You might find an “active contingent” listing when searching for your next home. But if you like the house, can you still buy an active contingent home?

When a property sale is contingent, the home has a buyer, but many things still need to happen before the home is sold. Sometimes these things don't work out, with the seller looking for other offers.

We look at the things you need to know about active contingent listings.

What is Active Contingent?

An active contingent listing means the seller has accepted an offer with real estate contingencies that haven’t yet been met.

Many potential contingencies can be included with a buyer's offer. This makes the buyer’s offer dependent on certain things happening before closing.

If these things don’t occur, the buyer doesn’t have to continue purchasing, thanks to these contingency clauses in the real estate contract.

What Does Pending Mean?

Many potential buyers ask about the meaning of pending in real estate sales. A pending status also means an offer has been accepted, though the contingencies have been dealt with in this case.

The listing will remain pending until the closing date when the documents are signed, and the property is transferred.

Pending status indicates that while an offer has been accepted, another buyer could still have an opportunity if the sale falls through. While the listing isn’t active, it shows other agents the home sale status.

Common Contingencies

Contingencies are usually used to protect buyers when they make an offer. If something goes wrong or isn’t as expected with the home, the buyer can back out with their earnest money deposit returned.

Many different contingencies can be included in a real estate contract, these are some of the more common ones:

Home Inspection Contingency

If the home inspector discovers serious issues and an agreement can’t be reached to repair or reduce the price, the buyer can use this contingency to walk away. Without this contingency, a buyer could choose between losing their earnest money or buying a home requiring expensive repairs.

The home inspection contingency clause lets you walk when there is a deal breaker.

Financing Contingency

Sometimes a buyer can have problems getting the mortgage needed to purchase the home. The financing or loan contingency stops them from losing their deposit if they don’t qualify for the mortgage they expect.

Home Sale Contingency

If the buyer needs to sell their home to fund their new purchase, the home sale contingency can give them more time to find a buyer. This prevents buyers from increasing costs when most of their cash is tied up in the house they are trying to sell.

Appraisal Contingency

Lenders usually require an appraisal to find the value of the home. The appraised value has to be the same or higher than the offer price, or the lender can refuse to approve the loan. Thanks to this contingency, the buyer can renegotiate the price with the seller, fund the appraisal gap themselves, or back out of the deal.

In hot seller markets, it is not unusual for a bidding war to drive the accepted offer way over the asking price. Often there is an escalation clause that initiates higher bids. When this happens, there is an increased likelihood of a home not appraising.

Can an Offer Be Made on Active Contingent Homes?

If you have found the perfect home, but it is active contingent, can you still make an offer?

You can still make an offer on an active contingent property as long as the seller’s agent isn’t refusing offers. However, you won’t prevent the current buyer from closing, and your offer will only come into play if contingencies aren’t met with the current purchase contract.

Most of the time, active contingency listings will sell to the first buyer. If you make an offer on this type of listing, don’t stop searching for your next home, as there is only a small chance of success.

Is it a Good Idea to Make a Non-Contingent Offer?

Most contingencies benefit the buyer, and there can be pressure to waive contingencies in competitive markets. Offers with contingencies are less appealing to sellers, so avoiding contingencies is an option if you want to give your offer the best chance of success.

There are risks for buyers when making their offer non-contingent. The buyer has a greater chance of losing their earnest money deposit, typically 1% to 5% of the purchase price.

It can be a difficult choice depending on how competitive the market is. Should you give up the protection offered by contingencies to make your offer more attractive?

Final Thoughts

When buying or selling, it is essential to understand the various listing statuses in the Multiple Listing Service.

Some have slightly different meanings that can be crucial to know. Active contingent and pending are two of the more important to grasp.