What Is the Difference Between Contingent and Pending?

When you look at an online home listing, the pending status indicates that a buyer’s offer has been accepted and the home is in escrow. This means the buyer and seller are doing what is necessary to ensure that (a) the buyer wants the property and (b) all necessary logistics are in place for the transaction to close. This usually includes, at minimum, the buyer’s inspections, any necessary repairs, appraisals and loan underwriting. Pending can also describe a short-sale listing that is in contract, where the parties are still waiting to get the green light from the seller’s mortgage servicer(s).

The sellers of property in contingent or active contingent status have also accepted an offer to buy the home. But with a contingent listing, the contract is contingent or dependant upon the buyer’s ability to sell their existing home, i.e., if the buyer doesn’t sell their home, they can back out of the contract.

Pending listings generally close escrow or come back on the market as soon as both parties get their inspections, appraisals and green light from the lenders involved. Generally speaking, contracts contingent upon the buyer’s sale of his home do not even go into escrow and inspections; appraisals and underwriting do not begin unless and until the buyer actually does sell his home, however long that takes.

What is an Active Contingency?

An active contingency means the seller of the home has received an offer from a potential buyer; however, certain contingencies or conditions must be met before the sale can be finalized. A purchase contract may include contingencies, such as a buyer’s contingency for a property inspection and negotiating any necessary repairs with the seller before closing. An appraisal of the property will also need to be completed to ensure that the home is not priced higher than it is worth.

Another common contingency is that the buyer needs to be approved for a mortgage loan within a certain period after the contract is signed. If any of these contingencies are not met, the contract will be null and void, and there may or may not be penalties assessed. Most of the time, the contingencies within a contract can be worked through without any issues.

Common Contingent Statuses

Financial contingency

A financial contingency refers to a clause that an offer is contingent or dependent on the buyer securing financing for the property.

Appraisal contingency

An appraisal contingency protects buyers if the appraised value is less than the price they’ve agreed to pay for the property. Without an appraisal contingency, the buyers’ deposit would be at risk if they backed out of the contract because the property didn’t appraise for the purchase price.

Inspection contingency

The home inspection contingency is typically the first contingency on the timeline, and it may include an inspection of the whole property as well as specific tests for wood infestation, radon, well, septic and other issues ultimately affecting buyers’ willingness to move forward or the sellers’ financial ability to address concerns.

Title contingency

A title contingency may be added to protect the buyer from a question of ownership or a pre-existing lien against the property. Usually, these answers are identified during the title search before the property closing. As an extended security measure, homebuyers may choose to purchase title insurance for protection from title problems that may occur after closing.

Common Pending Statuses

Once all of the contingencies have been removed and the active contingent stage is completed, the property will show a “pending” status. This means the closing is not far away.

Taking Backups

A home listed as pending-taking backups means in case the contract falls through, the homeseller is interested in other offers.

Short Sale

In a short sale, the homeowner asks the bank to accept an amount less than the amount the bank is owed on a mortgage. This can happen when the seller, which is usually a mortgage lender or a bank, has said they are willing to take less than what is owed.

More than 4 months

This simply means the home was listed as pending for more than four months.

How long does it take from contingent to pending?

Depending on the type of contingencies in the offer, the length of contingency varies. The contingent period usually lasts anywhere from 30 to 60 days. A home usually stays in contingent status until the contingencies are met or for the specified period.

Some might ask: Does contingent come before pending?

A contingency or contingent means the contract cannot be complete until the condition or contingency is met. It is usually in the best interest of the buyer. Pending means, the process has moved on and the conditions have been met to complete the sale.

How often do contingent offers fall through?

According to the National Association of Realtors’ March 2018 Economists’ Outlook blog, 76 percent of buyer’s agents who closed a sale in January 2018 reported the closed sale had a buyer contingency, with home inspection the most common contingency. The next most common contingencies were getting the correct appraisal and acquiring financing.

Finally, some people have asked: Can a seller back out of a contingent offer

Some conditions exist when a seller can back out of a contingent offer, for example, if the homebuyer does not complete their due diligence in time, meet their part of the contract, or add an addendum. It has to be a legitimate reason pertaining to what the contract states.

When homebuying, be sure to become educated about the contract and the contingencies you’ll want to put into place, and get your mortgage ducks all in a row (i.e., get preapproved) well in advance so that you know your precise financial boundaries. This way, once you like a home, all you need to do is (a) have your agent let the listing agent know when he can expect your offer (so he waits for it if another one comes in), and (b) review the recent sales of similar homes, to decide on a precise offer price.

Once you’ve done these preparations, when you finally find the “right” one, you’ll be positioned to make an offer soon after it comes on the market, reducing your chances of missing out on yet another property!

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