In a competitive home market like the one we are currently in, buyers often find out the property they would like to buy is under contract, contingent, or pending before they can see the property or put in an offer of their own.
If this has happened to you, the first question you should ask yourself is what does contingent or pending mean in real estate, and do I still have a chance to buy the home?
Each status means something a little different, and the short answer is “maybe” as to whether or not you can still buy the house.
Give us a call to learn more because every state and MLS has different rules for how a property’s status should be listed. If you haven’t purchased a home in a while or buy a house in another state, you want the most accurate information.
What does under contract mean when a house is listed for sale?
Under contract means a buyer has made an offer, and the seller has accepted the terms of that offer. Simple enough, right?
Your opportunities for a house under contract exist within the terms of that accepted offer. For example, it could be under contract and the seller is accepting backup offers. It could be under contract with contingencies that must be met within a specific time.
Let’s start there.
What does contingent mean when a house is listed for sale?
This is often the first stage of a real estate transaction. A contingent real estate status means the seller has accepted the offer, and the transaction is dependent on one or more things happening before the final closing.
The contingencies must be satisfied within a designated time frame, and if they are not, the buyer, seller, or both may back out of the contract.
Some of the more common real estate contingencies include:
Loan contingency. Most homes are purchased using financing and obtaining a loan is a contingency of the purchase. If the loan is not fully approved, the buyers can back out of the purchase under the contract terms. Lenders may not approve financing when the buyer or property does not qualify.
Home inspection contingency. Many offers are contingent upon the buyer’s acceptance of the home inspections. You can order several types of inspections during the “due diligence” phase of the home buying journey. Some of these are a home inspection, roof inspection, septic inspection, radon inspection, termite inspection, title inspection, land use or zoning inspection, and more. We can advise which ones make sense because some inspections are highly recommended, and others are optional.
The agents work to find a solution or renegotiate the terms of the contract when something comes up during the inspection.
For example, if the home inspection uncovers needed or recommended repairs, the buyer may ask the seller to fix it, give a credit to cover the cost of repairs, or adjust the sales price down. The seller doesn’t have to accept the renegotiation, and if there is no agreement, the home may go back on the market. This could signal an opportunity for you!
Appraisal contingency. The appraisal shows the value of the property based on closed sales of similar homes in the area. The lender decides how much they will lend on the property based on the appraised value. When it’s higher than the contract’s purchase price, the buyer is in good shape. When it’s lower, the lender will base their loan amount on the appraised value. If that happens, renegotiations may adjust the sales price downward, the buyer will provide additional cash to make up the difference, or the buyer may back out of the contract, and the home may go back on the market.
The appraisal will also reflect the condition of the property. Sometimes, it will identify maintenance items that must be repaired for the home to qualify. This is often for obvious things that make the house habitable such as the roof’s condition. When the lender sees something in the appraisal they don’t like, they may require the item to be repaired or may not do the loan based on the extent of the damage.
There are loans available for total fixers, so it’s not entirely out of the realm of possibility for the contract to move forward. However, the buyer must have the right loan to fit the condition of the purchase. When these don’t match, the house may return to the market, and this could signal an opportunity for you!
Additional property contingency. Sometimes, the buyer has a house they must sell. They may need the money from the sale of their current home for the down payment, or their lender may require the home sold to qualify for the new loan. This type of situation is common, and agents work diligently to coordinate multiple transactions. However, sometimes the buyer’s existing home doesn’t sell, and the contract on the new home may fall through. When that happens, it may signal an opportunity for you!
Short sale contingency. A short sale is when the lender of record will accept less than the amount owed on the home. When the seller is a bank or other mortgage lender, which is the case in most short sales, the time that passes from when the contract is accepted to when the bank approves the short sale can take months. Some buyers can wait out the process; other times, they will drop out at some point either because they found another house to purchase or they got tired of waiting. This could be an opportunity for you if you are not in a hurry!
Probate contingency. Much like a short sale, probate proceedings may dictate the time and terms of the real estate transaction.
What does pending mean when a house is listed for sale?
Like a contingent status, pending means the seller accepted an offer; however, the transaction is usually a little further along in the process. Some or all of the contingencies have been removed.
You may be able to put in a backup offer or see the property depending upon the seller’s instructions. However, when the transaction looks solid, this is less likely to be a viable option.
Still, when you let us know you are interested in a pending home, it helps us find out the status to see if there is any chance of it not closing.
What are your options for under contract, contingent, or pending properties?
As you can see from the different types of real estate statuses listed above, there are opportunities for you to get your dream home if the first offer the seller accepted falls through.
But, there is a trick to getting in.
When a home you think you love is already under contract, contingent, or pending, call us.
We can help determine the status and how likely it is to close successfully. We will know if you can still see the house even though it is under contract. We can determine if a backup offer should be written up and presented, so you are on the seller’s radar should something go south with their current contract.
Or, we may learn about challenges to the property that you find undesirable. With this knowledge, you can stop dreaming about that home and move on to something even better.
We will also dig into other properties coming soon to the market that match your criteria. Knowing what you are looking for in your next house helps us tap into our network to inquire about homes for you. You would be amazed at how many homeowners aren’t aware that they want to sell until someone is ready to make an offer!
The bottom line is we are on the inside track and can build a strategy that puts you in the best position should the home come back on the market.