Can you put an offer on a house that is under contract?  Also what is the difference between under contract and contingent.

Q: I’m interested in a property that is under contract but is also under a contingency. I find it odd that this house has been contingent for over six months! I want to submit a backup offer. How can I find out if their deal is rocky or just slow to go through?

A: The residential real estate market continues to befuddle most buyers these days. Millions of homeowners are locked into extremely low interest rates and have no desire to sell. Meanwhile, hedge funds and private equity groups have bought tens of thousands of homes to keep as rental properties. This has led to far fewer properties being listed for sale. Meanwhile, between rising interest rates and the high cost of homes, many buyers are finding they can’t qualify for loans. 

You found a property that shows as “under contract” in the multiple listing service. The listing also shows that the sale is “contingent.” Let’s start with what “contingent” might mean in this context.

Real estate agents generally use a multiple listing service for their properties. The goal is to get as much information out about a property to other agents, so those agents will bring their buyers (and hopefully an offer). Once the seller signs a contract with a buyer, the property is considered to be “under contract.” 

What does it mean when a home is under contingency?

However, buyers may have certain conditions they need satisfied before they proceed to close on the property. Some of these conditions or contingencies may involve the buyers obtaining financing, inspecting the property to ensure they understand the property’s physical condition, and the ability (in some states) for the buyers’ attorney to review and approve the contract. 

These three conditions are the most common, but there are others. In some areas of the country, common contingencies include a wood-boring insect inspection, septic system inspection, well water inspection, and radon inspection, among others. If a home is of a certain age, there may be a lead paint or water inspection. Or, a home buyer may want to inspect for mold or structural defects.

Less frequently, a buyer may put a bid in for a home with the anticipation of tearing it down or renovating and expanding the home. When this happens, the buyer may add a contingency to the contract giving the buyer the right to apply for permits, zoning changes or to satisfy other municipal requirements before completing the purchase of the home.

Sometimes sellers want to remain in their home for an extended period of time before closing and moving. The seller may be building a home and needs to delay closing until the new home is finished. The seller may want to move to an assisted living facility and has to wait for space to open up. Or, the seller is waiting for the buyer to obtain financing, and the buyer has been unable to obtain it. 

There could be other matters on the buyer’s side that have delayed the buyer’s purchase of the home including the buyer’s ability to sell their existing home.

You can put in an offer on a home under contract

In any case, you can always reach out to the listing agent and put in a backup offer. We doubt the listing agent will give you any information as to the details of the transaction. Still, if you submit an offer, one of several things might happen: the seller can ignore it, thank you for it, negotiate with you on the offer, or accept the offer subject to terminating the existing contract. In some cases, they may terminate the existing contract and simply accept your offer. You never know until you try.

We don’t think the situation you’ve described is that odd. We know a number of people who have lucked into a property simply by submitting a back-up offer and then checking back regularly with the listing agent. If you don’t put in an offer, you’ll never know if the seller is just sitting there, waiting for a better offer to come along. If you’re working with a real estate agent, that agent could submit the offer.

Another option is to continue to monitor the property to see if the original deal falls through. If it does, you can put in your offer then. But there may be more competition for the property, as other buyers are likely watching it as well. 

One possible risk: Submitting your offer may prompt the current buyer to close quickly on the property because that buyer doesn’t want to lose it. In that case, though, you’re not really losing out, since the property was already under contract.

Let us know how things turn out.