What Does Pending Sale Mean?
Over the years, many buyers and sellers have asked me what does pending mean. It is not that unusual as many real estate terms are batted around with the assumption that all consumers should know them.
There are similar terms that real estate agents use that have the same or similar meanings, including under contract, under agreement, pending sale, and offer accepted. It’s no wonder there can be some uncertainty with the definition of pending.
Many homebuyers might have been hoping for a let-up in the real estate market going into 2021, but things have gone in the opposite direction.
With homes not staying on the market for long, home buyers have to be very quick to get the home of their dreams.
If you find a home that you really like, it can be annoying, to say the least, to see the listing change to sale pending.
But what does pending mean, and how will it affect your search for a new home?
If a listing changes to sale pending or offer pending, it means that the seller has accepted an offer from a buyer. There is an executed contract in place. If this has happened, you can’t simply offer a higher amount to the seller. It’s too late. The real estate transaction is waiting on the settlement at this point.
Let’s take a comprehensive look at what pending means on a house and all the things a buyer and seller need to know.
How Do Home Listings Go From On The Market to Pending?
You might be wondering how active listings become pending listings. When real estate listings go into the multiple listing service (MLS), they start as homes for sale.
Any prospective buyers who want to buy a home can peruse home listings at their leisure. Numerous real estate websites are fed all of the homes from the local MLS. Home buyers and home sellers can look at homes for sale at their leisure.
Of course, potential buyers do this in hopes of finding their dream home. Some home buyers will look at online listings daily in hopes of not missing a property that hits the market. Once an offer is accepted on a property, the listing agent will change the listing status in the multiple listing service.
Changing the listing status to pending in MLS will also change the status to pending in sites like Realtor.com and other popular real estate sites.
Status changes must be made in MLS when there is an accepted offer, and both parties execute a contract. Seller’s agents have a few options when changing the listing status. A listing agent could mark the property as active contingent or mark the home as pending.
The contingent status is quite common as most real estate transactions have common contingencies to get through, such as the home inspection contingency, appraisal contingency, and financing contingency.
Most experienced real estate agents expect a contingent offer unless the real estate market heavily favors home sellers. If bidding wars take place, there will be fewer contingent deals as buyers try to one-up one another.
So, when someone asks what contingent means, you will know it is when things need to be completed before the transaction goes through. A contingent listing will move to the pending stage when all contingencies are removed.
Understanding the Differences Between Contingent vs. Pending
You might notice some listings that are marked as contingent, but what exactly does that mean? How does pending status differ from contingent status? As previously mentioned, contingencies are clauses added to the buyer’s offer that allow them to back out of the offer they have made with their earnest money returned.
Buyers can request contingencies, and if the seller accepts this as part of the offer, it is a contingent sale. The seller still can’t accept another offer in this situation, though the buyer can walk away from the deal if the contingency terms aren’t met.
Contingencies are more commonly used in a buyer’s market where sellers are more likely to agree to keep the buyer happy. Though in a seller’s market, buyers may have to give up these safeguards that protect their earnest money.
When sellers are in a position of power with multiple bids to choose from, they might only consider offers with no contingencies attached to them.
When comparing contingent vs. pending sales, both statuses mean that the seller has accepted an offer. A contingent sale will become a pending sale once the contingencies have been fulfilled. In some places, the status is referred to as active contingent.
If the terms of the contingency are not met, the sale can be canceled, and the buyer will have their earnest money deposit returned to them. This deposit sometimes referred to as a good faith deposit, can be between 1% and 5% of the offer value.
Sometimes a listing agent will move a home into pending status before all the contingencies have been satisfied.
Why Change a Listing Status to Pending With Open Contingencies
You may be wondering why a real estate agent would change a home in the multiple listing service to pending if there are open-ended contingencies left to satisfy? In many places, when you mark a house as contingent, the days on the market continue to increase as if the home was still for sale.
If for some reason, the current buyer backed out of the contract, when put back on the market, there would be inflated days on the market. It would seem as if the home was on the market for a long time which is not good for sellers. When you change a home to pending, the days on the market do not continue to grow.
So, it boils down to the type of contingency left to satisfy. For example, if you are reasonably certain the mortgage lender will be granting financing approval, it would be a good idea to change the status to pending. By doing so, the days on the market will be frozen.
If the buyer gets cold feet and backs out at the last minute, the market time will not be unnecessarily inflated. Marking pending is the best way when you are confident the purchase agreement will be satisfied.
Can You Still Make an Offer on a Sale Pending Listing?
Most of the time, making an offer when the sale has an executed contract isn’t worth the trouble, especially when you really need to find a place to live. Even if you want to offer more for the home, the seller can’t normally accept. An under-contract sale means the buyer’s due diligence has been done, and the final step is waiting for the closing date to arrive.
Unfortunately, the current contract must be honored, and the seller cannot accept a better offer. As a buyer, you may not like this situation, but it will benefit you when you have a real estate deal in place yourself.
You wouldn’t want to have your offer accepted, only to continually have to worry about someone coming along with a higher offer.
It is possible to submit an offer on a pending sale, but it will only be treated as a backup offer. This means that the seller will not consider your offer unless the sale falls through with the first buyer. For this reason, making an offer on an unsettled home sale often isn’t advised if you’re under a time crunch.When you have lost out on a house you really want and don't have a 2nd choice, you may want to consider writing a backup offer.Click To Tweet
What is a Backup Offer?
You may be wondering what is a backup offer? Back-up offers are made on properties in the hopes the original buyer does not proceed with the transaction. The home buying process does not always go smoothly.
There are several reasons why a home sale could fall through. A home inspector finding major issues to a home loan being rejected are all potential reasons; a home seller could see their home back on the market.
A backup offer will allow you to be in a position to move forward with the sale should this happen.
How Often Do Pending Sales Fall Through?
Under contract sales do sometimes fail, but it doesn’t happen too often. As little as 4% of pending sales fail to close, with the home returning to the market.
Under contract sales can fall apart for several reasons, including the following:
Most homebuyers need a mortgage, and even if they are preapproved for a loan, things can sometimes go wrong. If the buyer’s financial situation changes between preapproval and closing, they may not get final approval for the loan.
Now and then, a buyer’s credit score could change for the worse, creating a mortgage rejection.
Particularly in competitive real estate markets, bidding can drive prices up. But when the home is appraised, the market value might be lower than the offer price. This can prevent the lender from loaning the full amount necessary to continue with the purchase.
When the home appraisal comes in low, and the buyer does not have additional down payment funds, the sale could fall through. The mortgage contingency would allow for the buyer to withdraw from the sale.
In hot real estate markets, it is not uncommon for a top real estate agent to ask for an appraisal contingency to be removed when the sale price is way over asking.
Great seller’s agents do what’s necessary to protect their client’s interests.
While it is unusual for a home inspection to find nothing wrong whatsoever, more major issues could halt a buyer’s purchase. A buyer may wish to negotiate after the inspection. Sometimes a reduction in the purchase price is asked for and rejected.
Other times a home buyer may ask for a seller’s concession or closing cost credit. Sometimes different terms cannot be agreed upon by the parties. The original contract will fall apart, opening the door for new buyers.
It is possible the title search could reveal unexpected problems that could impact getting to the closing table in a timely fashion. Having a clear title is a type of contingency found in all real estate contracts.
If the title issue cannot be fixed in an agreed-upon time frame, the sale could fall through.
Having Second Thoughts
Buying a house is a major life decision, especially for first-time home buyers. Sometimes a buyer will change their mind. Home buying is an emotional experience, and occasionally buyers can have a change of heart. Real Estate agents call this a case of buyer’s remorse.
Buyer’s remorse can become even more prevalent when a purchaser has been involved in a bidding war and realizes they may have paid too much.
Can Real Estate Agents Still Show Pending Homes?
While this is possible, as the home is still on the market, there isn’t much point. Since the sale is unlikely to fall through, Realtors are unlikely to bother the seller to show a home that has already got a buyer. In any case, the seller is unlikely to consent to have their home shown to another potential buyer.
How Long Will a Home Be Listed as Pending?
If you have set your sights on a home that is now under contract, how long before you’ll know for sure that the home is sold? It can take anywhere from about a week to a couple of months for a home to move to the closing.
The average time to close is between 45 to 60 days. All the stages in the home purchase need to be completed in this time frame, including title checks, home inspections, and mortgage approvals.
How Common is it for Sales to be Pending?
Many different factors increase or decrease the likelihood of an under agreement home. How active the real estate market is, affects the chances of sales pending, and things like the time of year also have an influence.
If a home is priced properly, it will eventually move to pending status. Sometimes a lower price is necessary for that to happen. When a significant amount of time goes by in the selling process, owners eventually realize their homes won’t sell without a price adjustment.
6 Common Questions About Pending Home Sales
1. What does active under contract vs. pending mean?
In both circumstances, a contract has been submitted by a buyer and accepted by a seller. The seller has requested for showings on the home to continue until all of the buyer’s contingencies in the contract have been lifted with the active under contract status.
There may be some fear on either the seller’s or listing agent’s part whereby they think there is elevated risk the sale will not make it to closing.
2. What does active kick out vs. active contingent mean?
An active kick-out clause is when a buyer has a house under contract with a seller, but there is a provision that states the buyer only needs to purchase if they sell the home they currently own.
The seller can continue to market the home, and if another buyer comes along with an acceptable offer, the first buyer would either need to proceed by removing their home sale contingency or pass on the house and get their money back.
Active contingent means that there are contingencies that have not been satisfied, and the home is still being marketed in case the sale falls through.
3. Can you buy a home that is pending?
In order to be able to buy a house that is pending, the sale would need to fall through first. If you love a particular property, it might make sense to submit a backup offer in hopes the sale falls apart. It is certainly possible for under contract sales to come back on the market.
Houses come back on the market after being under agreement all the time.
4. What is the difference between under contract and pending?
There is no difference. They mean the same thing. There is an executed contract in place between a buyer and seller.
5. Can you outbid a pending offer?
No, you cannot. There is a binding contract in place. Additional offers can be made but not accepted by a seller.
6. Does under contract mean it’s sold?
Technically no. A home does not become sold until papers pass at a closing and a new deed is recorded at the local registry of deeds.
By now, you should have a complete understanding of what the pending status means. Whether you buy a house or sell one, it is essential to know the different listing statuses. Hopefully, you now have a better handle on the ins and outs of what a pending transaction means in real estate.
About the author: The above Real Estate information on what does pending mean in real estate was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at firstname.lastname@example.org or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 34+ years.
Are you thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.