How often contingent offers fall through
Quick insights
- Most contingent offers succeed; only 4% to 7% of home sale contracts fall apart because of financing, inspection or appraisal problems.
- A contingent offer typically lasts from a few days to several weeks, depending on the agreed timeline and contingency type.
- While contingent offers are common in real estate, their success depends heavily on preparation, communication and financial readiness.
A contingent offer is an offer from a buyer to a seller with conditions that must be met for the offer to be binding. This contingency is a clause that gives the buyer the right to back out and recover their deposit if the conditions aren’t met.
The seller can accept, reject or counter the buyer’s contingent offer. The goal is to reach an agreement that benefits both the buyer and the seller. So, what implications do contingent offers have on the success rate of home sales? Read on to learn more about how often contingent offers fall through.
Are contingent offers common?
Yes, contingent offers are common. Contingent means the seller has accepted an offer, but the deal still depends on certain conditions being met, like an inspection or financing. The deal could still fall through, and the seller might still accept backup offers.
Contingencies are a normal part of real estate transactions because homebuyers want time to work through major steps in the homebuying process. While there is always some risk, most transactions involving a contingent offer move forward without major issues; only a small share of all contingent offers fall through.
How often do contingent offers fall through?
According to the National Association of REALTORS® (NAR), approximately 4% to 7% of contingent offers fall through. This means that the vast majority (over 90%) of offers successfully close. Broader market conditions, financing strength and the type of contingency involved will affect individual situations.
How long does a contingent offer last?
There’s no one-size-fits-all answer, but most contingencies follow general timelines:
- Inspection contingency: 7-10 days
- Financing contingency: 21-30 days
- Appraisal contingency: 1-3 weeks
- Home sale contingency: 30-90 days
So, if you’re wondering how long a house can be contingent, the answer depends on the contract. However, many homes stay in contingent status anywhere from a couple of weeks to over a month. During this time, the seller may still accept backup offers in case the original deal falls through.
How long does a house stay in contingent status?
The contingent period usually lasts anywhere from 30 to 60 days. The length of contingency varies case by case depending on the type and number of contingencies in the offer. Overall, a home stays in contingent status for the specified period or until the contingencies are met and the buyer closes on their new house.
Common types of contingent offers
When it comes to the process of buying a home, contingency offers protect homebuyers while they move through key steps. The conditions can give you time to verify key details before fully committing to a home purchase.
- Home inspection contingency: A home inspection contingency allows you to bring in a professional to evaluate the property before closing. If problems come up during the inspection, like roofing damage or foundation concerns, you may be able to renegotiate or walk away, depending on the agreement.
- Home appraisal contingency: A home appraisal contingency ensures the property is worth the agreed purchase price. If the appraisal comes in low, the mortgage lender may not approve the full loan amount. This gives you the option to renegotiate or reconsider the deal.
- Financing contingency: Also known as a mortgage contingency, this clause states that your offer depends on your ability to secure a home loan. Even if you are preapproved, a lender can still deny your final mortgage application. If your financing falls through during the agreed-upon timeline, this contingency allows you to walk away from the deal and recover your earnest money deposit without penalty.
- Title contingency: A title contingency ensures the property has a clear legal history of ownership. If problems like liens, disputes or ownership claims are discovered, you can pause or cancel the real estate transaction until those issues are resolved.
- Home sale contingency: A home sale contingency applies when you need to sell your current home before completing the new purchase. If you don’t sell within an agreed time frame, you may walk away from the deal without penalty.
What happens if a contingent offer falls through?
It depends on the situation, but here’s what typically happens if a contingent offer falls through:
- The home goes back on the market. The seller can put the property back on the market and start accepting new offers right away.
- Backup offers may move forward. If the seller accepted backup offers, they may immediately move to the next buyer in line.
- The buyer may get their earnest money back. If the contingency was valid and properly executed (such as a failed home inspection or financing denial), the homebuyer generally keeps their earnest money deposit. This depends on the contract language, timelines, notice requirements and state law/escrow procedures.
- Everyone resets. While it can feel frustrating, a real estate transaction falling through for some reason isn’t uncommon. Both parties can move forward quickly, often with more clarity the second time around.
Can a seller back out of a contingent offer?
Yes, but it depends on the timing and the offer contract. Before accepting an offer, a seller has full control. They can reject it, accept it or negotiate different terms. But once a contingent offer is accepted, backing out isn’t as simple. At that point, both parties are generally bound by the agreement. The seller is generally not able to walk away without a valid reason outlined in the contract.
In most cases, a seller can typically back out of the deal if the buyer fails to meet one of the contingencies. For example, if the home’s appraisal comes in significantly lower than the agreed price, and the buyer and seller can’t reach a new agreement, the deal may fall apart.
Another scenario involves something called a kick-out clause. This is a condition that allows the seller to continue marketing the home even after accepting a contingent offer. Here’s how it works:
- A new homebuyer submits a stronger (non-contingent) offer.
- The seller must give the original homebuyer a set period (often 24 to 72 hours) to move forward without their contingency.
- If the homebuyer can’t meet that deadline, the seller can cancel the contract and accept the new offer.
While sellers do have some flexibility, they can’t back out of a deal without cause once it’s under contract. Specific conditions, such as unmet contingencies or a kick-out clause, must come into play.
In summary
Contingent offers may be a helpful way to move forward with buying a home while keeping certain protections in place. Most real estate deals close successfully, and only a small percentage of contingent offers fall through due to financing, inspection or home appraisal issues. These contingencies typically last a few weeks, but it depends on the home, market and type of contingency. Preparing for the closing process once an offer is accepted may help you get the keys to your new place without headaches.
