On your home search, you may come across properties with pending vs contigent real estate sale status that have left you wondering whether you can make an offer on these homes.
These statuses indicate that a home sale is imminent, yet could still fall through.
What is Pending?
Pending homes are further along in the transaction process than contingent or under contract ones, as their buyers are typically applying for financing, conducting an inspection/appraisal and transferring earnest money into escrow – as well as possibly needing approval from homeowners associations, condominium boards or co-ops in some instances if purchasing condo units.
No matter how quickly a sale becomes pending, there is always the potential that its original deal might fall through for various reasons. Therefore, it’s vitally important that you work with an agent who understands this process well so as to assist in making the best decisions possible in your situation. However, listings with “Pending: Accepting Backup Offers” usually mean that sellers will accept backup offers should the first sale fail, providing another opportunity for home buyers searching for specific types of properties.
What is Contingent?
Home listings that indicate they are contingent for sale usually indicate this fact by including specific contingencies such as home inspection or mortgage/finance approval as contingencies to reduce buyers’ risk in case their purchase falls through. Contingencies allow them to lower risk.
Sellers generally allow contingent buyers to submit backup offers on properties. However, if they believe the deal won’t close as planned they may choose not to accept backup offers on contingent properties. To know whether submitting one would be worthwhile it’s best to discuss with your real estate agent first.
If you’re in the market to purchase a home, it is wise to obtain approval for a mortgage first. This will help narrow down your choices and determine how much house can afford – giving you confidence to pursue house hunting with greater ease.
What is Under Contract?
The seller isn’t bound to sell their property to anyone until all conditions of the contract have been fulfilled and final signatures taken, which could take any number of forms such as financing or inspection issues. Even so, other home buyers could submit backup offers during contract negotiations; though these might not be accepted if the original buyer backs out.
Unfortunately, despite best efforts on both sides of a real estate transaction, some pending real estate deals fall through. According to Hal Hovey’s research in his market, 20% of pending sales eventually return back onto the market due to unfulfilled contingencies or other unforseen events. Yet for buyers who’ve already made their bid on homes they love contingently listed for sale, submitting another offer might still be worthwhile; just be sure you have sufficient finances available before proceeding – consult with a Total Mortgage loan expert first before proceeding further with an offer submission.
What is Active Under Contract?
When a home seller changes the listing status to “active under contract,” this indicates an offer has been accepted by a buyer and cannot proceed until all conditions of the purchase agreement have been fulfilled and removed by them.
If your dream home has the status “pending or contingent”, don’t let that deter you from making an offer. While most contingent sales agreements involve financing or an appraisal contingencies, lenders can deny loans for various reasons and appraisers may encounter problems when trying to evaluate it.
If you have a strong interest in a property and are willing to pay above its asking price, contact the seller’s agent and inquire as to whether backup offers can be accepted. A competent real estate agent will help determine if it’s worthwhile submitting such offers in case the initial deal falls through.