Contingent is a common word used in real estate. Unfortunately, most people don’t know what it means. If you are one of them then count yourself lucky because today you have landed in the right place. In this article, we are going to tell what this word means in real estate.
What does contingent mean in real estate?
When the word contingent is used in real estate, it means that the seller of a property has actually received offer an interested a buyer. however the buyer is required to meet certain set conditions before the deal is finalized. This conditions include things like mortgage approval, inspection or appraisal. In other words, contingency in real estate means that there is something that the interested buyer has to do in order for the process to move forward. A good example of contingency is when a buyer of home includes a clause in the contract that states that the contract is not legally binding until a thorough home inspection from a qualified home inspector is done. This means that once the inspection is done, then the contract will be legally binding.
Various types of contingent
Contingent show means a contract on particular property is available but the owner of the property is still willing show the property to other buyers and will most likely accept backup offers just in case the offer that is currently on the table fails to go through
Contingent no show
Contingent no show means that the property has a contract and the owner of the property believes that the contact will not fail to go through. As a result, the seller will not be interested to show the property to other interested buyers. In other words, it means that the property is off the market.
Contingent with kick out
Contingent with kick out means that the seller has already gotten an offer from a buyer but on the process, the seller gets a better offer from another buyer. In this case, the seller actually has the freedom to terminate the first contract and accept the second offer with is better than the first. The better offer will kick out the current offer and helps the seller choose the best possible offer available.
Contingent with no kick out
If the contract is termed as contingent with no kick out, it actually means that other offers will not be accepted. However, if the first contract fails to go through, the seller is at liberty to accept new offers.
How contingencies work
To understand better how contingencies work, it is important to first understand how real estate transactions works. First a buyer will make an offer to the seller. The seller can accept or reject the offer. The seller can also choose to counter the offer given or renegotiate the deal until all parties involved come to an agreement. If parities involved fails to agree, then they will all go separate ways with no deal made. On the other hand, if they agree, the buyer will be required to make a deposit that was agreed to demonstrate to their good faith and seriousness to buy the property. An escrow company will be tasked to hold these funds until the deal is closed. The buyer can include contingencies in their bid from the onset or during the negotiation phase before the contract is considered binding.