What does 48 hour contingency mean?

Answered by John Hunt

A 48-hour contingency in real estate refers to a specific clause in a contract that allows a seller to continue marketing their home to other potential buyers, while giving the current buyer a set period of time (usually 48 hours) to remove the sale and settlement contingency.

To better understand this contingency, let’s break it down step by step. When a buyer and seller enter into a purchase contract for a home, there are often certain conditions or contingencies that need to be met before the sale can be finalized. These contingencies protect both the buyer and the seller, ensuring that certain requirements are met before the transaction is completed.

One common contingency is the sale and settlement contingency, which is typically included in the contract to protect the buyer. This contingency states that the sale of the home is contingent upon the buyer being able to sell their current home or secure financing for the purchase. In other words, the buyer needs to sell their own home or secure a loan in order to proceed with the purchase of the new home.

However, this contingency can be a source of uncertainty for the seller. While the buyer is working to sell their home or secure financing, the seller may miss out on other potential buyers who are ready and able to proceed with the purchase immediately. This is where the 48-hour contingency comes into play.

With a 48-hour contingency, the seller has the right to continue marketing their home to other potential buyers, even after accepting an offer from the current buyer. If another offer is received within the specified time frame (48 hours), the seller can notify the original buyer and give them the opportunity to remove the sale and settlement contingency within that time period.

If the original buyer is unable to remove the contingency within the given time frame, the seller is then free to accept the new offer and proceed with the sale to the new buyer. On the other hand, if the original buyer is able to remove the contingency within the specified time, they can proceed with the purchase as planned.

This type of contingency is beneficial for sellers as it allows them to continue marketing their home and potentially receive a better offer if one comes along. It also puts some pressure on the original buyer to move quickly and secure their financing or sell their current home, knowing that they could lose the opportunity to purchase the property if they don’t act within the given time frame.

The 48-hour contingency provides flexibility for the seller while still protecting the interests of the original buyer. It allows the seller to explore other potential buyers without completely cutting off the current buyer, giving them a fair chance to proceed with the purchase if they can meet the contingency requirements within the specified time.