You might be new to real estate and have seen or heard about a property that was “CTG.” What is CTG status, and how does it impact your analysis of the property?

CTG is real estate shorthand for “contingent.” This means that the property has an offer subject to one or more contingencies. 

What is a contingent offer in real estate?

A real estate agent may show a home to multiple buyers and receive multiple offers. If the seller accepts an offer, that buyer is said to be in escrow. Contingent offers are based on conditions being met, such as the sale of the buyer’s home or the buyer securing financing. The seller is free to accept backup offers if the contingencies are unmet.

It’s also important to understand that real estate agents have an active listing agreement with the seller. This means that the real estate agent has a fiduciary responsibility to get the highest and best offer for their client, the seller. In most cases, real estate agents will not accept a backup offer until all contingencies have been removed from the accepted offer or the original buyer has walked away from the deal entirely.

The most common contingency is financing, but other conditions include a successful home inspection or the buyer selling their current home. If any contingencies are not met, the buyer has the right to back out of the deal and receive a full refund of their earnest money deposit. Contingent offers are often used when buyers try to sell their current home and purchase a new one simultaneously. In this situation, they will make an offer on their new home contingent upon their current home selling within a specific timeframe. This gives them a backup plan in case their current home doesn’t sell and they cannot purchase the new one.

A contingency period is a period of time during the real estate contract process in which the buyer can cancel the deal for a specified reason. In most cases, the listing is removed from active status in the MLS listing and replaced with a notation of pending status.

While contingencies can benefit buyers and sellers, they are typically more advantageous to buyers. For example, if buyers cannot secure financing within the contingency period, they can back out of the deal without penalty. However, if a seller backs out of a deal during the contingency period, they may be required to pay damages to the buyer. As such, it is generally advisable for sellers to avoid including contingencies in their real estate deals.

How does a contingency work in real estate

A contingent listing is a real estate listing contingent on conditions being met, such as the sale of the buyer’s home or the approval of financing. The contingent status of a listing means that the property is not yet available for purchase but may become available in the future if the conditions are met. Contingent listings are typically handled by listing agents, who work with buyers and sellers to negotiate the terms of the sale. If the contingent status is removed and the property becomes available for purchase, the listing agent will work to find a buyer willing to meet the seller’s conditions. Sometimes, contingent listings may also be used to negotiate a lower purchase price.

There are several types of contingencies, but the most common is the attorney review contingency. This contingency can be found in both buyers’ and sellers’ contracts, allowing each party to have their attorney review the agreement before it becomes binding. If either party decides not to proceed with the transaction, they can void the contract by giving written notice within the specified timeframe. Other common contingencies include loan contingencies, inspection contingencies, and appraisal contingencies. Each type of contingency serves a different purpose, but they all help protect the buyer or seller from making a decision they may regret later.

When a contract is contingent, the agreement is not yet binding. The parties involved have agreed to certain conditions that must be met before the contract becomes fully effective. This gives each party time to review the agreement and ensure they are comfortable proceeding with the transaction. Contingencies also provide a way out of the contract if something goes wrong during the transaction. For example, if an inspection reveals significant repairs that need to be made, the buyer can void the contract and back out of the deal without penalty. In short, contingencies help to protect buyers and sellers alike by giving them time to change their minds before committing to a purchase or sale.

What are the benefits of making a contingent offer?

Making a contingent offer when buying a home has its pros and cons. A contingent offer means the seller accepts your offer to purchase the property, contingent on certain conditions being met. For example, you may accept a contingent offer only if the home passes a home inspection. The benefit of making a contingent offer is that it gives you some protection as the buyer. If the home inspection reveals serious problems with the property, you can back out of the deal without losing your deposit. However, there are also some drawbacks to making a contingent offer. One is that it may be more challenging to have your offer accepted in the first place since the seller knows that there are conditions attached. Additionally, if there are multiple offers on the property, the seller may be more likely to choose an offer that is not contingent. In the end, whether or not to make a contingent offer is a decision that you will need to weigh carefully before making an offer on a property listing.

You may be able to get the house you want for a lower price.

Home buyers often assume that the only way to get a good deal on the house is to wait for the perfect property to come on the market and then offer a low offer. However, there are other ways to get a great price on your dream home. One option is to look for houses that are active but have been on the market for a while. Sellers may be more willing to negotiate on price if they are tired of their home sitting on the market. Another option is to search for private listings, which are properties that are not listed on the multiple listing service (MLS). These properties may be significantly cheaper than comparable homes because sellers do not pay a real estate agent a commission. Finally, don’t be afraid to ask for a price change if you think the home is overpriced. In a buyer’s market, sellers may be more likely to lower their asking price than in a seller’s market. By keeping these tips in mind, you may get the house you want for a lower price than you thought possible.

The seller may be more likely to accept your offer if it’s contingent on them finding a new home.

When making an offer on a home, it’s essential to consider the seller’s needs and situation. If the seller is still living in the home, they may be more likely to accept an offer contingent on finding a replacement home. This contingency gives the seller peace of mind, knowing they have a backup plan if their home doesn’t sell right away. In addition, the seller may be more motivated to sell quickly if they know they have a buyer lined up. As a result, including a home sale contingency in your offer could increase your chances of having your offer accepted.

If something happens and you can’t buy the house, you won’t lose anything since your offer was contingent on another event happening.

There’s no use dwelling on what could have been, especially regarding real estate. When you make an offer on the house, that offer is contingent on several factors. If your financing falls through or the home inspection turns up some serious problems, then you are within your rights to back out of the deal and get your earnest money deposit returned. In other words, making an offer on the house doesn’t commit you to anything until the offer becomes active. Even then, there’s still a chance that something could happen to void the contract, such as if the seller breaches the listing agreement. So, if you worry that you might miss out on your dream home, remember that there’s always a contingency plan in place.

It shows the seller that you’re serious about buying their house.

When you find a house that you’re interested in buying, one of the first things you’ll need to do is make an offer. This is usually done by submitting a listing contract to the seller, which stipulates the price you’re willing to pay for the property. If the seller accepts your offer, they will sign the contract and officially list the house at that price. While it may seem like a small gesture, listing the house at your offered price shows the seller that you’re genuinely committed to buying their property. This can be the difference between accepting or rejecting your offer in a competitive housing market. So, if you’re serious about buying a particular house, list it at your offered price.

What are the risks of making a contingent offer?

Making a contingent offer on a property means that your offer is not firm – it’s contingent upon another event, such as the sale of your current home. Because your offer is not firm, the seller may accept a better offer from another buyer. In addition, if the contingent status of your offer is not disclosed upfront, the seller may be less inclined to work with you if another buyer comes along with a better offer. Therefore, it’s essential to be aware of the risks involved in making a contingent offer before you decide to do so.

In the case of a short sale or new status listing, the seller may not be willing or able to accept a contingent offer or must obtain third-party or bankruptcy court approval before the offer can be accepted. In a hot market, where home listings are selling at or above list price, there is little incentive for a seller to consider a contingent offer – especially if you are the first buyer to present an offer.

When is it a good idea to make a contingent offer?

Making a contingent offer is usually only a good idea if you have a period to find another home and the market status is such that there are more buyers than sellers. If you’re in a seller’s market, making a contingent offer may not be in your best interest because the seller may be more likely to accept an offer from another buyer who does not have a contingency. In addition, if you’re under contract to purchase another home, making a contingent offer may not be as attractive to the seller since they would be responsible for finding another buyer if you cannot sell your current home. However, if the market is slow and there are more homes than buyers, making a contingent offer may give you an edge over other buyers who are unwilling to make the same commitment. Ultimately, whether or not to make a contingent offer depends on your situation and the current housing market.

When is it a bad idea to make a contingent offer?

A contingent offer is when you make an offer to purchase a property contingent on selling your current home. This offer may work well in a slow housing market, but there are some situations when making a contingent offer is not a good idea. For example, if you are trying to buy a new home in high demand, the seller is unlikely to wait for your current home to sell before moving forward. Similarly, if you are trying to buy a new home that is privately listed, the seller may not be interested in working with a buyer with contingencies in place. Generally, it is best to avoid making a contingent offer unless you are confident that the sale will go through quickly.

While a contingent offer may seem like a great idea, some definite pros and cons should be considered before making such an offer. Weighing your options and understanding the risks involved is the best way to ensure you make the right decision for your home-buying journey. 

If you are looking for some resources for real estate investing, there are a ton out there. One that stands the test of time – real estate or not – is Never Split the Difference: Negotiating as if Your Life Depended on It by Chris Voss. There is nothing more important than setting yourself up for success in negotiations – regardless of the endeavor. 

A good resource for the first time homebuyer is 100 Questions Every First-Time Homebuyer Should Ask by Ilyce Glink. It covers everything from selection of an agent to closing.

For investors, the best resource out there is Bigger Pockets, and they have a library of materials, podcasts and more to get you comfortable with real estate. A couple other books to consider are Multifamily Real Estate Investing by Morgan Lane and for real estate agents and professionals, Harris Rules by Tim and Julie Harris.

Happy investing!