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When you’re shopping for a home, you might not be able to tell your chances of buying the home from the listing. That’s because properties have different listing statuses that are on a spectrum from “active” (available for sale) to “sold” (no longer for sale). What’s more, certain statuses might have different names depending on your location, and listing statuses aren’t always accurate or up to date. A lender may reject a mortgage approval for any number of reasons, including a low home appraisal or if the buyer’s financial situation has changed since the initial approval. If an appraisal identifies a lower value, the lender may lower the loan approval or choose to deny the loan. Buyers can appeal for a second appraisal if they think the home is more valuable than originally appraised or negotiate a lower sale price with the seller if they still want to buy the home.
Common Pending Statuses
The appraisal contingency comes into play most often when you’re taking out a mortgage. The seller might be asking for a wild sum, and you might be all too happy to pay it, given the values in the neighborhood. But that asking price may not necessarily reflect the value of the home.
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In these cases, the seller reserves the right to receive backup offers in case the current offer falls through. When it comes to contingent vs pending homes, both mean an offer has been accepted but neither means the sale is final. Contingent homes are still waiting on certain pre-conditions to be met before the sale goes through, while pending homes have yet to finish processing the sale. If the home you want is contingent or pending, you may still be able to make an offer or view the property.
Contingencies Can Come With Risks
Simply answer a few questions about your home, and you can receive a no-obligation all-cash offer in as little as a week. Most real estate contracts — or roughly 80% — contain contingencies, according to data from the National Association of Realtors (NAR). As of 2023, 79% of contracts included an inspection contingency while 82% contained an appraisal contingency. If you’re in the market to buy a house, you probably spend a lot of time looking at listings.
Some of the most common real estate contingencies found in contracts include mortgage, home inspection, title, home appraisal and home sale contingencies. 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). “All the way until the very last day before we close on your house, the buyer can cancel.
It’s always worth asking your real estate agent to confirm the home’s status with the listing agent. Now that you know how to interpret pending versus contingent in real estate listings, it’s time to resume house hunting. The word “contingent” means subject to change, but in real estate, there’s a little more to it.
Instead, you should use contingencies sparingly and only when they make sense for your situation. Before you make an offer, make sure you have your financing squared away so you can impress the seller. Start your initial mortgage approval now to make your strongest offer.
While contingencies can be important to protect you, this is another reason to make your offer with as few contingencies as possible. But the good news is that the sellers can’t kick you out just because they find a better offer. They must notify you and give you a certain period of time to remove the contingencies. In a contingency with a kick-out, sellers can continue to consider offers, and they will generally be looking at ones with fewer contingencies than the first offer. The good news is that title searches should reveal those problems before closing.
Slowing home sales could mean a return to contingencies - OCRegister
Slowing home sales could mean a return to contingencies.
Posted: Thu, 02 Jun 2022 07:00:00 GMT [source]
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Voiding a contract means that the seller can relist their home and the buyer will get their earnest money back. As a buyer, you’re able to choose the types of contingencies you include in your offer. The exact ones you choose will depend on your circumstances, the market and your real estate agent’s recommendations. You want to use the contingency clause judiciously to make sure your offer is as attractive as it can be. Returning to our example above, let’s say that we make the offer contingent on the home inspection showing a roof life of 15 remaining years.
Buying and selling a home often requires a dictionary as you navigate a new litany of terms, each describing a crucial step in the process. In real estate, a contingent offer has a meaning all its own—one that can make or break a deal. 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. Usually, you’re required to provide the buyer with 24, 48, or 72 hours notice to give them a final opportunity to remove their contingency and close.
Most contingent offers involve finding financing for the home, but there are other reasons. Learn more about common contingencies in real estate and how they can affect the buying processes. Get free, objective, performance-based recommendations for top real estate agents in your area. Buyers often want a home inspection to protect their interest — they want to lift the hood of the car so to speak before they commit to buying. Buyers can also use the home inspection report as leverage to negotiate a better deal, asking you to complete repairs or offer repair credits. If you refuse and you can’t come to an agreement, they’re free to walk away.
The seller can opt to back out of the offer they’ve accepted if the attendant contingencies are not met by a certain deadline. Even if a buyer gets preapproved for a loan, there’s always a chance that something will come up and cause their deal with the lender to fall through. Mortgage contingencies let the buyer off the hook if they get denied for a loan despite making reasonable attempts to get approved. When searching the market for a new home, you’ll run across properties in several states of activity. What do you do when the home you’re interested in is marked as “contingent” or “pending”?
In any case, sellers considering additional offers once a home is contingent should consult a real estate attorney before making any new agreements. If you’re unsure which contingencies you should use, you can discuss your options with a real estate agent or REALTOR®. They’ll be able to help you write up your bid while making recommendations on crafting a more competitive offer. In this article, we’ll explain what contingent means for you as a buyer, the difference between contingent and pending and other common home statuses you may come across during the buying process. Now that you understand common contingencies, you’ll be better prepared when you come across an active listing that you want to make an offer on while house shopping.
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