Updated July 3rd, 2019
The hunt for your dream home can be an adventure. While searching online listings on the MLS or on Zillow or Trulia, you may have come across the terms "contingent" and "pending" on a listing. What does this mean? Do you still have time to put an offer on the home?
A top real estate agent can walk you through the home buying process, ensuring you understand what confusing terms like contingent and pending mean, and when it makes sense to put in an offer.
What does contingent mean in real estate?
In real estate, you'll often see the word "contingent" attached to a condition. Contingent means that an offer has been accepted by the seller, but the listing is still considered active until specific requirements have been met, such as the buyer sells their house. Once specific requirements are met (as defined by one or both parties), the listing status will progress from an active listing to pending status, until it's final marked as sold.
What does pending mean in real estate?
If you see the term "pending," hold off on putting in an offer. Pending means that the offer has been accepted and both parties are moving forward with the sale. Pending is used to describe the period from the time the buyer and seller resolve the contingencies until the close of the sale.
Common Real Estate Contingencies
There are several types of contingencies in real estate. More common ones are:
Home Inspection Contingencies
Many lenders put an inspection contingency on offers to make sure the home is worth the loan amount. An inspection contingency means both parties cannot continue to the buying process until an inspection of the home and property and is completed to ensure the value is there. Investigations may turn up insect infestations, foundation and structural issues, or even issues with mold or asbestos.
If you are using a mortgage to purchase a home, most lenders require the buyer to have an appraisal done to the property ensuring the house is worth at least the price of the accepted offer. The appraiser will look for any damage, add-ons, or other high-value features that will add or detract from the home's previous value. If the appraisal value of the home is lower than the offer, then you could run into issues.
If you take out a loan to purchase your home, you may wish to include a financing contingency. A financing contingency provides a way for you to back out of the sale of the house if your loan falls through. Mortgage lenders can be difficult to work with, and if something major has changed since you got pre-approved, you may not be able to purchase a new home right away.
Home Sale Contingencies
As mentioned previously, a home sale contingency is an agreement between the buyer and seller that the seller will take the home off the market for a set amount of days in which the buyer hopes to sell their home. This contingency is one of the riskier ones and is therefore used sparingly, as sellers usually pass up offers with a home sale contingency for one that does not have it.
Common Pending Types in Real Estate
There are a few different kinds of pending sales in real estate. The more common ones are:
Pending - Short Sale
This means the home is under contract and is awaiting approval from the bank. A short sale is a measure to avoid foreclosure, but the bank (or other lender) must approve each portion of the sale, which slows down the typical 30-45 day close. Short sales have a reputation of taking especially long during the approval process, and many deals fall through at this stage because of the buyer finding a listing with a shorter timeline to closing.
Pending - Taking Backups
When you see this status, the seller is concerned that the deal will fall through for some reason, either because of financing problems or other issues. You may place an offer on the property, and the seller will go to your offer (or other backup offers) if the current agreement doesn't work out. However, they can’t just toss out the offer and accept the highest backup offer — it has to fall through on its own.
Can you make an offer on an active contingent listing?
Technically, you can make an offer all the way until the status states "sold." The best time to make an offer on a home is when there are no contingencies or pending sales. The second best time to make an offer is when the status specifically states that they are taking backup offers. If the home status states "pending" or a non-backup contingency, it's best to shelve that property and keep an eye on it as you search for another property to put an offer on.
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FAQs About Contingent vs Pending Listings
Can you put an offer on a house that is pending?
When a home has “sales pending,” on its listing, that means there is an active purchase contract the seller and buyer agreed upon. While a new offer won’t bump the first buyer, you can always submit a backup offer, which the seller can look at if the first contract falls through for any reason. However, the seller is not obligated to accept your offer if their initial contract falls through. Some real estate agents will advise you not to submit a backup offer, as it removes your leverage if the home goes back on the market.
Can you put an offer on a house that is contingent?
If you come across a property marked “contingent,” that means it’s already under contract between the buyer and seller, but is contingent upon some external factor included in the sales agreement, like financing, home inspection, home sale, or appraisal. Your buyer’s agent can research what the offer is contingent upon and help you decide if you’d like to put in a backup offer in case the contingency can’t be met.
Can a realtor show a house that is pending?
If a house is “pending,” that means there’s an active purchase agreement on the house. In most cases, a realtor can still show you the house and you can make a backup offer if you so choose. However, your offer cannot be accepted unless the first offer falls through.