Contingent vs. Pending: Understanding the Difference in Real Estate
When you’re shopping for a new home, especially in a competitive real estate market, you’re bound to come across listings marked “contingent” or “pending.” These terms can be confusing, particularly if you’re unfamiliar with real estate transactions. As a homebuyer or seller, understanding the difference between "contingent" and "pending" can make all the difference when it comes to crafting your strategy for buying or selling a property.
In this blog, we’ll break down the key differences between contingent and pending listings, explore how each status can impact a real estate transaction, and provide insights on what these terms mean for buyers and sellers alike.
What Does “Contingent” Mean in Real Estate?
A contingent listing indicates that a seller has accepted an offer, but the sale is subject to one or more contingencies. Contingencies are conditions that must be met before the sale can proceed. Common contingencies include home inspections, financing, or the sale of the buyer’s current home. Until these contingencies are satisfied, the sale is not final, and the property remains available for other offers.
Types of Contingencies
There are several types of contingencies that could appear in a contingent real estate offer. Here are the most common ones:
1. Home Inspection Contingency
A home inspection contingency allows the buyer to have the property inspected for any issues. If significant repairs are needed, the buyer can either negotiate for the repairs or cancel the sale altogether.
2. Financing Contingency
A financing contingency ensures that the buyer can secure a mortgage to finance the home purchase. If the buyer’s loan application is denied, they have the right to walk away from the sale without penalty.
3. Appraisal Contingency
An appraisal contingency protects the buyer if the property’s appraised value comes in lower than the purchase price. In such cases, the buyer may ask the seller to lower the price, pay the difference, or cancel the contract.
4. Home Sale Contingency
Some buyers make an offer on a new home contingent on the sale of their current home. If they can’t sell their existing property within a specified time frame, they have the option to back out of the deal.
What Does “Pending” Mean in Real Estate?
When a home is listed as pending, it means that the contingencies have been met, and the sale is moving forward. In most cases, a pending status indicates that the final steps of the transaction, such as obtaining title insurance and closing the sale, are in progress.
A property in the pending stage is much closer to being sold than one in the contingent stage. Most sellers stop accepting backup offers once the home enters pending status, as the deal is almost complete.
Different Types of Pending Statuses
Pending listings may come with certain designations that give more information about the status of the transaction. Here are a few common types:
1. Pending – Taking Backup Offers
In some cases, sellers will still accept backup offers after the contingencies are met. This could happen if the seller is not fully confident in the buyer’s ability to close the deal.
2. Pending – Short Sale
For homes being sold as part of a short sale (where the seller owes more than the home’s current value), the pending process may take longer. This is because the seller’s lender must approve the sale, which can add time to the closing process.
3. Pending – Subject to Lender Approval
This type of pending status appears when the sale requires approval from a third-party lender. This is common in transactions involving foreclosures or short sales.
Key Differences Between Contingent and Pending
Now that we’ve explored the definitions, let’s break down the key differences between contingent and pending real estate listings.
1. Sale Progress
Contingent: The home sale is still in its early stages. The seller has accepted an offer, but the buyer must satisfy one or more contingencies for the sale to move forward.
Pending: All contingencies have been met, and the transaction is in the final stages. The sale is much closer to being completed.
2. Buyer’s Ability to Make an Offer
Contingent: Since contingencies are still in place, other buyers may be able to submit backup offers on the property. In some cases, buyers can make offers that the seller may consider if the initial buyer fails to meet the contingencies.
Pending: Once a home is pending, the seller typically stops accepting offers. However, in some cases (such as “pending – taking backup offers”), the seller may still consider backup offers if there are concerns about the sale falling through.
3. Likelihood of the Sale Closing
Contingent: There is still some uncertainty as to whether the sale will close, especially if there are several contingencies involved.
Pending: The likelihood of closing is much higher, as the contingencies have already been resolved.
What “Contingent” and “Pending” Mean for Buyers
If you’re a buyer and you see a home listed as contingent, don’t necessarily assume it’s off the market. There’s still a chance the deal could fall through if the contingencies aren’t met, and you may be able to submit a backup offer. In fact, some sellers are open to working with multiple potential buyers to ensure the sale doesn’t fall through if the initial offer falls apart.
What “Contingent” and “Pending” Mean for Sellers
As a seller, contingent offers can feel like a gamble, especially if the contingencies depend on factors outside the buyer’s control, such as securing financing or selling another home. That’s why it’s crucial to work closely with your real estate agent to understand the strength of the buyer’s offer and whether it’s worth considering backup offers.
Once your home is in the pending stage, you’re much closer to closing the deal. However, it’s still essential to maintain communication with your real estate agent to ensure the transaction moves smoothly through the final steps.
Final Thoughts: Contingent vs. Pending
In real estate, understanding the difference between contingent and pending can help both buyers and sellers make more informed decisions.
As a buyer, don’t shy away from contingent listings—they can still be an opportunity. As a seller, keep your options open by considering backup offers, even after reaching the contingent or pending stage. And always work with a knowledgeable real estate agent who can guide you through the complexities of the transaction process.
By understanding between contingent and pending, you’ll be better equipped to navigate the real estate market and achieve your home buying or selling goals.
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