So is the House for Sale? Pending, Contingent, and Under Contract in Real Estate

The world of real estate has a language all its own…which can make it difficult for first-time buyers to understand the status of a listing when searching for a home. While a real estate agent can shed light on the differences between pending, under contract, contingent, and other terms encountered during the home buying process, it helps to know a little about them before beginning your search. 

Let’s look at these common real estate terms and what they mean when it comes to the availability of a home.

First, it helps to understand the basic process of buying a house. Every offer and sale can have some variations or hiccups along the way, but if everything goes according to plan, it will follow this path: 

1. The buyer finds a house they are interested in.
2. The buyer makes an offer and lists any contingencies, such as a passed inspection or appraisal value. 
3. If the seller agrees to the offer, they accept and both parties sign a contract.
4. The home is inspected and appraised according to the contingencies.
5. The seller addresses any issues resulting from the inspection, or agrees to adjust the sale price if the seller will be making repairs.
6. If all issues are resolved, the parties move on toward closing. If not, the buyer walks away and the house goes back on the market.

The sale is not final until the closing happens. 

Many of the homes listed on Realtor.com and other real estate websites are pulled from the MLS, which stands for Multiple Listing Services. When searching for homes online, you will notice that some say they are Pending or Under Contract. These statuses are updated by the listing agent to notify buyers and other agents when a sale is in the works. 

A home “under contract” still needs to pass inspection and appraisal, and meet any contingencies. “Pending” means it’s closer to the last step and waiting on title information and closing. So when it comes to availability, a home under contract is more likely to fall through, while a house for sale that’s pending is closer to a finalized sale. However, this does not always mean the house is completely out of reach. 

A home under contract means a contract has been signed by both a buyer and seller. The contract details how much the buyer has offered and any contingencies they are asking for (which we explain below). Earnest money is typically paid and placed in an escrow account when the contract is signed. 

Houses under contract might also show an additional status of “Show” or “No Show” in the MLS. Show means the homeowner is willing to have other potential buyers view the home. No Show means the opposite. Because they have a contract and are getting closer to making a final sale, they are not allowing agents to conduct tours or showings.

A house listed as “contingent” is also under contract. Contingent means that both parties are waiting for all of the requirements listed by the buyer to be addressed. These often include:

1. Inspection. The sale is contingent on any flaws found by a professional home inspector being fixed by the seller, or the sales price lowered accordingly. If the two parties cannot agree about how the issues will be resolved, the buyer can back out.
2. Financing. Even though a buyer may have pre-approval, they may have trouble securing financing when it comes to getting the loan. This could stop the sale from proceeding.
3. Appraisal. If the house is appraised for less than fair market value, the lender will not approve a loan. 
4. Title. If there are liens or other issues with the seller’s title, the sale will not be able to close.
5. Buyer’s Home Sale. Buyers may include a contingency that if they cannot sell their current house within a specified time period, they can end the contract with the seller.

A house listed as contingent may still be actively shown and the buyer can continue to accept offers if they wish. If any of the requirements do not work out as spelled out in the contract, the buyer is allowed to back out.

A house for sale that’s pending means there is an accepted, binding contract, and all contingencies have been resolved. During this time, appraisals and inspections are performed, repairs are made, financing is finalized, and the title is checked. The pending period can last anywhere from two weeks to two months, depending on the extent of repairs and any issues with loan processing.

When a house for sale is pending, the deal is just about done. In most cases, a seller can’t continue to show the home or accept other offers. However, the National Association of Realtors has found that more than 5% of pending sale fall through each year because of the following scenarios:

• Income to debt issues. A buyer who was pre-approved for a loan may have debts that a bank didn’t originally know about. If lending falls through, so will the contract.
• Failed inspection. Structural problems found during inspection will allow a buyer to renegotiate the purchase price or back out all together.
• Low appraisal. If a home appraised for lower than the contract price, a lender will refuse to loan more than that amount to the buyer. 
• Buyer’s remorse. Even at the end of the sales process, buyers can change their mind.

If you are interested in a house that’s pending, under contract, or contingent, it may still be worth pursuing. Follow these steps to toss your hat into the ring:

1. Tell your agent you are interested, and make sure they know you are serious. 
2. Find out all you can about the current contract. Your agent may be able to talk to the listing agent and find out if the sale is likely or if there are indications that the deal could fail. 
3. Make a back-up offer. Many sellers like the security of other offers if the first one does not work out. It’s worth it to secure the first spot in line.
4. Sweeten the deal. This is not a situation where a low-ball offer will work. Also, consider waiving contingencies (within reason). Many buyers have success writing a letter to the seller to make a human connection.

As we mentioned before, a sale is not final until the final documents are signed on closing day. A Realtor at Berkshire Hathaway HomeServices Select Properties can help you understand your chances of purchasing the home of your dreams, and will walk you through the process of making an offer.

This piece is a rewrite of the original post published on July 20, 2021.

Cover photo by sl-f by Canva.com