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SellersIt depends almost entirely on where the buyer's own home stands. If it is already in escrow, the risk is modest. If it is listed but has no offer, the risk is real and belongs in the price. If it is not listed yet, most sellers are better off declining or insisting on the right to keep marketing.
Two offers come in on the same afternoon. One is $880,000. The other is $860,000. The higher one carries a line saying the purchase depends on the buyer selling their current home first. Most sellers see the $20,000 and stop reading.
That line is not a detail. It means the offer in your hand is really two sales stacked on top of each other, and you only get a say in one of them.
What the higher number is attached to
Accept a contingent offer and your closing now depends on a stranger buying a house you have never seen, at a price you did not set, on a timeline nobody at your table controls. If that sale stalls, yours stalls. If that buyer walks, yours can too.
The risk is not the same in every contingent offer, though. It depends on how far along the other sale already is.
| Where the buyer's home stands | What you are really accepting | What it usually calls for |
|---|---|---|
| Already in escrow | A second sale that is underway, with its own contingencies possibly still open | Reasonable, especially with the right to keep marketing |
| Listed, no accepted offer | A sale that has not found its buyer yet, at a price you did not set | A kick-out right, a firm deadline, and a premium that reflects the wait |
| Not listed yet | A plan to sell | A counter, or a polite no |
That last row deserves a second look. An offer contingent on a home that is not on the market yet is not really an offer. It is a buyer telling you they intend to become a buyer.
It also helps to know who never brings this contingency. First-time buyers have nothing to sell, so their offers cannot carry it. The contingent offer usually comes from a move-up buyer, or from military buyers and veterans relocating in who still own a home at their last duty station, often one bought with a VA loan.
What the extra $20,000 has to pay for
A premium on a contingent offer is not free money. It is compensation for waiting, and waiting has a monthly cost.
| Contingent offer | Non-contingent offer | |
|---|---|---|
| Price | $880,000 | $860,000 |
| Depends on another sale closing | Yes | No |
| Extra carrying cost if closing slips two months | About $10,000 at $5,000 a month | Not applicable |
| Real advantage after that delay | About $10,000 | Baseline |
| If their home never sells | You relist, and the premium never existed | Not applicable |
Five thousand a month covers mortgage, taxes, insurance, and utilities on an ordinary home in San Diego North County, and yours may run higher or lower. At that figure, a two month slip cuts the premium in half and a four month slip erases it. If the buyer's home never sells, you are back on the market in a later season with a cancelled escrow in your listing history.
For sellers leaving on PCS orders, the math is simpler and harsher. A report date does not wait for somebody else's escrow. If you have to be gone by a fixed date, a contingent offer is usually the wrong offer at almost any price.
The right you keep, if you ask for it
California's standard addendum for this contingency gives the seller something most sellers never use. You can keep the home on the market while the contingency is open. If a second buyer comes along and you accept their offer in backup position, you can give the first buyer written notice to do three things within a short window set in the addendum, commonly about three days:
- Remove the contingency for the sale of their home
- Remove their loan contingency, if one is still open
- Verify they have the funds to close without selling their home first
If they cannot, the contract can be cancelled and your backup moves up. People call this a kick-out clause. It only works when every step is followed exactly as the addendum lays it out, in writing and in order. A notice delivered the wrong way can fail, so treat the procedure as seriously as the price.
The buyer owes you information, too. The addendum requires them to keep you updated on their own sale, including delays, revisions, contingency removals, and cancellation. You are entitled to know how the other half of your deal is going.
The boxes almost nobody reads
The addendum has options, and some of them quietly move your dates. Versions of the form have included an election that holds the buyer's other contingency periods, inspection and loan among them, until their own home is in escrow. If that option is selected, the clocks you assume are running have not started. Deposit timing can be handled separately as well.
None of this is hidden. It is just easy to sign past. Before you accept, have your agent walk you through exactly which options are checked and what each one does to your calendar.
Pro Tip: Look up the buyer's listing before you accept, the same way a buyer would study yours. Compare their list price to recent sales on their street. If their home is overpriced, it is going to sit, and your sale sits right beside it. The best predictor of whether a contingent offer closes is not how eager the buyer sounds. It is whether their own house is priced to sell.
When it is the right call
There are real situations where saying yes makes sense. The buyer's home is already in escrow with its own contingencies removed. The buyer can qualify to close without the sale, so the contingency is a preference rather than a requirement. Your price range has gone quiet and a committed buyer with a clear path beats an empty showing calendar. You have time, and nobody is waiting on your proceeds.
When those line up, a contingent offer with the right to keep marketing is a sensible way to keep momentum. When they do not, the higher number is mostly decoration.
Ask the Buyer's Lender This
Two questions, word for word, through your agent:
- "Can this buyer qualify to close without selling their current home first?"
- "Is your approval counting on proceeds from that sale, and what sale price did you assume?"
The first tells you whether a kick-out notice would make them perform or make them walk. The second tells you whether their financing leans on a price their home may never get.
If a contingent offer is sitting in front of you right now, reach out and we can weigh it against what else is realistic for your home, or call me directly at (619) 485-8293.
Frequently Asked Questions
Should I accept a contingent offer on my house?
Only after you know where the buyer's home stands, whether they can close without selling it, and whether the right to keep marketing is in the addendum. The price is the last thing to evaluate, not the first.
Can I keep showing my home after accepting a contingent offer?
Yes, if the addendum preserves your right to continue marketing, which the standard California form provides for. Backup offers are what give that right its teeth.
How long does a contingent buyer get to sell their home?
Whatever the addendum says, and it is negotiable. Shorter deadlines are safer for you. If the buyer's home does not close by the date specified, the contract gives you options to move on.
Is a contingent offer ever better than a cash offer?
Rarely on certainty, sometimes on net proceeds. A strong cash offer and a contingent offer are almost opposite propositions. The different kinds of cash buyers and what each one pays are covered separately on the blog.
Addendum terms, time periods, and form versions vary and are negotiable. Carrying cost figures are illustrative. This content is for informational purposes only and is not legal, tax, or financial advice. Review all contingency terms with your agent and consult a qualified real estate attorney on contract questions. All real estate services comply with NAR, HUD, and California DRE regulations.
