What does it mean when a property is active contingent?

When a property is listed for sale in the MLS, the home can be listed under a variety of different statuses.  Most commonly, you are looking at homes that are listed as active.  However, sometimes you may see properties listed as active continent.  An active contingent property is a property where the owners have accepted an offer on the property, but the buyers must sell another property before closing on the sale of the subject property.

In Texas, there is a promulgated contingency form that outlines the terms of this agreement.  The Addendum For Sale of Other Property by Buyer form specifies when the buyers must close on the sale of their current home and what will happen if the sellers receive another offer on the home.  This form stipulates that if the seller receives another offer on the property they must notify the buyers of said offer.   The form also specifies a certain number of days in which the buyers must either waive their contingency or the contract will terminate automatically.  If the buyer elects to waive the contingency, the buyer is stating that even if they don’t sell the current home, they will still purchase the subject property.


As a seller considering accepting an offer that is contingent, you should be sure to carefully read this contingency form.  The date in which the buyers must sell their current home is important to review.  If you are looking for a quick close, you want to make sure this date is not too far in the future.  You will also want to ask questions to see how far along they are in the selling process.  Do they have their current home on the market yet?  If so, have your agent review the listing to make sure they are priced aggressively, and marketing appropriately.  If the home is not even on the market yet, you will want to ask more questions to determine when they plan on listing the home for sale.  You also want to make sure that the number of days required to respond when notice of another offer is received is not too long.  In my opinion, three days is usually adequate.  If the current buyers have too much time to respond, you may lose out on the second offer.

If you are a buyer submitting an active contingent offer, you should also consider how the seller will feel about the contingency.   By providing proof that your current home is actively being marketed for sale and is priced correctly, you can ease the seller’s apprehensions about accepting an offer that is contingent.
One more interesting caveat in the active contingent scenario is that if you receive a second offer that is higher than the first, you can’t simply accept it.  In fact, the only way you can accept the second offer is if the original buyers decide not to waive the contingency and the first contract automatically terminates.  In this event, the earnest money that the contingent buyers submitted would be refunded back to them, and you could proceed to accept the second offer.

If you have any other questions about active contingent status in Texas or general real estate questions, I am always here to help.  Feel free to give me a call or send me an email.