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The Contingency Factor


The Contingency Factor

Acive_Contingent

Back a few years ago it was rare to find a contingent listing status.  Usually it meant the buyer had to sell another property first before they could purchase another home.  Today you find them often and they have different meanings.

Let’s start with first things first – What’s a contingency status?  By definition it means the sale is dependent on something else from certain things occurring to certain facts identified.  It is most widely used when a seller of a property has not sold there home first but wants to make sure they have a place to go when they do. Makes Sense? They other seller can accept a contingency, however it does take your home off the market.  But you can accept other offers if one comes along and that is dependent on the original contingency addendum agreed upon.

Now let’s take the market today, there are 16 contingent status home in West Plano.  For buyers these home are good for back up offers because many of them will fall through.  Why? Because some of these are short sales and require lender approval on the price and terms, so the process is long, say 3 to 6 months to close. Most buyers get tired and won’t wait or find something else.  Another factor is financing approval for the buyer.

What we are finding is even though you might be pre-qualified, say a month or so ago, when the loan goes to under writing the programs might no longer exist or sold out, full filled the quota for that particular program.  Also the qualifications might change depending on the lender, for example you might need more of a down payment, credit score is lower so you don’t qualify or a job loss could or has occurred.

So instead of a listing agent marking a property active option, it will be marked contingent first based upon the above scenarios which vary greatly but it’s a tool being used now to let buyers know that a back up offer will and can be taken if a better offer comes around.  Based on the economy and housing market searching for a home should include looking at all status changes on properties, you just never know and more than likely your dream home still might be available. Real Estate is fun, isn’t it?

Remember to ask about those contingency contracts.