A reader posed a very good question recently regarding the impact of contingent sales and what happens to inventory numbers when a contingent buyer is unable to sell their current home.
If a sale is contingent and the buyer’s current residence doesn’t sell then theoretically the house they had in a contingent contract should come back into inventory as an active listing. If this were happening a lot you’d expect to see the number of contingent units dropping over time and active inventory rising over time. While we’ve only been collecting pending and contingent data for the past few months, we’re seeing exactly the opposite so far.
Contingent sales are going up steadily, while inventory is dropping significantly. At this point in the cycle, sellers (and their Realtors) are getting smarter. If a buyer makes a contingent offer the sellers are going to make sure the buyer is being realistic about the price of the home they have to sell first.
Are there contingent sales out there that won’t go through? Sure. But the days when buyers were making contingent offers based on unrealistic expecations of the value of their homes are long over.