What Does ‘Pending’ Mean In Real Estate?

In the dynamic realm of real estate, the term "pending" carries significant weight, evoking a sense of anticipation and uncertainty for both buyers and sellers alike. Understanding the nuances behind this status is pivotal for anyone navigating the property market. When a property is marked as pending, it signifies a critical juncture in the transaction process.

Whether you're a prospective home buyer eager for insight or a seller navigating the intricacies of a pending sale, this article will explore the factors that contribute to the pending stage in property transactions.

Pending In Real Estate: A Definition

In real estate, a pending sale refers to a stage in a property transaction that comes after the contingent phase. This designation indicates that all stipulated conditions in the agreement between the buyer and seller have been met. At this point, both parties have successfully addressed any contingencies, and the process is advancing toward the closing stage. It's important to note that the actual closing, the finalization of the sale, has not yet occurred. During the pending phase, escrow serves as a neutral intermediary holding funds and overseeing the transaction process. It helps protect the interests of both the buyer and the seller, ensuring a secure and orderly real estate transaction.

Essentially, pending in real estate means the seller has accepted an offer, and certain conditions and contingencies have been met. At this point, the buyer and seller are moving toward closing on the sale.

What Is The Difference Between Pending And Contingent?

A contingent listing means that the seller has accepted an offer, but there are still a few things that need to happen before the sale is final. These things, called contingencies, could include the buyer getting a home inspection, securing a mortgage or selling their own house. It's like saying, "We have a deal, but let's make sure everything checks out first."

Now, once all those checks are done, the listing moves from contingent to pending. A pending listing means that all the conditions have been met, and the sale is in the final stages. The paperwork is getting sorted, and everyone is getting ready to officially close the deal. So, in simple terms, contingent is like having a deal with some conditions; pending means everything's good to go, and the sale is almost wrapped up.

Can You Make An Offer On A House That Is Pending?

Making an offer on a house that is already marked as pending is uncommon and often not accepted. A pending status means that the seller has accepted an offer, and the property is in the process of closing. During this phase, the seller is usually in a contractual agreement with the buyer who made the accepted offer.

A backup offer in real estate is a secondary purchase proposal submitted by a buyer for a property that is already under contract, typically marked as pending. Essentially, it acts as a standby option in case the primary offer encounters issues and falls through. While a property is in the pending status, the backup offer remains in contention, ready to step in should the initial deal fail to progress. However, it's important to understand that the acceptance of a backup offer is contingent on the primary offer collapsing, and the seller is bound by the terms of the primary accepted offer until it officially terminates.

Attempting to purchase a property listed as pending can be challenging, given that the primary offer is already in the advanced stages. To enhance the likelihood of success, buyers are advised to focus their efforts on active listings rather than those marked as pending. Additionally, keeping a close eye on new listings and acting swiftly can provide buyers with better opportunities, allowing them to make offers on homes that have not yet progressed far in the transaction process. By working closely with a real estate professional and staying proactive, buyers can increase their chances of securing a property in a competitive market.

How To Make An Offer On A Pending House

Navigating the intricacies of submitting an offer on a pending house requires a strategic approach, especially in a real estate market where properties move swiftly. Below we'll provide steps to help buyers navigate this challenging yet potentially rewarding aspect of the home-buying process.

• Work with a real estate agent: Start by consulting with a knowledgeable real estate agent. They can provide crucial insights into the status of the pending sale, the likelihood of the primary offer falling through, and whether the seller is open to considering backup offers.
• Write an offer: If the circumstances are favorable, prepare a compelling and competitive offer. Your offer should address the seller's needs and, if possible, improve upon the terms of the primary offer. This could include a higher purchase price, fewer contingencies or a flexible closing timeline.
• Arrange financing: Arranging financing is crucial when making an offer on a pending house because it demonstrates to the seller that you have the financial means to follow through with the purchase. Additionally, having mortgage preapproval enhances the competitiveness of your offer, assuring the seller of a smoother and more secure transaction. 

How Often And Why Would A Pending Sale Fall Through?

The frequency of pending home sales falling through can vary, but on average, a relatively small percentage of pending sales end up not closing. According to the National Association of REALTORS® (NAR®), the rate of home sale contracts that fell through was around 5% in 2023. This percentage can fluctuate based on factors such as market conditions, economic stability and regional variations. While most pending sales proceed to closing, unforeseen issues like financing challenges, home inspection concerns or changes in the buyer's circumstances can contribute to some transactions not reaching completion.

There are a few reasons why a buyer might cancel a home sale. Let’s look at some of the most common reasons.

Failure To Secure Financing

The predominant method for home purchases involves buyers securing a mortgage. In cases where a buyer encounters challenges in obtaining a mortgage, the sale may need to be canceled unless the buyer opts for a cash transaction.

Various circumstances can hinder a buyer's ability to secure a mortgage, leading to the potential cancellation of the sale. Listed below are circumstances that can lead to sale cancellation:

• The buyer might run into a financial emergency and may need to drain their down payment fund.
• In verifying the buyer’s income and assets, the mortgage lender could discover inaccuracies that could change the amount a buyer is approved for.
• Finally, if the lender believes that the buyer is trying to use a loan for their down payment, they will pull their funding offer.

Appraisal Problems

An appraisal can significantly influence a home sale by assessing the property's market value. Conducted by a licensed appraiser, this process involves evaluating the home's features, condition and comparable sales to determine its worth. The appraisal's outcome can affect the sale's status, impacting the buyer's mortgage approval, negotiations and overall transaction, as lenders rely on appraisals to ensure they are not financing more than the property's true value.

A low appraisal occurs when the appraised value of a property is less than the agreed-upon sale price. This issue arises when the appraiser determines that the property is not worth the amount specified in the purchase agreement. The frequency of low appraisals impacting property listing status can vary, but it is a common concern in real estate transactions. When a property appraises below the agreed-upon price, it can lead to challenges such as renegotiations between the buyer and seller, the need for the buyer to cover the shortfall in cash, or, in some cases, the termination of the deal if an agreement cannot be reached.

Inspection Results

In a home inspection, a real estate professional thoroughly assesses the property, noting any areas requiring repair or replacement. After completion, the inspector shares the results with both the buyer and the seller.

The results of a home inspection can significantly impact a home sale by identifying issues or concerns with the property. Depending on the findings, the inspection may lead to renegotiations between the buyer and seller, adjustments to the sale price or necessary repairs. In some cases, severe issues uncovered during the inspection may even result in the termination of the sale. Many purchase agreements contain a provision enabling the buyer to withdraw from the sale if significant issues are uncovered during the inspection. However, before deciding to cancel, the buyer often provides the seller an opportunity to address and resolve the identified problems. The inspection's outcomes play a crucial role in shaping the transaction's status, influencing negotiations and decisions made by both parties.

Common home inspection failures often involve issues with the property's structural integrity, electrical systems, plumbing, roofing, heating, ventilation and air conditioning (HVAC) systems. Frequent findings include water damage, faulty wiring, plumbing leaks, roofing problems and HVAC malfunctions. The impact of these failures on property listing status can be significant, potentially leading to renegotiations, repairs or even the termination of the sale if the parties cannot reach an agreement. The frequency of these issues varies but underscores the importance of a thorough home inspection in influencing the course of a real estate transaction.

Short Sale

A short sale can have a significant impact on a home sale, influencing both the sale price and the time it takes to finalize the transaction. In a short sale, the property is sold for less than the remaining mortgage balance, with the lender agreeing to accept a reduced payoff. This process can be intricate and time-consuming, often affecting the overall status of the home sale. Negotiations with the lender's approval may extend the closing timeline. The purpose of a short sale is typically to prevent foreclosure when a homeowner is unable to cover the full mortgage amount. It allows them to sell the property for less than what is owed, potentially avoiding more severe financial consequences.

Buyer’s Reservations

A buyer's uncertainties, second thoughts or unexpected life events can significantly impact a home sale. For example, if a buyer faces financial changes, like a job loss or unexpected expenses, they may reconsider moving forward with the purchase. Discovery of unforeseen issues during the inspection, like major repairs, can contribute to reservations and potential withdrawal. In the end, buyer hesitation or unexpected life events can introduce uncertainties into the sale process, influencing its status and possibly leading to the termination of the deal.

The Bottom Line

In summary, the terms contingent and pending are used to indicate different stages in the process of selling a home. A property can't be both contingent and pending simultaneously because these terms represent specific milestones in the transaction timeline. A contingent status implies that an offer has been accepted, but certain conditions or contingencies need to be met for the sale to proceed. Pending status implies all contingencies have been satisfied and the sale is in its final stages, progressing the transaction toward close.

If you're ready to start the home buying journey, apply online today with Rocket Mortgage^® and discover the possibilities of what you may qualify for in the ever-changing real estate market.