Content of the material
- Step 1
- Low Appraisals
- No more contingencies = sale pending
- Various Types of Pending Statuses
- What does it mean when a home is pending?
- Can you put an offer on a house that is pending?
- For further reading
- Putting In A Backup Offer
- What’s The Difference Between Contingent And Pending Offers?
- Other Real Estate Listing Status Meanings
- 9. Use that quiet time to get your home ready for the final walkthrough
- How does the real estate transaction process actually work?
- Buy your next home without rushing to sell first
- 6. …But know that you aren’t always required to negotiate
- The Bottom Line: Pending Purchases Aren’t Final
- The Bottom Line: An Under Contract Status Isnt Always A Done Deal
Drive past the house, if possible, and check the sign in the front yard. Look for a “sale pending” rider attached to the sign. You might also see “under contract” or “contract pending.” These riders all mean that the seller has received an offer that’s pending on the house.
Lenders almost always ask buyers to pay for appraisals to protect their position when and if they ultimately end up financing the home. Sometimes appraisals come in at less than the sales price.
Buyers have a few options when this occurs. The buyer can pay the difference in cash or order another appraisal from a new professional. He can supply the underwriter with comparable sales that support the sales price. He may also give the seller a second mortgage for the difference.
A buyer might ask the seller to reduce the price so it’s more in line with the appraisal. But the pending sale will fall apart if the parties can’t agree to work out one of these solutions.
Always ask a real estate agent to provide you with comparable sales before you write a purchase contract. This will allow you to keep your offer in line with recent sales. You might also want to hire a strong negotiator to get your offer accepted at this lower price.
No more contingencies = sale pending
A deal that’s truly pending is one in which the buyers have removed all contingencies. The buyer is “locked in” to buying the home.
The final step is to move toward closing, which can take anywhere from a few days to a few weeks.
Most agents won’t label a home “pending” until this time, when the sale is close to a done deal. In this case, the sale is pending the final closing.
Can a buyer walk away after removing all contingencies? Absolutely, but it’s less likely. From time to time, a buyer has an emergency and needs to exit the contract. But most likely, the buyer risks losing the earnest money deposit.
Various Types of Pending Statuses
At times you might see different types of pending statuses. Bellow is our real estate pending vocabulary list and their specific meanings.
- Pending-taking backups: the seller is still accepting backup offers in case the first one falls through
- Pending-release/continuing to show: contingencies have been met but there is a kick-out clause still in effect for one of the parties, and the buyer will still show and accept offers
- Pending-do not show: the seller is no longer showing their house, or accepting other bids
- Pending-over 4 months: anything pending listing that has been ongoing for 4 months or longer, and will usually have a tentative closing date
Although a lot of these different pending meanings are similar in ways, different MLS listings will use different phrases—it’s good to familiarize yourself with a broad understanding. The main thing to take away is if you see release, taking backup offers, or continuing to show, then you may still have a chance at purchasing the house.
What does it mean when a home is pending?
For a home to be listed as pending, that means the home is under contract and there are no longer any contingencies on the sale. Once a property is listed as pending, the home is much closer to actually being sold than when it’s under contract.
Can you put an offer on a house that is pending?
In most cases, the answer is no.* Typically when a buyer submits an offer letter to buy the home, there is a clause that says the homeowner can’t cancel the sale if another offer comes in – even if it’s a better one.
While this might feel annoying, it’s something you’ll appreciate once you do get your dream house – you don’t want to sign the paperwork, get the loan, and turn in the keys for your current place, and have to worry the whole time that someone can still outbid you.
*Can you outbid a pending offer? Technically, you can still submit an offer and be a potential backup to the accepted offer. The buyer can’t consider your offer unless the current sale falls through, though, so agents will usually discourage you from wasting your time and emotions on trying this.
For further reading
- Can the Zillow Zestimate be Trusted? What Home Sellers Need to Know
- Should I Buy a House in 2022? The Answer, Surprisingly, Is Yes.
- Will the Housing Market Crash in 2022? Don’t Count On It – Here’s Why
Putting In A Backup Offer
There are pros and cons to putting in a backup offer. Let’s briefly run through them.
On the plus side for backup offers, it helps to remember the adage “nothing ventured, nothing gained.” It’s true that you most likely still won’t get the house, but if you don’t put in a backup offer, you also damage chances of getting it should the other offer fall through because another potential buyer may have put an offer in.
The main downside to putting in backup offers is that you’re taking time and effort to put together a proposal to buy a home that you have a slim chance of getting. Having your heart set on this one shouldn’t stop you from finding other houses that are actually on the market and could be right for you. We’ll also get into this a little bit more below, but there’s always a reason a contract falls through, and it’s important to know what that is so that you can avoid any pitfalls.
If you do put in a backup offer, you obviously want to make it stand out. One way to do that is to offer more than the seller’s asking price.
What’s The Difference Between Contingent And Pending Offers?
One of the things you’ll occasionally come across is that a property is listed as contingent. There is a difference between contingent and pending offers in real estate.
A property that’s listed as contingent means that the seller has accepted the offer but is choosing to keep the property listed in case certain conditions aren’t met. For instance, the home inspection or appraisal could cause the sale to fall through.
Whereas if the property is listed as pending, that means those contingencies have already been met, and the buyer is preparing to close on the property. So, you have a better chance of purchasing a property that’s listed as contingent than a pending home sale.
Other Real Estate Listing Status Meanings
Hopefully, by now we’ve answered your question of what does pending mean in a real estate listing. However, there are quite a few other statuses that you might want to know. Below is a list of some common ones you might read along the way.
- Active With Contract (AWC): This is beneficial for the seller. It means there is an accepted offer from a buyer. However, a seller is still accepting backup offers just in case the buyer backs out for any reason. This is a term you see often with short sales and is specified in the contract as allowable.
- Under Contract (UC): The contract has been made and signed, things are moving forward but not quite closed on.
- Back On Market (BOM): A house with a pending status that fell through. This means that for whatever reason, the home fell out of escrow and is fully active.
- Expired: When a seller contacts a real estate agent to sell their house, a contract is signed between the agent and seller giving the agent a certain amount of time to list the property. After that time expires, usually due to the agent not being able to sell the house, then it will be listed as such.
- Temporarily Off The Market (TOM): For whatever reason, the owner has taken the property off the market. Sometimes this is for repairs to be made. Definitely still inquire about these properties.
- Withdrawn: A withdrawn status usually means that a seller changed their mind and want to keep their listed house, or they weren’t able to get the money they needed. This is another listing that doesn’t hurt to inquire about.
9. Use that quiet time to get your home ready for the final walkthrough
Communications may be calm and quiet for a stretch, but you can use the downtime to clean up your house for the approaching final walkthrough.
Things start moving fast once the title is cleared for transfer. That’s pretty much the last step before the sale closes, so once the title has cleared, your buyer will want to schedule a final walkthrough to ensure the house is as it should be before the sale closes.
If your buyer has a great agent, they’ll advise them to wait until you’ve completely moved out of the house before scheduling the final walkthrough. This is the only way they can make sure that you haven’t taken anything you’ve promised to leave, like that dining room chandelier or the kitchen appliances.
They’ll also want to ensure that you’ve left the house in broom clean condition so that it’s move-in ready, not cluttered with junk you’ve left behind.
How does the real estate transaction process actually work?
It’s hard to conceptualize what these different sales terms mean if you aren’t familiar with what it takes to buy a home. This brief overview will give you an idea of how the process works and what order each of these statuses come into play.
Step 1: The buyer tours homes and finds one they want to make an offer on.
Step 2: The buyer makes a formal offer in writing, and they may agree to contingencies put in place by the seller or set their own.
Step 3: The seller considers the offer.
Step 4: Negotiations may ensue at this point.
Step 5: The seller accepts the offer (if all goes well).
Step 6: The seller accepts the offer.
Step 7: The seller and buyer sign a contract (that will be contingent on certain factors such as inspection results) — the home is now under contract.
Step 8: The buyer’s earnest money will be deposited into an escrow account.
Step 9: The buyer applies for a mortgage.
Step 10: The home will go through an inspection and appraisal — you are now at the sale pending stage.
Step 11: The deal will close.
Buy your next home without rushing to sell first Orchard takes care of selling your home once you’re all moved out.
6. …But know that you aren’t always required to negotiate
Brand new landscaping, resurfacing the pool, a carpet credit because they don’t like the current color — buyers come up with all sorts of crazy requests during the negotiation period.
However, while you are legally obligated to sell them the house at the completion of the sale pending period, you are not required to transform it into their dream home by fulfilling their every request.
For the requests that are purely cosmetic or just personal preference, you can simply say no without any negotiation. Depending on your state, you may even be able to say no to some legitimate repair requests. Every state has their own standard in terms of what qualifies as a repair that would require negotiation after the inspection report comes in.
“In New York state, a seller is only required to renegotiate the contract terms if the inspection finds one major structural defect with a repair cost totaling at least $1,500. However, in other parts of the country, pretty much anything can be asked for or renegotiated,” explains Marchesiello.
Knowing that a flat “no” is an option, it’s tempting for some sellers to take a hardline against any and all buyer repair requests, but not so fast. There are some repair requests that buyers are likely to take a stand on and could be required to make the house safe and livable, including:
- Water damage
- Structural issues
- Old or damaged roofing
- Damaged or old electrical system
- Plumbing problems
- Insect and pest infestation
- Issues with the HVAC system
The Bottom Line: Pending Purchases Aren’t Final
When you find a home you love only to see it’s listed as pending, this can be very disappointing. But a pending sale is not the same thing as a final sale. The pending offer could still fall through, and there’s a chance you could buy that home.
If you’re just starting the home buying process, the best thing you can do is to start the mortgage process today. Get your financial affairs in order and get preapproved for a mortgage. That way, when you reach the pending process on your dream home, you’ll ensure the process goes smoothly.
The Bottom Line: An Under Contract Status Isnt Always A Done Deal
If you found the perfect home, but it’s under contract, it’s important to keep your head up! Although most homes that are pending sale do close, a variety of things can happen to change that. An appraisal might come in low and be a sticking point in negotiations. Maybe a buyer can’t sell their current home. While it’s important to understand why a home has fallen out of contract, the previous buyer’s loss could be your opportunity.