When searching for a new home, you may hear the phrase “under contract with contingency” thrown around. This can be confusing for first-time buyers or those new to the real estate process. But fear not, we’re here to break down exactly what it means.
In real estate terms, “under contract” typically means that a buyer and seller have agreed to the terms of a sale. This includes the purchase price, closing date, and any contingencies. Contingencies are clauses in the contract that specify conditions that must be met for the sale to go through.
A common contingency is the home inspection. This allows the buyer to hire a professional inspector to examine the property and report any major issues or needed repairs. If the inspection reveals a major problem, the buyer may ask the seller to make the necessary repairs or negotiate a lower price. If the seller refuses, the buyer may have the option to back out of the sale.
Another common contingency is financing. This allows the buyer to secure a mortgage loan from a lender. If the buyer is unable to obtain financing, they are not obligated to continue with the sale.
So, when a property is listed as “under contract with contingency,” it means that the seller has accepted the buyer’s offer, but the sale is not yet final. The sale is contingent on the fulfillment of certain conditions, such as the results of a home inspection or the buyer securing financing.
It’s important to note that a contingency can be both protective and risky for both parties. For the buyer, contingencies allow them to back out of the sale without losing their deposit if certain conditions are not met. For the seller, contingencies can prolong the sale process and potentially scare off other potential buyers.
In conclusion, “under contract with contingency” means that a sale is in progress but is not yet final. The sale is contingent on certain conditions being met, such as a successful home inspection or securing financing. As a buyer or seller, it’s important to understand these contingencies and how they can affect the sale process.