Ever wonder what does Contingent mean on Zillow?
If you have been searching around on the web, I’m sure you have gone to Zillow.com and stumbled across properties that have the word Active-Contingent on them.
This blog post will explain what contingent means on Zillow, how it differs from other forms of purchase agreements, and who should use this option.
It is important to read this article to the end to see if this information will be helpful to you when purchasing your next home and give you informed information on all aspects of the process.
What is contingent in Real Estate
A contingent is a word that can be confusing to homeowners and homebuyers alike.
It refers to the idea of something is dependent on one or more conditions, so it’s often used in legal agreements.
What is contingent in real estate? Most contracts for the sale of property, including residential and commercial properties, use a “contingent” clause to define when the contract is considered complete and binding.
It means that the seller has reached an agreement with a buyer to sell their property, but there are still some things that need to be done before it closes.
A contingent contract is an agreement where one party has made a promise contingent on something else happening first.
The contingencies in these agreements can range from something as simple as waiting for financing to be approved or getting inspections before completing the sale or they can be much more complicated such as waiting for the results of an environmental study before finalizing an agreement.
What does contingent mean on a house for sale
So the question you want to know is what does contingent mean on a house for sale?
The answer would be it would all depend on the situation that is going on with the homeowner.
Typically, when you see a property that has a contingent clause, sometimes this statement could mean that the home is contingent upon the owner getting a release of some type.
Normally, this release could be in reference to a lien,
for example, a Mud District Approval is when a property sits in a Mud District, and also when the property has a septic tank on it.
Sometimes the contingent could be based on the new buyers honoring the current tenant’s lease that is currently on the property.
The contingent could be also upon having the court approval of selling the property such as Probate Court or Bankruptcy Court.
Also, it could be contingent upon the owner getting financing to buy a different home.
The contingency could also mean contingent upon the buyer getting approved for the loan to buy the home.
These are some of the main uses in Real Estate for this contingent.
It’s giving the buyers notification that I want to sell my home, but we have a few things that need to be done before I can sell you the home.
This contingent can also be contingent upon the release of a mortgage lien or judgment lien.
For example, the property is listed and you see something that says contingent upon short sale approval.
What this means is the home has to be approved for a short sale before the seller can sell the home to you.
Another contingent that you might see from a seller when selling a home. Is the contingent upon the buyer being able to qualify for FHA Assumptions or VA Assumptions?
There are ways that a property can be bought with someone being able to assume the responsibilities of an FHA loan or a VA loan.
This is considered FHA or VA Assumptions and the property can be sold with the contingent that the new buyer qualifies for the assumptions.
If for some reason the buyer can’t qualify to assume the loan then the contract can be terminated.
What does contingent mean when buying a house
A contingent is when a buyer makes an offer to buy a house with the stipulation that the offer will only go through if the buyer is approved for a loan.
So when you make the offer on the home, the agent will write up your offer.
Upon writing up the offer the Agent will include something called a Third Party Addendum.
This is the name of the form in Texas in your state it will be something else.
On this form, it will name a few different types of loan that you can be approved for.
On this form, it has a place where you will put Appraisal Amount.
Normally, what goes in this spot is the accepted offer between you and the seller.
This is found under section 2. Approval of Financing. When you write in say 20 days.
What it’s saying to you is you have 20 days from the time of the accepted offer to get financed.
If for some reason you are unable to receive financing within those 20 days then you would be able to terminate the contract and earnest money is returned back to you.
But this is only if you unable to receive financing.
If you check the other box of then the offer is not contingent upon you receiving financing
Very important to understand. The other part of this Addendum is when you see the Appraisal amount.
If for some reason the property doesn’t Appraise for the amount then you may terminate the contract.
What this means is your making an offer contingent upon you receive financing from your lender. On the form, you might put in 20 days.
Another contingency that you might have when you are buying a home is the offer being contingent upon you selling your existing home.
While the offer being contingent on you selling your existing home isn’t a universally accepted convention, it is one that can make sense in certain situations.
Normally you will present the offer to the seller with it being contingent upon you being able to sell the current home you are in.
What is the difference between pending and contingent
Pending deals with agreements that are entered into by two parties. The contract is written and all of the contingents have been met.
When this happens the property is now in a pending status.
Pending, lets you know that everything has been completed by the buyer. From the buyer inspection to negotiating repairs.
When a property is pending it’s being prepared for closing. Most of the time when the property is in pending status.
It is normally because the loan process has to be completed. This can consist of property appraisal, termite inspection, and negotiated repairs.
The property can not close until all of the loan processes have been completed.
Upon completion of this process, the property would then be changed to sold.
Contingent deals with an agreement between two parties that is subject to a condition, such as the performance of some act, and provides for the performance of the agreement only if the condition occurs.
Contingent deals are agreements where the party providing consideration is only obligated to perform if the other party performs their duty.
What this means is a seller or a buyer must complete whatever the contingency is before the property is able to go into a pending status.
If for some reason this contingent isn’t met then the contract is considered null and voided.
Who decides if a home is contingent on Zillow
Most of the time when you are viewing Zillow a lot of the homes on Zillow are listed with a Real Estate Agent.
When this happens the Real Estate Agent will take the offer from you and present it to the seller.
If for some reason you choose to get the representation of a Buyer’s Agent.
Your Buyer’s Agent will present your offer on your behalf to the Listing Agent.
From there the Listing Agent will then turn your offer in to the seller and the seller will then look the offer over and approve your offer.
So the answer to who decides on the contingent would be the seller who owns the home.
The Listing Agent would follow the instructions of the seller and then change the Listing in the MLS to Active Contingent.
This will then update on the Zillow website.
What Are Some Of The Most Common Contingencies In a Real Estate Transaction
1 What is Buyer’s Inspection Contingency
The buyer’s inspection contingency is a clause in an offer that allows for the buyer to perform their own due diligence on any given property. This adds protection against unseen damages to the home and also gives them more confidence before making such important decisions about buying or selling homes
2. What is Financing Contingency
In the transaction, this simply means that the offer is contingent upon the buyer receiving approval for a loan.
These are the terms that are spelled out on your Third Party Addendum.
3. What is Short Sale Contingency
This is a situation in which the bank requires a seller to sell their home before foreclosure occurs. This also lets a buyer know that the home has to be approved by the lender before the property can be sold.
4. Offer Contingent Upon A Sell Of Another Property
Simply means before a buyer can purchase a seller’s home, the buyer has to sell their current property
Conclusion
Contingent can be a confusing word, but it’s important to know what this means when you are doing your homework or searching on Zillow.
A contract is contingent when its execution depends on certain factors like whether or not all parties uphold their end of the bargain in the Real Estate Transaction.
Thank you for taking the time to read this article! I hope it was helpful and that we can help you with any real estate questions.
If not, please feel free to reach out and ask us anything about buying or selling a home in your area. We’re here for you!