What is CTG?
CTG, in the realm of real estate, is shorthand for “contingent.” This indicates that the property has received an offer, but this offer is subject to one or more specific conditions (or contingencies) being fulfilled.
Importance of CTG:
- CTG is used when a property has an accepted offer, but certain conditions, like the sale of the buyer’s existing home or property, or financing or inspections, must be met before the sale can be finalized.
- The property is essentially in a waiting state. While the initial offer is being processed, the seller can entertain backup offers in case the primary one falls through.
- Buyers and Sellers must understand that until all contingencies are cleared, the sale is not set in stone. This gives both buyers and sellers some flexibility and protection.
- Active vs. Contingent Listings: Some might think that a property with a CTG status is not available for offers. Not so. While it’s true that there’s a primary offer in place, sellers can still accept backup offers.
- Contingency Period: This is not the same as the closing period. It’s a designated time during which specified conditions must be met.
How Does CTG Work in Real Estate?
A contingent offer implies that while the seller has accepted the buyer’s proposal, specific conditions must be met for the deal to proceed. These conditions can range from financial criteria, such as the buyer securing a loan, to situational factors, like the buyer first selling their existing home. If these contingencies aren’t met within a specified timeframe, the offer can be nullified.
Benefits of Making a Contingent Offer:
- Protection for Buyers: If certain conditions aren’t favorable (like they see a poor home inspection), buyers can retract their offer without penalties.
- Flexibility: Buyers can synchronize the sale of their current home with the purchase of a new one.
- Negotiation Power: In specific market conditions, contingencies might help in price negotiations. Or in a very competitive market a buyer taking on contingency risk may get their offer accepted.
Risks of Making a Contingent Offer:
- Sellers Might Prefer Non-contingent Offers: If a property might receive multiple offers, the sellers could lean towards those without contingencies.
- Also, If a buyer’s contingencies aren’t met and another non-contingent offer comes in, buyers might miss out entirely on a property they like!
When is Making a Contingent Offer Ideal?
Contingent offers are most favorable when there are more properties than buyers. In such scenarios, sellers might be more amenable to waiting for contingencies to clear.