Everything You Need to Know About Contingent and Pending Home Sales

When I was in the process of buying my house in Los Angeles, my husband and I decided that any offer we made had to come with contingencies. We needed enough time to perform an inspection, conduct an appraisal, and get our loan approved.

Not every buyer makes an offer on a home with contingencies, and not every seller will accept contingencies with their offer. It depends on where you live (for instance, contingent offers are very rare in New York, while pretty common in California) and how hot the market is.

You might also be browsing through listing sites and notice labels like “pending” and “contingent” and wonder what they mean, what’s the difference, and what that means for you, a potential buyer.  Let me explain.

When an offer is contingent, it basically means, “I’m offering you a certain amount of money for your house if the property, and the transaction in general, meets specific conditions.” And that’s baked into the contract between the buyer and seller.

The buyer will (usually) have a limited amount of time to make sure their contingencies are met in order to remove or meet them. During that period of time, the listing is usually still active (aka, other people can still make offers on the house)—but not always. Once all contingencies have been checked off, the offer goes from being labeled as “contingent” to “pending” on most Multiple Listing Service (MLS) sites (you might notice different wording as well, and we’ll get to that in a sec!).

There are four types of contingencies. The first three are most common: The physical contingency (an inspection of the house, which is usually done by a professional), the appraisal, and the loan approval.

The time frame of contingencies varies state by state, but in California, for instance, the standard time frame for a physical and appraisal contingency is 17 days, while the loan contingency is usually 21 days.

The fourth is a sale contingency: This is when the buyer has to sell their own property in order to purchase the current one. As you can imagine, it’s harder to set a time limit on the latter.

According to agent Lindsay Barton Barrett at Douglas Elliman, the seller may also insist on a contingency of their own: They’ll only sell their house once they find a property to move to or buy. However, this isn’t super common, since the timing of the transaction is up in the air, and typically buyers prefer a more streamlined process that doesn’t drag on.

There are three kinds of contingency labels MLS sites will sometimes use:

This means the seller has accepted an offer with contingencies. However, while the buyer is working on meeting them (i.e., scheduling an inspection, or looking into an appraisal), the seller is allowed to let people view the house as well as submit offers.

Once the seller accepts the contingent offer, they can’t show their home or accept offers anymore. Basically: The buyer has put a ring on it, and that is that. Sellers will typically not go for this kind of contingency label, because it can put them in a tough spot if the purchaser feels that one or more of their contingencies aren’t met and they decide to back out. The seller would then need to put the house back on the market and start over.

The buyer has a deadline on their contingencies, and must meet them. If the buyer isn’t able to resolve the contingencies in the time frame per contract, they either need to go through with the offer as-is, or forfeit their earnest money deposit. If the buyer goes over their deadline, the seller’s agent will have to deliver a Request for Buyer to Perform notice that forces the purchaser to make a decision in 48-72 hours.

However, even if a seller is allowed to keep showing their home and accepting offers, they definitely can’t cancel the ongoing purchasing process with their current offer while it’s contingent—no matter what.

Having contingencies in place is usually to protect the buyer and allow them a way out of the transaction if the unexpected occurs. For example, the buyer could learn that a roof which was advertised as “new” is actually 40 years old and needs to be replaced. This would fall under the “physical” contingency, and the buyer can back out, per contract (if they alert the seller and agent in time).

Or maybe there’s been an emergency in the buyer’s family which resulted in no longer having the money needed to purchase the house or be able to pay the mortgage — the buyer therefore wouldn’t qualify for the loan, which means one of the contingencies will not be met. The buyer would be allowed to exit the deal.

When speaking to Los Angeles-based Compass real estate agent Leslie Marquez, she tells Apartment Therapy that buyers can skip out on contingencies, but she doesn’t recommend first-time buyers to do so. However, buyers can sweeten the deal by reducing the time frame contingencies must be removed.

Instead of 17 days for a physical and appraisal contingency, the buyer can offer 12 days, for instance. Or instead of a 21-day contingency on the loan approval, the buyer can negotiate 18 days.

However, it’s risky when you create a smaller window, because the allotted time counts weekends and holidays—and you’re depending on a bunch of different people to deliver results that will impact your decision-making process.

And trust me, even a simple house inspection means a big stack of papers you’ll need to annotate, line by line. Will you be able to book an inspector right away? Will a loan officer be able to sort out finances fast enough?

It’s a no-brainer that a seller would be keen on doing away with contingencies to begin with—it’s less of a risk for them, and having an offer go straight to pending speeds up the process. However, it’s fairly standard in many states for buyers to include contingencies with their offers. But if one of the buyer’s contingencies is waiting on their property to sell first, that’s when they can expect a seller to be less willing to agree to that contract. Especially if the seller has other offers that are less complicated and time-consuming.

In some markets, offers laced with contingencies are rare. Barrett tells Apartment Therapy, “Even in the current sluggish market in NYC, it is extremely rare for a seller or buyer to agree to a contingent contract.”

As soon as all contingencies have been removed and all that remains in the home-buying process is closing paperwork, that means the home is in “pending.”

Here are several different types of pending labels you might spot on MLS sites (they’re very similar to the types of contingencies): 

This is basically what it sounds like. The sale is in pending, but the seller is accepting back-up offers *just* in case things fall through somehow.

This means that even though the contingencies have been removed and the house is technically pending in escrow, the seller is still allowed to show their home and accept more offers.

Once the home is pending, the seller isn’t allowed to host any more open houses or accept any offers.

This is when a house in pending in escrow for four months or longer and the seller is allowed to start showing their home and accepting offers again.

However, if the buyer and seller didn’t agree to any contingencies, a house can go straight to a pending sale.

That all depends on the contract between the buyer and the seller. If the contract says “Contingent: Continue to Show,” then the seller can, in fact, accept more offers.

And sometimes contingent offers don’t end up working out, so it’s definitely not a futile mission if you have your heart set on a house that’s listed as contingent. If you’re browsing the MLS, you should be able to see homes labeled as such. You’ll be able to put in a back-up offer (which requires putting down an earnest deposit).

If you can’t make an offer on a listing, it could say “Contingent: No Show/Without Kick-out.” And it never hurts to have your agent reach out and see what the deal is with the house. It might seem like it’s in purgatory, but you never know.

Marquez says that this doesn’t happen very often in a hot market: “Everyone wants everything to go smoothly, and especially in a super hot market…you don’t see many contingent or pending offers fall through. Usually the buyer and seller will work something out, even if the buyer says one or more of their standards are not being met.”

In my case, for instance, we found that our dream home had major foundation issues that weren’t disclosed. Our agent reached out to the seller’s agent and proposed a workaround: The seller either lowers the price, or offers credit (or a combination of both). The seller ended up agreeing, and we met halfway.

That of course isn’t always the case. While it’s hard to track precisely how many contingent or pending offers fall through every year, HomeGo reports that failed home sales have increased from 1.3 percent to 4.3 percent of all listed properties in the last two years (although that doesn’t specify whether the properties were listed as contingent or pending). 

It all depends on how long the escrow process is and the agreed upon contingent time frame, but you can (usually) expect a house to go from contingent to pending in about nine days.

According to Marquez, if you’re working with the standard 30-day escrow, you’re more or less waiting on contingencies to be removed. The longest contingency is the loan approval (21 days). Once the loan is approved, that leaves nine days before you can close on a house.

However, that number can go up if it’s a 45-day escrow—or it can go down if the buyer and seller have chosen a 14 or 21-day close (those are more rare and mostly reserved for either super seasoned buyers or investors who have less to lose, plan on flipping the house, or both).

I ended up going with 14-day physical and appraisal contingencies and a 21-day loan contingency in my offer and I’m not going to lie: It was stressful. I was calling inspectors and leaving messages, making sure I had two back-up inspectors on call for worst-case scenario.

I was glued to my phone just in case my loan officer called needing more paperwork (luckily there was a scanner I could sneak off to at work so that I could send over my tax returns and bank statements in a timely fashion).

But having the opportunity to do my due diligence before making such a huge investment was super worth it—and I’m sure any buyer who’s done the same agrees.