When searching for a new home, you are likely to find twists and turns along the way. Among them, you could learn through Multiple Listing Services (MLS) or via an online marketplace that a property you have your heart set on buying currently has a pending sale or contingent status. In either case, the real estate transaction is not a done deal.
However, while pending and contingent sales are similar, they are not the same thing. The distinctions could make all the difference when making an offer on the house you want. In this article, we will explore the critical difference between pending and contingent real estate sales and what it means for a potential buyer.
Pending Sale Explained
When a real estate sale is pending, a buyer has made an offer on a property, and the seller has accepted it. If there were any contingencies in a pending sale, they have since been satisfied either by being met or eased, and the buyer and seller are on their way to completing a transaction. The deal is headed for closing as long as there are no snags.
Pending status carries more weight than a contingent sale, but it is not yet a done deal, leaving the house on the market in the meantime. This means the door is still open for another interested buyer to make an offer on a pending real estate sale, depending on the details around the transaction, which can be discussed among real estate agents.
However, an interested buyer cannot win over the seller simply by offering a higher bid than what has already been accepted. While it is still possible for a pending sale to fall through and for someone else to swoop in, the stars must align for this to happen. Legally, a deal should be canceled by the buyer, not the seller, for it to be canceled.
A seller has the right to cancel the deal if the buyer is not adhering to the contract’s specifications, in which case they can submit a notice to perform to the buyer. The buyer then has a specific window of time to respond or lose the deal. If a pending real estate sale is canceled, the would-be buyer on the transaction loses what is known as an earnest money deposit, which is made when the sale agreement is signed.
When you are ready to begin the loan application process, contact Total Mortgage. We have experts standing by in offices around the country ready to assist you and bring a real estate deal from pending to complete.
Contingent Sale Explained
In a contingent real estate sale, the seller has accepted an offer from a buyer, and the house is placed under contract, similar to a pending deal. The difference between pending and contingent here is that the listing retains an active status with contingencies. This is because the buyer must meet certain requirements for the transaction to be complete.
These preset contingencies are named in the sale agreement after both the buyer and seller have agreed. For the transaction to move ahead to an eventual closing, the buyer must meet these contingencies unless they are waived. A contingent sale provides an out for both the buyer and the seller so that the contract becomes null and void if the conditions are not met.
Pending Deal Types
There are different types of pending real estate deals, the most common of which include:
- Accepting Backup Offers: This status means that the seller is willing to take backup offers. Even though they’ve accepted an offer and the deal is pending, the seller has some reason to be concerned that the transaction will happen. As a result, they are leaving the door open to backup offers.
- Pending Short Sale: In this case, the property is going through a short sale and is being sold for less than it is worth. The deal depends on lenders’ approval and could drag on for a while. As a result, the seller wants to keep the door open for backup bids.
- Four-Month Rule: Sometimes, a pending real estate deal can drag on for longer than anticipated. A pending over four months status means that the deal has hit a snag for one reason or another, such as a contingency having yet to be met, delaying the closing.
Contingency Deal Types
There are also different types of contingencies, the most common of which include:
- Home Inspection Contingency: This clause allows the buyer to back out of a deal if the home inspector identifies issues with the property and a solution cannot be found.
- Home Appraisal Contingency: Even after a seller prepares for the home appraisal by making any apparent repairs, there is still a possibility that they missed something. If the appraiser determines that the property is worth less than the purchase price, the appraisal contingency allows the buyer to scuttle the transaction.
- Financing Contingency: This clause provides the buyer some breathing room to secure financing for the deal up to a specific date. The contract can be canceled if they cannot find a lender and secure a mortgage.
- Home Sale Contingency: In this case, the buyer is relying on the sale of their current property to go through for them to be able to purchase the new home. If the first deal fails, the buyer could walk away from the second one.
Explore Total Mortgage’s Flexible Loan Options
Now that you know the difference between pending and contingent deals, you are equipped with more information about the real estate market. As a result, you have a better idea of what to expect when you embark on your homebuying journey.
A pending deal is well on its way to closing, while a contingent deal still has some hoops for the buyer to jump through. Neither status is a done deal, though they are a signal to the market that a seller and a buyer are working on it.
Total Mortgage’s experts will be by your side from start to finish, including through pending and contingent real estate transactions. Begin the application process today so you can find yourself closer to living in the home of your dreams.
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