Intending homeowners often come across some industry terms while house hunting. Pending is one such term. You may have heard it mentioned in relation to a property you’re interested in or even seen it on a real estate listing.
But what does pending mean in real estate? What should you do if you’re considering buying a property with a pending status?
Keep reading to learn more about pending in real estate and find out if you have a chance to acquire a property with a pending status.
Understanding What Pending Means in Real Estate
When buying or selling a home, you’ll likely hear the term “pending” a lot. But what does pending mean on a house? And how long will the status last until the sale is final? Here’s what you need to know.
When a property is pending, the seller has accepted an offer, and the sale will likely close. There are usually several contingencies, such as getting financing and inspections done before finalizing the sale.
Pending sales can take anywhere from a few days to a few weeks to close, depending on how quickly both parties process the paperwork and resolve issues that may arise during the home inspection. So if you’re competing with other buyers for a pending property, don’t give up hope just yet! It’s not over until it’s over.
Can Agents Show Pending Homes?
Technically, pending home sales are still on the market. Therefore, real estate agents can decide to show these properties to interested buyers. However, most agents don’t do that because most pending properties close.
Agents consider showing a pending sales property a waste of time, and most homeowners don’t show their homes if there’s a sale pending.
A pending sale can take up to 60 days, and during this time, the buyer will request needed repairs, check the property title, secure their financing, and pay for a home inspection.
Can You Bid for a Pending Property?
The bidding wars on a property end when the home assumes a pending status. While you can still go ahead to bid, you can’t outbid the buyer with a pending offer. When a buyer makes an offer, and the seller agrees, part of the agreement will be that the seller can’t accept another offer or cancel the sale even if the other bids are higher.
However, you can leave a backup offer. If the pending sale falls through, which sometimes happens, especially if the buyers couldn’t qualify for a mortgage or the appraisal is low, the seller can then consider your offer.
Contingent Vs. Pending Sale: Major Differences
Another term you might come across in a home listing as an intending buyer is contingent. You might be wondering, pending vs. contingent: what’s the difference?
A contingent home sale is different from a pending home sale, as the buyer will need to meet a specific requirement before closing the sale.
For example, a buyer bidding for a house can include a contingent offer stating they can only close the home purchase when they sell their current property. The property sale is contingent on the home buyer selling their existing home.
You can leave a backup offer on a contingent home in case the sale fails. Although some contingent offers don’t fall through, your bid has a higher chance with contingent offers than with properties with pending status.
What a Contingent Status Means
A property with a contingent status implies that the home seller has accepted an offer. However, the buyer must meet certain contingencies before closing the property. Some of the common contingencies home sellers come across include:
1. Title Contingencies
Home titles aren’t always clear and simple in real estate. Therefore, buyers hire title companies to conduct thorough public record research to ensure the title has no lien issue.
Besides liens, titles can come with other complications like forgeries, unknown heirs, public record errors, or illegal deeds. Suppose the buyer discovers any of these issues during the title search, they can back out of the deal.
2. Financing Contingencies
Sometimes, home buyers are unable to secure financing for a property. You might be wondering, why make an offer when you can’t procure a loan?
Home buyers often get preapproved for a specified amount of loan before they start house hunting. The preapproval helps them determine how much they can spend on a property.
However, you’ll still need approval for a specified loan program and undergo the underwriting process. Some intending buyers often fail to try to get a home loan at this point.
3. Home Sale Contingencies
A home sale contingency allows the buyer to sell their current home before closing an offer. Although this arrangement favors home buyers, most sellers don’t appreciate this clause because buyers can easily back out of the transaction.
4. Appraisal Contingencies
The appraisal contingency works together with the financing contingency. Before the bank gives you a loan, the house will be appraised to ascertain its fair market value. That way, the bank will be sure it isn’t making a bad investment, and the buyer will be protected from being ripped off by the seller.
As most financial institutions and lending services can only give loans for a property’s fair market value, a buyer with a low appraisal will have no option but to back out.
5. Inspection Contingencies
Often, buyers make offers based on how the property looks at face level. However, hiring a home inspector often reveals other hidden defects which the buyer’s untrained eye couldn’t detect. Here’s where the home inspection contingency clause is activated.
This clause protects the buyer, allowing them to hire the services of a home inspector to get a professional home inspection report. Depending on the clause terms, the buyer can back out without financial repercussions if the inspector discovers any defect, for instance, the house foundation.
However, the clause sometimes allows the seller to fix the problems, maintaining the contract validity.
Common Contingent Statuses
The above-mentioned common contingent statuses come in various subcategories, including:
Contingent: No Show
In this scenario, the home seller no longer accepts other offers or shows the property. Under the contingent: no show, the seller is confident that the buyer will meet the contingencies.
Contingent: Continue to Show (CCS)
Real estate listings marked as CCS means the buyer needs to satisfy multiple contingencies. Therefore, the real estate agent and seller have decided to keep showing the contingent property and will likely accept a higher offer from another serious buyer.
To ensure the seller doesn’t overlook your offer, you need to show that you’re serious about the contingent sale. Start with depositing earnest money or getting a home loan approval. Your real estate agent will advise you on what to do to strengthen your offer further.
Contingent: Without Or With a Kick-Out Clause
A contingent status with a kick-out clause means you have a deadline for fulfilling all contingencies. On the other hand, if there’s no kick-out clause, the seller can meet the contingencies in the buyer’s offer in their due time.
This status occurs when the seller puts up the property for sale due to the homeowner’s death.
Here, the seller (often a mortgage lender or bank) agrees to accept less money than the homeowner owes on the mortgage. However, short-sale contingent deals usually run for months before they’re finalized.
The short-sale contingent status implies that the short-sale process is still on, but the home is off the market due to the accepted offer.
Common Pending Statuses
It’s not enough to ask, what does pending mean in real estate? You also need to know the common pending statutes. These statutes come in various subcategories, such as:
Pending: Taking Backups
Here, the property sale is pending, but the seller is still accepting backup offers and showing the house.
Pending: More Than Four Months
This status automatically happens in the multiple listing service when a property has been pending for over four months. A pending: more than four months status indicates that the pending sale transaction is dragging on for a long time or that the listing agent forgot to change the listing status to sold after the property closed after a pending period.
Pending Short Sale
The pending short-sale status is similar to the short-sale contingent status, as the house is under the short-sale process. Here, the seller isn’t accepting backup offers.
Can a Pending Home Sale Fall Through?
Pending home sales sometimes fall through. Although the chances are slim, you might be lucky enough to purchase a pending house.
The following are some reasons a pending property sale might fall through:
Financial Fall Throughs
Suppose the home buyer didn’t qualify for a loan to cover the property’s price and closing cost; the pending sale won’t close. Unsurprisingly, most sellers only accept offers from intending buyers with a pre-approved mortgage loan.
Failed Home Inspections
Once the property inspector discovers significant problems with the home, the buyer might withdraw their initial offer and walk away. As a seller, once multiple intending buyers have discontinued their bids due to the same problem, you might want to address the issue.
Although rare, some buyers might develop cold feet and experience buyer’s remorse even after making their offer. However, buyers who cancel their bids due to buyer’s remorse often take a financial hit by losing their earnest money deposit.
After both the seller and buyer agree on an offer, the buyer’s mortgage lender will request a third-party appraisal to deduce the property’s fair value. Suppose the property price is higher than the current market value; the low appraisal might scuttle the sale.
If you’re in the market for a new home, it’s important to understand what a pending status means. A pending property can still fall through, so it’s crucial to know the causes and prepare in advance.
By understanding the contingencies involved in a home purchase, you’ll be able to assess better whether a particular property is right for you. Therefore, if you’ve been asking, what does pending mean in real estate? You have all the information you need.
If you’re ready to become a homeowner, you’ll need an experienced local realtor to help you easily find your dream home. At Homes by Ardor, our team of knowledgeable real estate agents is always available to make the house hunting process seamless, easy, and fast for you.