What Does Pending Mean in Real Estate?
It can be disappointing to find out that your dream home is no longer for sale.
We’ll discuss what pending in real estate means and why that doesn’t mean that the sale has been completed.
What does it mean when a house is pending?
A seller who has accepted an offer from a buyer is said to have a pending sale. Comparable to a contingent sale, where the seller accepts an offer that has conditions to be resolved before the sale is finalized. If a property is in pending status, this usually means that the contingencies have been met, the contract has been signed, and both parties are prepared to move on to the final stages of the escrow process.
The house is not sold, even though the sale has almost been completed. Motivated buyers who are interested in real estate listings with a “pending” status can bid on the house. It’s unlikely the seller will accept your offer unless the other sale falls through.
Why are homes listed as Pending?
A listing agent adds a property to the Multiple Listing Service (MLS) once it is listed for sale. This database contains all properties that are currently available in a particular area. A house that is on the market has an “active status”. The status of a house can change as it progresses through the home buying process. It could be “contingent,” pending,” “canceled,” or “sold.”
If a property has a “pending” status, it usually means that the conditional property has been successfully resolved. The “contingent listing” status will change to “pending,” indicating that the sale is moving towards closing.
The homes listed as “pending”, are in contract, but not yet sold. The sale can fall through if the buyer’s financing is denied, for instance.
Why might a sale fall through?
There are many reasons why a sale may not go through.
- Financing: If the buyer is unable to secure financing, then they cannot proceed with the sale.
- Home inspection: If the inspection reveals structural issues that were not anticipated, both the buyer and the seller may renegotiate. The sale could fall through if they cannot agree on a price.
- Short sale: A homeowner can list their property for sale to avoid foreclosure. The lender decides who is allowed to buy the house. If the buyer does not meet the lender’s requirements, the seller must relist the home.
- Buyer’s regret: In fast-paced markets, it’s common for buyers to rush into making an offer only to regret their decision later. A buyer’s priorities may change due to an unexpected event, crisis or other life-changing situation.
- Low appraisal: The buyer might need to pay more for the house upfront to close the appraisal gap if the home assessment is lower than the price.
- Title issues: A home with competing ownership claims, or creditor liens may cause financial and legal problems. Buyers should order a title search before purchasing and get title insurance.
Ask why an offer that was pending fell through. You could benefit if the buyer was unable to secure financing, or moved to another state.
The seller may be motivated to reduce the price of the home if the appraisal was low or he needs to sell it for less to pay off his mortgage.
It can be an indication that your dream home could turn into a financial nightmare if the deal falls through due to major structural problems in the house.
What is the difference between contingent and pending offers?
You will likely see properties marked as contingent. There is a distinction between contingent and pending when it comes to real estate.
A property that is listed as contingent means the seller has accepted an offer contingent on certain conditions. The sale will only be finalized if those conditions are met. If the seller wants to keep the property on the market in case conditions are not met and the sale fails, they can do so.
The home inspection contingency, for example, may be activated if the seller refuses to make repairs that were identified in the inspection report. In a different scenario, if the property’s appraisal was lower than expected, the buyer might need to use the contingency. Both scenarios can lead to a failed sale.
If a property has a pending status, it means that all contingencies are met and the buyer is getting ready to close the deal.
A property that is listed as contingent has a higher chance of being purchased by motivated buyers than a home in pending sale.
Can you make an offer on a house that is already sold?
It doesn’t harm to ask the real-estate agent of the seller if you are able to submit a backup bid, but in most cases, you won’t be able submit an offer if a home has been pending. This is because many buyer’s contracts do not include a clause for getting out of the deal. Therefore, most sellers are unable to continue showing the house or accepting offers.
You can hold your position as a potential buyer for a home if the seller accepts a back-up offer. The seller will sign a contract and you can buy the home if the first deal fails. In bidding wars or pending sales, backup offers are useful, but don’t guarantee that you will be able to purchase the house.
It’s unlikely that the original buyer will not close the deal if they were serious enough to sign a contract and submit an offer. If you want to make sure you don’t miss out on the chance to buy the house, you can put in an offer.
How to make an offer on a pending house
Here are the three steps to making an offer for a real estate transaction that is pending:
1. Contact the listing agent
Ask your agent to first find out if the seller accepts offers while the transaction is still pending. Also, check if the contract of sale contains a clause that allows the buyer to cancel the deal.
2. Prepare your offer
You can make an offer once the listing agent confirms that the seller will accept offers. If the first buyer closes the deal, you won’t likely hear back. The listing agent may contact you if the deal fails.
3. Prepare your financing
Before making an offer on any pending home, it’s important that you get preliminary approval. The initial approval lets the seller know that you are a serious buyer with a conditional mortgage. Include an approval letter in your offer to help differentiate it from the other offers that are received by the seller.
You can take it a step further and obtain a Verified Acceptance Letter (VAL)1. This can serve as a signal to sellers that you have had your finances and credit thoroughly vetted. A buyer’s offer that has been subjected to more thorough financial analysis can be appealing to a seller whose home sale just fell through.
Pending real estate FAQs
You can learn more about a pending status by reading the questions and answers below.
Can a real estate agent show a pending home?
The pending status indicates that the sale of a house is not complete. In theory, this means you can still view the property. If the seller has signed a contract that does not include a clause for a kick out, then they will be unable to accept or show offers. Agents discourage buyers from visiting a pending home because it is a waste.
How long does it take to sell a house?
The buyer and seller will determine how long the home will be listed as “pending”. There are no rules that apply to everyone. Homes are typically listed as pending between 30 and 60 days. Cash buyers may be able to close the sale much faster.
When should I make an offer on my pending house?
The earlier you submit your offer, the better. The earlier in the process a buyer or a seller will be most likely to use a contingency clause to cancel the contract, the more likely it is that the offer will fail.
The Bottom Line
A pending sale doesn’t mean that the sale is final. You have a small chance that the pending sale could fall through and you can buy the house.
Start the approval process now if you are just beginning your home-buying journey. Get your finances in order, and get a mortgage that suits your budget. When your dream house is “pending,” then you will be prepared.
