Understanding 'Pending' in Real Estate: Is It Contingent or Not?

Real estate transactions are intricate processes that require clear communication and a good understanding of various terminologies during the buying and selling process. One such term is ‘pending’, which can be commonly encountered and often misunderstood. This article aims to demystify the concept of pending status in real estate and explore the differences between contingent and non-contingent pending offers. Understanding these nuances is crucial for buyers and sellers to navigate the real estate market effectively.

1. What Does Pending Mean in Real Estate?

A pending offer in real estate signifies that an offer to purchase a property has been accepted by the seller but the deal is not yet finalized. Essentially, the term refers to the stage of a real estate contract between the buyer and seller where the terms have been agreed upon, and both parties are awaiting the completion of additional requirements such as financing or inspections.

Pending offers are quite common, especially when buyers and sellers have reached an agreement on the terms but are waiting for contingencies to be satisfied. These contingencies could include waiting for mortgage approval, selling a current property, or completing necessary repairs. In other instances, a property may be marked as pending if the first offer has been accepted but the process of closing the deal has not yet initiated.

Pending offers can be either contingent or non-contingent. A contingent offer means the buyer’s offer is tied to another condition being fulfilled, such as selling their current home or obtaining financing. Conversely, a non-contingent offer is unconditional and stronger, with no other conditions attached.

2. What is Contingent in Real Estate?

Once a property is under contract but not yet finalized, it remains contingent. Contingencies are stipulations that make the purchase conditional, protecting the buyer from unforeseen issues. For example, the buyer may want to ensure they can secure a loan or that necessary repairs are completed before they proceed with the purchase.

Contingencies can be negotiable. Sellers might be willing to remove certain contingencies, such as a financing stipulation, if the buyer agrees to pay in full or if the repairs are made. Conversely, buyers might agree to waive repairs if the seller makes necessary improvements, making the offer more appealing.

3. Differences Between Contingent and Pending Offers

Contingent offers are subject to conditions and are less firm compared to pending offers. Contingent offers rely on the buyer obtaining financing or the seller completing necessary inspections. If these conditions aren’t met, the buyer usually has the right to back out of the contract without losing their earnest money deposit.

Pending offers are more definitive. Once accepted and pending, the contract details all terms and conditions, and both parties are awaiting the finalization of the transaction. A pending offer may still have contingencies, but these are usually detailed in the contract and more strictly enforced.

4. Can You Put an Offer on a House That Is Pending?

When searching for a home, it’s frustrating to find your dream property listed as pending. However, it is indeed possible to place an offer on a pending property. Whether the seller entertains a competing offer depends on various factors. Here are a few key points to consider:

Commitment Level of the Original Buyer: While sellers can consider multiple offers, their commitment to the original buyer is crucial. Squeezing in a competing offer amidst a pending deal requires careful research and positioning. Negotiability and Competitiveness: Understanding the strength of your offer and the negotiations with the initial buyer will determine the likelihood of acceptance. Your offer must be compelling in light of any existing offers. Ethics and Respect: It’s important to communicate your intentions professionally and respectfully. Transparency about your efforts and respect for the seller's commitment can help.

The best approach is pragmatically seeking new properties while knowing a pending property’s status can create room for negotiation. Always work with experienced real estate professionals to navigate these scenarios effectively.

5. How Selling Works When Under These Contracts

For sellers, pending status indicates the path to closing a sale. Once a property is listed as contingent, it means the sale is subject to the buyer obtaining financing, passing inspections, or meeting other contingencies. Upon meeting all conditions, the sale becomes pending.

A pending sale means all contingencies are met, and the documentation is in process, awaiting finalization. The seller and buyer are now waiting for the closing process to occur. Contacting an experienced real estate agent is advisable to streamline the process and ensure a smooth transition.

Conclusion: In the complex world of real estate transactions, understanding terms like pending and contingent is essential. While it’s possible to put an offer on a pending property, doing so requires thorough research and respect for the original buyer's process.