The next door neighbor’s house went “pending” on an “Active Contingent” contract. I have never done that myself, want to hear stories (good or bad) from you guys.
I know an " active contingent" is good when the market is hot and the buyer’s home is in an area that could be sold quickly and results a closing of the seller. A happy ending. Of course, it could go wrong and things could drag out forever. Another house in the neighbor went on that kind of contract for almost 6 months and finally closed. In that, the new potential buyers may not want put their foot forward because of the timing.
There are pros and cons on either side of the coin, on one hand the sellers may have a long closing and it may never close, on the other hand, the sellers may got the price they wanted.
I’ve never heard the term “active contingent.”
Please explain…what is “active contingent”.
We sold our first house with a Hubbard clause. The buyers had a house to sell. We accepted their offer pending sale of their house. Our house continued to be shown…and if another offer came through the first buyers were given a very short timeline with rights of first refusal.
Worked out fine for us as sellers. Not so good for the Hubbard clause family who,actually lost the house to a subsequent buyer.
I buy and sell and I would never accept a contingent agreement, unless I had no real timeline myself. Even then, a better buyer may come along when the Seller is ready to vacate. What Active Contingent means (for those who don’t know) that the Buyer can perform his end of the Purchase Agreement for your house if he can sell his own, so the Seller is tied to the Buyer with no real way to know if performance will occur.
Too many possible snags for me. I want free and clear buyers and have never had any problem finding them.
But then I never sell a house while still occupying it. I only sell it when it is mint, showplace ready to go.
Here is what “active contingent” means in Redfin.
What is active contingent?
Active contingent is when a home seller has received an offer from a buyer, but the buyer needs to meet certain conditions before the sale can be finalized. These conditions may include a home inspection or getting approval on a mortgage loan. Once these conditions are met, the home will no longer be listed as active contingent.
In certain areas(including ours in CA), active contingent is also referred to when a buyer must sell their home before purchasing a new home. In other areas, this specific situation is covered by a different listing status:
Active with Contingencies
Bumpable
Bump Clause
Active Kick-out
Active - First Right
To reduce risk on a contingent sale, you can structure the deal as a form of an option, with a very short contingent period for inspections, and then the full amount of the deposit being released from escrow as option monies, to be credited against purchase price if deal closes but otherwise non-refundable. This is a good strategy where the purchaser claims that they are 99% certain that they will be able to sell their other during the contract period, but you as the seller dob’t want tge risk. This shifts the risk of the non-sale to the purchaser, where it should be. If the deposit/ option is large enough, the seller is just as happy if the deal falls through.
I did a version of this when I sold my house. It wasn’t a contingency contract per se but the buyers wanted a very long escrow. We set it up so that the purchaser put down a very large deposit ($100,000) that was released from escrow (after a seven-day inspection period) is on a non-refundable basis as option moneys. The seller was very motivated to close the sale after those funds were released, so I wasn’t worried about the long escrow period.