A home that is for sale with a contingency means it is for sale but has an accepted offer that is contingent upon an event or condition that must happen before closing. Homes are often for sale with a contingency. There are many different types of contingencies when selling a home, but the four most often seen on the MLS are:
- Sold, subject to inspection is probably the most often seen contingency. The buyers have had their offer on the home accepted, but they have chosen to do a home inspection. If the inspection finds problems, they can either cancel their purchase agreement, or work out an acceptable solution with the sellers.
- Sold, subject to statutory rescission is another common contingency. If the property has a homeowners association, the buyers have ten days to review the documents. Sometimes, the buyer will decide they cannot live with the rules and regulations of the association, or they find the financial state of the association to not be in good order, they can cancel their purchase agreement.
- Sold, contingent on the sale of another property is another contingency one often runs into. The buyers must sell their own home, or another property to qualify for financing, or to have enough cash for the downpayment. If the other property does not sell, the purchase agreement will be cancelled because the buyers cannot get the financing or cash they need to purchase the property. In this contingency, the seller can keep accepting offers on their home. If they receive another offer, they will give the initial buyer with the contingency a short time frame to sell their home, or they will cancel the purchase agreement.
- Sold, subject to third party approval was seen a lot in the housing crisis a few years ago with short sales. This contingency means the purchase agreement has been accepted by the seller, but the bank must approve the sale as the seller cannot pay what he owes on the home.
Once a contingency has been removed, the property will move to pending status. For sale with a contingency allows buyers the chance to keep a home on their radar in case the contingency is not met, and the sale falls through.