Yes, you can buy a house that is listed as contingent. The home is under contract but not yet sold, and you pursue it by submitting a backup offer that places you next in line if the current deal collapses. Roughly five percent of contracts fall through before closing, and a backup offer means you step into the primary position without competing against fresh buyers on the open market.
Why Contingent Deals Fall Through
A contingent listing means the seller has accepted an offer that depends on one or more conditions being satisfied. When those conditions are not met, the deal unravels. Knowing the common failure points helps you judge how likely a particular listing is to come back into play.
- Home sale contingency: The buyer’s purchase depends on selling their current home within a set timeframe. If their home does not sell, the contract can be canceled.
- Inspection contingency: A professional inspector evaluates the property for structural, electrical, plumbing, or roof issues. If serious problems surface and the parties cannot agree on repairs or a price adjustment, the buyer can walk away.
- Appraisal contingency: A licensed appraiser determines the home’s market value. If the appraisal comes in below the agreed purchase price, the lender will typically refuse to finance the full amount.
- Financing contingency: The buyer has a window, typically 30 to 60 days, to secure a mortgage. If the buyer loses a job, takes on new debt, or otherwise fails to qualify, the loan falls through and the contract ends.
Deals also collapse for less common reasons, such as title defects discovered during a title search, or a buyer getting cold feet and forfeiting their earnest money deposit.
How to Submit a Backup Offer
A backup offer takes the same preparation as a primary bid. Sellers are far more likely to accept one that looks ready to close, so treat it that way from the start.
Your offer should include a firm purchase price, a proposed closing timeline, and an earnest money deposit. Earnest money generally runs from one to ten percent of the purchase price depending on market conditions and seller expectations. In a competitive market, a larger deposit signals seriousness; in a softer market, a smaller amount is more common. You will also need a mortgage pre-approval letter, or proof of funds if you are paying in cash.
The Backup Addendum
The document that distinguishes your offer from a primary bid is a backup addendum. It states that your offer is secondary and only becomes a binding contract if the primary deal is terminated. The addendum should include an expiration date so you are not tied to the property indefinitely. A common approach is to specify that the backup offer expires if it is not activated within 15 to 30 days, which protects your flexibility while giving the seller a meaningful safety net.
Your agent sends the signed offer and addendum to the listing agent. If the seller is satisfied with the terms, they sign to formally accept your backup position, and any new buyers who come along would have to line up behind you. Sellers can generally accept only one backup offer at a time without risking legal complications from having multiple binding contracts.
What Happens to Your Earnest Money
Whether your earnest money goes into escrow immediately or is held until activation depends on how your backup addendum is written. Some sellers and agents prefer the deposit to be placed in escrow right away to demonstrate commitment. Others allow the buyer to hold the funds until the backup moves into the primary position. Either way, the obligation to deliver the earnest money attaches the moment the seller accepts your backup, so clarify the timing with your agent before signing.
If the primary buyer’s deal closes successfully, you are released from your backup contract and any earnest money in escrow is returned to you.
How a Kick-Out Clause Can Speed Things Up
A kick-out clause is a provision in the primary buyer’s contract that lets the seller keep marketing the home even after accepting a contingent offer. When the seller receives a strong backup offer, the kick-out clause allows them to notify the primary buyer to remove their contingencies within a set window, often 48 to 72 hours, or the contract is terminated.
If the primary buyer will not or cannot waive their contingencies in time, the seller can cancel that contract and move your backup into the primary position. Not every contingent contract includes a kick-out clause, but when one is present, it gives the seller a faster path to your offer without waiting for the primary buyer’s contingency deadlines to expire.
Moving From Backup to Primary Buyer
When the first deal falls through, whether by kick-out clause, failed contingency, or buyer withdrawal, the seller’s agent sends you formal written notice that your offer is now the active contract. That notification is the trigger for your own contingency timelines. Your inspection period, financing window, and other deadlines begin counting from the date you receive the notice, not from the date you originally submitted your backup offer.
At this point, your earnest money must be in escrow if it is not already, and you move forward with your own home inspection, appraisal, and mortgage underwriting. The transition is governed by the terms you already agreed to in your purchase agreement and backup addendum, so there is no need to renegotiate.
Protecting Yourself as a Backup Buyer
Keep Your Contingencies
It can be tempting to waive contingencies to make your backup offer more attractive, but doing so is risky, especially the inspection contingency. If the primary deal fell apart because the inspector found major problems, you want the same opportunity to evaluate those issues before you are locked in. An inspection contingency lets you hire your own inspector once your offer becomes active and walk away or negotiate repairs if the findings are serious. The appraisal contingency is equally important: it protects you from overpaying if market values shift between the time you wrote your offer and the time it activates.
Find Out Why the First Deal Failed
Before moving forward after activation, ask why the primary buyer’s contract was canceled. A deal that collapsed because financing was denied is very different from one that collapsed after an inspection revealed foundation cracks or mold. If the failure was property-related, approach your own inspection period with extra scrutiny and be prepared to walk away if the same problems surface.
Watch the Appraisal Timeline
If weeks or months pass between when you wrote your backup and when it activates, property values in the area may have shifted. Your agreed-upon price stays the same, but a new appraisal could come in lower. Without an appraisal contingency, your lender will likely require a larger down payment to cover the gap, or you would need to renegotiate. An appraisal contingency gives you the right to back out if the numbers do not line up.
Withdrawing a Backup Offer
If you find another home or change your mind while your backup offer is still waiting, you can withdraw it. Before activation, meaning before the primary deal has fallen through and you have been notified, you are not yet in a binding purchase contract. Your agent contacts the listing agent, typically by phone first and then in writing, to confirm the withdrawal.
Timing matters most if your earnest money is already in escrow. If the backup has not been activated, you should be able to recover your deposit, though the specific process depends on the terms of your addendum and your state’s escrow rules. Once you receive written notice that your backup has moved into the primary position, you are in a binding contract and would need to rely on your contingencies to exit without forfeiting earnest money.
Short Sales Take Longer
On a short sale, where the seller owes more on the mortgage than the home is worth, the seller’s lender must approve the sale price, and that process can take several months. Primary buyers often lose patience and walk away during the wait, which is part of why backup offers are especially relevant on these listings.
If you submit a backup on a short sale, expect a longer wait and build that into your expiration date. The same contingencies apply, but the timeline for lender approval, closing, and even communication between agents tends to stretch significantly. Confirm with your lender that your pre-approval will not expire before the deal could realistically close.
Watch for a Right of First Refusal
A backup offer is not the same as a right of first refusal, and the difference can matter. A right of first refusal is a contractual right, often held by a tenant, family member, or business partner, that lets that person match any offer the seller receives. The holder sees the competing offer and decides whether to match it before the seller can accept. A backup offer, by contrast, is a secondary bid sitting behind the primary contract; you do not get to see or match the primary buyer’s terms.
If a property you are interested in has a right of first refusal held by someone else, a backup offer may not help you even if the primary deal falls through, because the refusal holder could step in ahead of you. Ask the listing agent whether any such rights exist before investing time in a backup bid.