages and the seller is willing to look at additional offers in case the one in motion falls through.
When is a home officially sold?
A home is officially sold once closing is finished. The very last step happens when the escrow company files the ownership papers as public record. For the buyer, the “sold” moment usually feels real when they get their new keys!
FAQ about contingent status
Can you make an offer on a house that is active contingent?
Unless the seller is refusing offers, you can submit an offer on a home with an active contingent status. The seller has already accepted an offer, but the offer will fall through if certain conditions aren’t met, so there’s a chance that they’ll be willing to review your offer. It’s worth a try if you love the home and want the seller to be aware that you’re another prospective buyer.
However, keep your expectations in line with the reality that the seller has already agreed to sell their home to someone else. In some states, the seller may not be able to review your offer until the contingent one has expired.
What is the difference between contingent and active contingent?
“Active contingent” typically means that a home’s seller has accepted an offer with one or more of a variety of contingencies attached to it. “Contingent” means the same thing in some states; in others, a “contingent” home is one specifically with a sale contingency.
What is the difference between contingent and pending?
Contingent is when a home’s seller has accepted an offer with conditions that mean the buyer may walk away if those conditions aren’t met. Pending means the home is in the process of closing and will be sold very soon unless an extreme circumstance occurs.
Can you look at a house that is contingent?
If you’re interested in looking at a house that is contingent, ask your agent to reach out to the listing agent. The seller may be willing to allow prospective buyers to tour the property.
How do you beat a contingent offer?
In some cases, a contingent offer has a “no kick-out” status that means the seller can’t accept another offer. Sometimes, there’s a “kick-out” status that means you can essentially bump the current buyer if the seller likes your offer better.
The only way to know what’s going on with a particular home is to have your agent reach out to the listing agent to find out what information the seller is willing to share. If the seller is willing to entertain new offers, a good strategy for beating a contingent offer is to submit an offer with as much certainty as possible by avoiding your own contingencies. It may also help to offer a quick closing period.
Does contingent mean sold?
Contingent means that a sale is underway but could fall through. A buyer’s offer has been accepted, but there are conditions that need to be met before the sale moves to “pending,” which is when the closing process begins. After closing, the home is sold.
About the author: Liz Gallagher is the Editorial Director at Flyhomes, publishing articles to give people the education and insights they need to be confident decision makers as homebuyers, sellers, and owners.
Cover photo by Elina Fairytale on Pexels.com