How Often Do Contingent Offers Fall Through?

Thinking of buying or selling in the Lone Star State? If so, you’ve probably heard the term “contingent offer” in your real estate journey. But what does it mean and how often do contingent offers fall through? Don’t worry, we’re here to break it down for you in simple terms so you can navigate the Texas real estate market with ease.

According to the National Association of Realtors, contingent offers are quite common in the real estate market, with a low percentage of these offers ultimately falling through. This highlights the importance of understanding contingency agreements in real estate transactions.

Before we dive into the world of contingent offers, let’s talk about a smart alternative that’s gaining popularity among Texas homeowners: selling to a cash home buyer. Companies like Four19 Properties are changing the game by offering a straightforward, hassle-free way to sell your house fast in Texas. By choosing a cash buyer, you can avoid the potential headaches and uncertainties that come with contingent offers. Imagine selling your home without worrying about buyer financing falling through or dealing with lengthy home inspection contingencies. Sounds appealing, right? We’ll explore this option later, but first, let’s unpack what contingent offers are all about.

Do Contingent Offers Fall Through Often?

Okay, let’s get to the point: yes, contingent offers can and do fall through sometimes. But don’t freak out! It’s not as often as you think. Most contingent offers work out just fine. But you should know how they work and what can go wrong so you can be prepared for anything.

The duration a house stays in contingent status can vary, typically from 30 to 60 days, depending on the contingencies involved.

How Contingent Offers Work

Imagine you’re buying a new pair of cowboy boots (we’re in Texas, after all!), but you tell the store, “I’ll buy these, but only if they’re comfortable after I wear them for a day.” That’s kind of like a contingent offer in real estate. When a buyer makes a contingent offer on a house, they’re saying, “I want to buy this house, but only if certain conditions are met.”

These are the conditions, or contingencies, that can be:

1. The buyer needs to sell their current home first
2. The house needs to pass a home inspection
3. The buyer needs to get approved for a mortgage
4. The home must appraise for at least the purchase price. (Here is a helpful guide to getting an appraisal on your house) 

The seller can accept, reject, or negotiate these contingencies and may use kick-out clauses to manage multiple interests. If they accept, the house is listed as “contingent” until all the conditions are met. This contingent status means the home is technically off the market but still has a chance the sale might not go through. A contingent house can still entertain other offers, and buyers can make backup offers.

How Long Do Contingent Offers Last?

Now you’re wondering, “How long does a contingent offer last?” or “How long can a house be contingent?” The answer is: that it depends. The length of a contingency period can vary based on the type of contingency and what the buyer and seller agree upon.

For example, a home inspection contingency might be 7-14 days, and a home sale contingency could be 30-60 days or longer. A mortgage contingency provides buyers with a specific timeframe to secure financing and can impact the duration of the contingent period. Keep in mind the longer a house is contingent the more anxious sellers will get. After all, they’re essentially taking their home off the market while waiting for the buyer to meet all the conditions.

How Often Do Contingent Offers Fall Through?

Now let’s get to the big question: how often do contingent offers fall through? While exact numbers vary, it’s estimated that 1 in 20 contingent offers fall through. That’s only 5%! So the odds are in your favor if you’re dealing with a contingent offer.

However, buyers may face challenges in securing financing, which can impact the efficiency of the home-selling process and potentially lead to broken offers or delays.

But remember, every situation is different. The local real estate market, the specific contingencies involved, and how they’re handled can all impact whether the offer goes through. In hot markets with high-end home sales in TX, contingent offers might be less common or more likely to fall through as sellers have more options.

Why Contingent Offers Fall Through

Let’s look at some common reasons why contingent offers might fall apart:

1. Home Inspection Issues: Sometimes the home inspection reveals issues the buyer wasn’t expecting. If they’re big issues the buyer might walk away or try to renegotiate the price.
2. Financing Falls Through: If the buyer can’t get a mortgage the deal can’t move forward. That’s why many sellers prefer to work with cash home buyers in Fort Worth or other parts of Texas. If certain conditions are not met, buyers can withdraw from the sale without forfeiting their earnest money.
3. Appraisal Comes in Low: If the home appraises for less than the agreed-upon price it can cause problems with the buyer’s mortgage. The buyer might ask the seller to lower the price or they might have to come up with additional cash to cover the difference. Check out these things that can hurt a home appraisal for more guidance. 
4. Buyer’s Home Doesn’t Sell: If the offer is contingent on the buyer selling their current home and it doesn’t sell in time the deal could fall through. This is a common issue, especially in slower markets. An offer contingent on the sale of a current home can be rendered invalid if the current home does not sell within a specified timeframe.
5. Change of Heart: Sometimes buyers just change their minds. Maybe they found a different house they liked better or their circumstances changed.
6. Title Issues: If there are issues with the property’s title such as liens or disputes over ownership it can kill the sale.
7. Home Sale Contingency: This is often considered the riskiest type of contingency. If the buyer can’t sell their current home they can’t buy the new one. That’s why some sellers are hesitant to accept offers with this contingency.

What To Do If A Contingent Offer Falls Through

If you’re a seller and your contingent offer falls through don’t lose hope! You have options:

1. Work with a Cash Home Buyer: Companies that say “We buy houses in Dallas” often provide a quicker, more certain sale process. They typically buy homes as-is, without contingencies which can be a relief if you just had a contingent offer fall through.
2. Put Your House Back on the Market: Sometimes the second time’s the charm! Use what you learned from the failed deal to make your listing even better. The original buyer holds precedence during the contingency period and must be given a limited timeframe to resolve their contingencies.
3. Adjust Your Price: If the offer fell through due to appraisal issues you might need to reassess your asking price. A real estate professional can help you determine a competitive price for your market.
4. Address Any Issues: If the home inspection revealed problems fixing them might make your home more appealing to the next buyer. This could help you avoid future contingent offers falling through for the same reasons.
5. Be Patient: Remember most contingent offers do work out. If one falls through another will come along soon. The key is to stay positive and keep your home show-ready.
6. Consider a Kick-Out Clause: For future offers, you might want to include a kick-out clause. This allows you to continue marketing your home and accept other offers if they come in.

For buyers if your contingent offer falls through take a deep breath. It’s disappointing but it’s not the end of the world. Here’s what you can do:

1. Keep Looking: Don’t get too hung up on one property. Keep searching for homes that meet your needs.
2. Reassess Your Finances: If the deal fell due to financing issues take some time to improve your financial situation before making another offer.
3. Sell First: If your offer was contingent on selling your current home you might want to sell it before making offers on new homes. This can make you a more attractive buyer.
4. Be Flexible: Consider making your next offer with fewer contingencies if possible. This can make your offer more appealing to sellers.
5. Work with a Real Estate Professional: An experienced agent can help you navigate the complexities of contingent offers and increase your chances of success.

Types of Contingencies

To understand how contingent offers work let’s break down some common types of contingencies:

1. Home Inspection Contingency: Allows the buyer to have the home professionally inspected and potentially back out or renegotiate if major issues are found.
2. Financing Contingency: Protects the buyer if they can’t get a mortgage. Less relevant when dealing with cash home buyers.
3. Appraisal Contingency: Allows the buyer to back out or renegotiate if the home doesn’t appraise for the agreed-upon purchase price.
4. Home Sale Contingency: Purchases the new home contingent on the sale of the buyer’s current home.
5. Title Contingency: Ensures the seller has the right to sell the property and that there are no liens or other issues with the title.

Each of these contingencies can impact how long a home stays in contingent status and can cause the offer to fall through if not satisfied.

Real Estate Agents and Contingent Offers

Real estate agents play a big role in contingent offers. They can:

• Help buyers write competitive offers with the right contingencies
• Help sellers evaluate contingent offers and negotiate terms
• Manage timelines and make sure all parties meet their obligations
• Guide you if issues come up during the contingency period

However, working with a real estate agent isn’t always necessary. For example, if you’re looking to sell your house fast in Texas working directly with a cash home buyer can often be quicker and easier.

Contingent Offer Alternatives

If you’re a seller worried about contingent offers falling through or a buyer struggling to get contingent offers accepted consider these alternatives:

1. Cash Offers: Cash buyers, whether individuals or companies that say “We buy houses in Dallas” can often close quickly without contingencies.
2. Rent-Back Agreements: If the seller needs time to find a new home the buyer could allow them to rent the home back for a set period after closing.
3. Bridge Loans: These short-term loans can help buyers purchase a new home before selling their current one eliminating the need for a home sale contingency.
4. Sell First, Then Buy: While this can be logistically challenging it eliminates the need for a home sale contingency and makes you a more attractive buyer.

Summary

Contingent offers are a part of the real estate market. While it’s true contingent offers can fall through it doesn’t happen as often as you think. By understanding how they work and what can go wrong you’ll be better prepared whether buying or selling.

If you’re looking to sell your house fast in Texas and want to avoid the uncertainty of contingent offers consider working with a cash home buyer. Companies like Four19 Properties buy houses as-is, with no contingencies, and no realtor commissions. This can be especially helpful if you’re dealing with major repairs or need to move and want a quicker and easier solution.

Every real estate transaction is different. Whether you’re dealing with contingent offers or other options the key is to stay informed and work with people you trust. Don’t be afraid to ask questions and get clarification throughout the process.

Contingent offers don’t have to be intimidating. With the right information and preparation, you can navigate them and achieve your real estate goals. Whether buying your dream home or selling a home you’ve outgrown, contingent offers are a valuable tool in your real estate toolbox.