Pending means that a buyer has made an offer on a house and signed a home-purchase contract, and that the buyer and seller have resolved their contingencies.
Occasionally, pending means the seller has merely accepted an offer. But, in practice, the stricter definition reigns.
Either way, if you find a house marked as pending that you fall in love with during your search for a home, you're not out of luck. The buyer ahead of you in line hasn't officially closed the deal.
However, significant hurdles must be overcome if you want to pursue and land the property.
What is a contingency?
What potential issues remain when a house is pending?
Most issues involving a pending house are out of your control as a potential new buyer. Your realtor, if you already have one, may be able to talk to the seller's agent to keep tabs on the status and actions of the first potential buyer and the seller.
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If the seller and first potential buyer can't close, you'll have an opening. Common issues buyers and sellers need to work out while a house is pending include:
A typical scenario: The buyer's financing falls through, perhaps because they need to redirect their money because of an unforeseen event, or they may have lost a job and steady income.
A typical scenario: A problem arises with the property itself, like its boundaries may be in dispute.
Or there's a lien on the property. That would be a legal claim that the current owners owe money to another party. Some examples of potential liens: unpaid property taxes, unpaid child support, or a stiffed contractor.
A typical scenario: Issues found during a home inspection take a long time to fix, drawing out the sale process. Negotiations become contentious.
Selling own property issues
A typical scenario: A buyer can't sell their current home and halts the sale.
Also, a seller may withdraw if they can't buy a new house.
A typical scenario: A buyer could just get cold feet and back out. It happens.
How often do home-purchase contracts fall through?
Six percent of overall home-purchase contracts fell through in November 2020, according to that month's Realtors Confidence Index Survey. The contracts within that 6% were terminated due to:
A typical scenario: An independent appraiser values the property below the agreed-upon cost of the house, so the buyer backs out of the contract.
A typical scenario: A buyer can't secure a home mortgage loan before a deadline and the deal falls apart.
The Realtors Confidence Index Survey didn't define these issues, but know they're different from the rest of the items in the survey.
Home Inspection Issues
A typical scenario: The home inspection reveals a deal-breaking issue, such as a failing roof or a structural problem with the home's foundation.
A typical scenario: A lien on the property — a legal claim against the current owners — means the new owner would potentially be responsible for unpaid debts.
Other contingency issues
The Realtors Confidence Index Survey also didn't define these issues, except that they're not the same as the ones elsewhere in the survey.
A typical scenario: The buyer loses their job and no longer has the income to pay for a property.
The survey isn't clear at what point in the home-sale process these contracts fell through, but it does provide a guideline for understanding whether a house that's pending might become available.
It'll likely happen less than six out of 100 times.
Can I put in an offer on a pending sale?
Yes, but not always. Have your realtor reach out to the seller's realtor to see where things stand and if they're accepting offers.
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Sometimes clues can be found within a listing online. Look for a few kinds of pending statuses that may help you decide whether making an offer is a good idea.
What are the common pending statuses?
Pending - taking backups
A backup offer means a seller will proactively take a secondary offer on the house, just in case the first offer falls through.
You should find out more information about why the seller's taking backup offers before reading too much into the situation.
It might be that the seller doesn't feel secure in the first potential buyer. Or, it might mean the seller's simply looking for a just-in-case offer to back up a strong-on-paper buyer. The seller could even be using you to prod the initial buyer.
Pending - short sale
When a house goes on sale for less than the amount owed on the seller's mortgage, it's called a short sale. Typically, the seller's financially distressed and facing foreclosure, and the transaction needs to be approved by the seller's lender.
Because the approval process remains beyond the control of the buyer and seller, it's a less-predictable, potentially extended situation. However, this situation can turn in your favor as a potential backup buyer.
Pending - more than 4 months
Extended delays can trigger this status. Often construction issues, extended processing time, or ongoing negotiations are involved. Sometimes it's just a clerical error and the listing hasn't been updated.
What's the best way to buy pending real estate?
The odds are against a pending property becoming available, as recent data show just six out of 100 home-purchase contracts don't close.
Still, if you've fallen in love with a 2,600-square-foot beauty of a house that's pending — and you really should be in love if you want to pursue it — you can make a backup offer.
A backup offer usually involves following the process a primary offer goes through, but a backup only becomes the primary offer if the initial offer falls through.
The pros and cons of a backup offer
Tips for making a backup offer
Try these three steps to put your best offer forward:
1. Get in strong financial shape
If the previous buyer falls through due to financing issues, you'll be in a better position to a seller who doesn't want the same issue to torpedo the sale.
2. Sell your existing property (if you have one)
If the previous buyer falls through due to this issue, you could be in position for a seller who doesn't want the same issue to affect the sale.
3. Open communications with the seller
You'll want to learn as much as you can about the property, via your realtor.
Be tenacious to show you're serious. Consider a personal note to help persuade the seller you'd be the best party to buy the house.
Can I wait to see if the sale falls through instead of making a backup offer?
Yes. If you do, you may avoid some of the pitfalls listed above and maintain the flexibility of your house search.
Also, with the right agent, you can keep on top of the status of the pending house and pounce should the house go back on the market. Provided, of course, there's no other backup offer.
Frequently asked questions
What issues need to be resolved when a house is pending?
It varies by situation. Title and financing issues are among the common issues to be resolved when a house is pending.
Can I put in an offer on a pending sale?
Yes. You can make a backup offer, which becomes the primary offer if the initial offer falls through.
What are my chances of buying a home that's pending?
Small. The November 2020 Realtors Confidence Index Survey revealed just six out of 100 home-purchase contracts don't close.