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Active Contingent and Active CAPA Defined

June 9, 2007 | By Kelley Koehler | Filed Under Home Buying 

Sometimes, I get calls from home buyers who are looking through the Tucson MLS and come across houses listed as Active Contingent and Active CAPA, and ask me what that means.

Active Contingent means that the Seller has already accepted an offer, but that there is still some condition, or contingency, to be met.  In most cases, the contingencies yet to be satisfied are just the standard things built into the purchase contract.  These things may include:

• The Buyer’s inspection period
• An appraisal that states the value is at least the sales price
• A round of negotiations if repairs are needed
• The Buyer’s final loan approval

Properties that are Active Contingent may come back on the market if one of these contingencies can’t be worked out between the Buyer and Seller.  If a deal is going to fall apart, it will typically happen in the negotiations for repairs.  Given that inspection periods are usually between 10 and 15 days, I would expect an Active Contingent listing to either come back on the market or change to Pending at about the 2 or 3 week mark from when the property status first changed to Active Contingent.

If you’re interested in an Active Contingent property, and it has only been Active Contingent for a couple of days, you’ve probably got another week or two to wait to see if it comes back on the market. 

As a second option, you can put in a backup offer.  If the Seller accepts your backup offer, then if the first deal falls through, you automatically step up, open escrow, and begin your inspection period.

Also – if a property was under contract and the deal falls through and the house goes back on the market, the listing agent doesn’t have to tell me what purchase price the Seller agreed to for that first offer.  In fact, a good agent should keep that information confidential.

Active CAPA is a whole different situation.  CAPA stands for “Can Accept Purchase Agreement.”  The only time this status is used is when a Seller has agreed to sell their home to a Buyer, and that Buyer must first sell their own home.

Because the deal depends on the Buyer selling their own home first, Active CAPA properties may stay CAPA for a long time.

As a Buyer under contract to buy a house when you have to sell your own home first, your position is less secure, for several reasons:

• The CAPA contract language gives specific time lines by which a Buyer must have their home under contract, and also by which they must have their sale completed.
• If a Buyer doesn’t meet those timelines, they can try to renegotiate or they must walk away from the deal, typically getting their earnest money back.
• If the Seller gets another offer, they can accept that second offer and then turn around and demand that the current Buyer either remove their home selling contingency or go away.  If the CAPA buyer can’t remove their contingency, then that CAPA Buyer has to walk away from the deal, and will usually get their earnest money back.

As someone interested in making an offer on a home that is Active CAPA, there’s a decent chance that you can kick the existing Buyer out of their position, and become the person under contract to buy that house.  However, Active CAPA isn’t a common thing in this market.

Photo via Flickr, courtesy of lars hammar

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