Contingent offer: what each contingency protects, and how to stay competitive without giving them up

What a contingent offer actually means

Every contingency is an exit with a deadline. If the condition is not met by the date in the contract, and you give notice the way the contract requires, you can usually cancel and get your earnest money back. Once a contingency is satisfied, waived, or allowed to expire, that exit closes.

Sellers read contingencies as risk. Each one is a way the deal could fall apart after they have taken the house off the market. So the question is never whether contingencies are good or bad. It is which ones you need, how short you can make them, and how believable your offer looks with them in it.

The main contingencies, side by side

Most residential offers in Illinois and Wisconsin use some mix of these four.

Contingent vs pending: what the listing status tells you

When a listing shows contingent, the seller has accepted an offer but one or more contingencies are still open. When it shows pending, the contingencies have generally been met or waived and the sale is heading to closing. Each multiple listing service defines its own statuses, so the exact labels vary between northern Illinois and northeast Wisconsin, and some add variations such as continuing to show.

For a buyer, contingent is worth a phone call and pending usually is not. If the accepted offer depends on the sale of the buyer's home, the seller may still be taking backup offers, and a clean backup can move into first position if the first deal stalls.

The home sale contingency and its alternatives

This is the contingency sellers like least, because it ties their sale to a house they know nothing about. Both states' standard forms give the seller a safety valve. Wisconsin's WB-11 pairs the closing of buyer's property contingency with a bump clause: if the seller accepts a bona fide secondary offer and gives notice, the buyer has a set number of hours, 72 if the blank is left empty, to waive the contingency and show proof of funds or bridge loan financing, or the offer becomes null and void. The Illinois Multi-Board contract has a similar provision, commonly called a kick-out notice, with the number of hours written in by the parties.

Notice what the Wisconsin form accepts as a cure: proof of bridge loan financing. A bridge loan borrows against the equity in your current home so you can buy first and sell second, and it lets you write an offer without a home sale contingency. We covered how they work, what they cost, and when they do not make sense in our guide to buying before you sell with a bridge loan.

• Bridge loan: buy first, then sell. Best when you have substantial equity and a home that should sell quickly.
• Qualify with both payments: if your income supports both mortgages, no contingency is needed.
• Sell first with a rent-back: close on your sale and rent your old home from the buyer for a short period while you shop.
• Keep the contingency but strengthen it: have your home already under contract with its own inspection complete before you offer.

Illinois attorney review and Wisconsin offer forms

In northern Illinois, the Multi-Board Residential Real Estate Contract gives each side's attorney five business days after acceptance to approve the contract, disapprove it, or propose changes. The disapproval cannot be based solely on the purchase price, and the price itself is not open to modification. The professional inspection window usually runs at the same time. One detail catches buyers: on the current form, if no inspection option is initialed, the waiver of professional inspections applies by default. Make sure the right box is initialed.

Wisconsin works differently. Offers are written on forms approved by the Real Estate Examining Board, and the WB-11 has no built-in attorney review period. Your protections are the contingencies you select: inspection, financing commitment, appraisal, and closing of buyer's property, each with its own deadline and, for inspection and appraisal, a choice about whether the seller has a right to cure. You can always hire an attorney to review an offer before you sign it, and for an unusual property it is money well spent.

How your lender makes a contingent offer stronger

The financing contingency is only as risky as the financing behind it. A pre-approval where income, assets, and credit have actually been reviewed tells the listing agent that the biggest unknown is already handled. Because Home State Bank approves, closes, and services loans in-house, a listing agent in Woodstock or Neenah can call a local loan officer and get a straight answer about where a file stands.

Before you agree to any financing or appraisal deadline, ask us whether we can meet it. A short deadline you can keep makes your offer stronger. One you miss can cost you the contingency and, with it, the protection of your earnest money.