Definition:
“A contingency is a clause that buyers include when making an offer on a home that allows them to back out of buying the house if the terms of the clause aren’t met. Without a contingency in place, buyers risk losing their earnest money deposit if they decide not to purchase the home after making an offer.”
When a home has been listed as contingent, it means an offer has been accepted by the seller(s). The sale is contingent upon various events in process that will need to be completed before the home ultimately is considered pending and then closed as a transaction. Often the listing will have a “C” attached in the listing description.
Home Classifications:
- Active “For Sale” - No offer has been accepted
- Active / Contingent “Offer Accepted” - Seller(s) have accepted an offer
- Active / Pending “All contingencies have been met” Scheduled for closing
- Closed “Property Sold”
Most times an agent will then cancel any upcoming showings on the property after an offer has been accepted by the seller(s). There are some properties that the seller(s) would also accept a secondary offer in the chance that first offer were to fall through. If a primary offer is accepted, but as a contingency that offer has a home sale contingency, a bump clause may be utilized when entertaining a secondary offer with no home sale contingency. This would then give the primary offer buyers to remove their home sale contingency to remain in primary position. If they cannot remove the home sale contingency, the secondary offer can “bump” the primary offer and become the primary offer.
Examples of contingencies:
Financing Contingency
Appraisal Contingency
Inspection Contingency
Home Sale Contingency
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https://www.investopedia.com/articles/personal-finance/102913/contingency-clauses-home-purchase-contracts.asp