The meaning of the word “contingent” with regard to a real estate sale has changed dramatically over the years. Originally, when I first started selling real estate the term “contingent” was used when the house was sold “contingent on the buyer selling his existing home”. These buyers could be “bumped” from the transaction by a buyer without a home to sell. There was usually a “first right of refusal” with a time period where the first buyer would either remove the contingency and make the earnest money non-refundable (only when they felt the sale of their existing home was a sure thing), or the transaction was canceled and the home was sold to the second buyer.
Next, the word “contingent” was used primarily because the sale was contingent upon the buyer completing something during their due diligence period such as an inspection or an appraisal. These buyers could not be bumped and a second buyer could write a back-up offer.
Now, the word “contingent” still applies to the case above but the primary use of the term is for a contingency on the part of the seller- short sale approval. Obviously, in this case, the second person interested in the property can do nothing about it unless the first buyer cancels because they have lost interest or don’t want to wait for the approval process.
Agents need to educate their buyers because the contingent properties still show as “available” in the MLS and on REALTOR.COM. This is very confusing to the general public. I recently had a buyer asked me “Why don’t you send me everything that meets my criteria. You are leaving out all the good properties!” After a detailed discussion, we discovered he was interested in “contingent properties” and thought he could step in front of those buyers because he has cash and no home to sell. This is not the case.
I could have lost a buyer because he thought I was only sending him certain properties and not the ones he liked the best. What “contingent” means in the current market needs to be one of the first discussions we have with our buyers. This is an important step in the education process and will alleviate headaches for all parties involved.