What Is An Active Contingent Listing In Real Estate?

If you’re a home buyer searching listing sites for your potential dream home, you may see an “active contingent” label on the listing. What does it mean and how does it affect your home search? Let’s dive in and learn more about active contingent listings and how they work.  

In real estate, sellers and buyers should understand what contingent means. In simple terms, it means “depending on certain circumstances.”

When a property is listed as ‘active contingent’, it means the seller has accepted an offer on the home but the contingencies – such as an inspection or financing – have not yet been met. While active contingent homes are still available for showings, the contingencies are usually met and the home then moves into a pending status.

Active Contingent Vs. Sale Pending

These terms represent different stages in the home buying process and indicate the status of the property.

In the context of real estate listings, there is a difference between an active contingent home and one that says sale pending on the Multiple Listing Service (MLS). Unlike an active contingent home status, sale pending usually signifies that the contingencies have been worked out, the contract has been signed and all that is left is to move through the final stages of escrow.

A contingency is a clause or provision commonly included in a real estate purchase contract designed to protect the buyer's interests when purchasing a property. During a home sale, contingencies are conditions or requirements that must be met for the sale to proceed smoothly.

Some of the most common real estate contingencies found in contracts include mortgage, home inspection, title, home appraisal and home sale contingencies. 

• Mortgage Contingency: A mortgage contingency, also known as a financing contingency or a loan contingency, is a clause that allows buyers to cancel the contract of the home purchase without penalty and receive a refund of their earnest money deposit if they are unable to secure a mortgage.

• Home Inspection Contingency: A home inspection contingency, also called a due diligence contingency, gives the buyer the right to have the home inspected by a professional home inspector. The purpose of the home inspection is to assess the condition of the property and identify any potential issues or defects that may not be apparent during a viewing. In some instances, if a problem is uncovered during the inspection and the home buyer wishes to walk away from the deal, they can do so and get their earnest money deposit back.

• Title Contingency: A title contingency is a clause in the contract that ensures the buyer can back out of the contract if the title search throws ownership of the property into question giving the property an unclear title. A clear title means that the seller has the right to sell the property without legal claims or encumbrances from others.

• Home Appraisal Contingency: A home appraisal contingency means that if your home does not appraise for the amount you have agreed to pay, you can walk away from the deal with your deposit. It allows the buyer to back out of the deal or renegotiate the price if the appraised value of the home comes in lower than the purchase price.

• Home Sale Contingency: A home sale contingency is a clause or condition included in a real estate sales contract that protects buyers who want to sell one home before purchasing another. It makes the purchase of a new home contingent on the successful sale of the buyer's current home.

If you’re interested in a property that is listed with an active contingent status, you can make an offer.

An active contingent status indicates that the property has an accepted offer, but the sale is contingent on certain conditions being met. While the initial offer will take precedence if all the contingencies are satisfied, making an offer can put you at the head of the line if the original deal falls through.

The timing of when you can make an offer on an active contingent property varies based on local real estate practices, laws and the specific circumstances of the property. Since making an offer on an active contingent property requires careful consideration and strategic planning, your real estate agent can do some research and help you with this process. 

The duration of the active contingent status can vary widely depending on the specific contingencies, the terms of the purchase agreement, market conditions, the responsiveness of the parties involved and local real estate practices. It might last for a few days to a few weeks or even longer, depending on how quickly the buyer and seller can fulfill the conditions outlined in the contract.

A status of sale pending follows the active contingent status during the home buying process. This status usually indicates that the contingencies have been met, and the transaction is moving forward toward closing.

The length of the active contingent period varies, but it's generally a few weeks unless it is a home sale contingency which can take up to a few months. It's important to note that unforeseen delays can occur at any stage, which may extend the overall timeline to the closing process.

Understanding what an active contingent status is and how the home buying process works can be challenging for anyone. Do your research ahead of time and talk to your real estate agent to get a sense of the information and materials needed for making an offer on a home with an active contingent status.

Ready to begin your home buying journey? Start the mortgage approval process with Rocket Mortgage® today.