What is the difference between contingent and pending?
When you view a home listing online, the pending status indicates that a buyer’s offer has been accepted and the home is in receivership. This means that the buyer and the seller do what is necessary to ensure that (a) the buyer wants the property and (b) all the necessary logistics are in place for the transaction to be completed. This typically includes, at a minimum, buyer inspections, any necessary repairs, appraisals and loan underwriting. Pending can also describe a short sale announcement that is under contract, where the parties are still waiting to get the green light from the seller’s mortgage agent(s).
Sellers of properties in conditional or active status have also accepted an offer to buy the house. But with a conditional listing, the contract depends on the ability of the buyer to sell their existing home, i.e. if the buyer does not sell their home, they can opt out of the contract.
Pending listings typically close the escrow or re-enter the market as soon as both parties get their inspections, ratings, and the go-ahead from the involved lenders. In general, contracts contingent on the sale by the buyer of his house are not even subject to an escrow and inspections; appraisals and underwriting only begin if and until the buyer actually sells their home, however long that may take.
What is an active contingency?
An active contingency means that 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 agreement may include contingencies, such as allowing a buyer to inspect the property and negotiate necessary repairs with the seller before closing. A property appraisal will also need to be done to ensure that the price of the home is not more than it is worth. Another common eventuality is that the buyer must be approved for a mortgage loan within a certain time after signing the contract. If one of these eventualities is not met, the contract will be null and void and penalties may or may not be imposed. Most of the time, the contingencies of a contract can be resolved without any problem.
Common contingent statuses
A financial contingency refers to a clause that an offer is conditional on or dependent on the buyer obtaining financing for the property.
An appraisal contingency protects buyers if the appraised value is lower than the price they 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 was not appraised for the purchase price.
The eventuality of a home inspection is usually the first eventuality on the schedule, and it may include an inspection of the entire property as well as specific tests for wood infestation, radon, sinks, septic systems and other issues ultimately affecting buyers’ willingness to move forward or sellers’ financial ability to address concerns.
A reservation of title may be added to protect the buyer from a pre-existing title or lien on the property. Usually these answers are identified during the title search before the property closes. As an extended security measure, homebuyers may choose to purchase title insurance to protect against title issues that may arise after closing.
Common Pending Statuses
Once all contingencies have been removed and the active contingency step is complete, the property will show a “pending” status. This means that closing is not far away.
A home listed as pending backups means that if the contract fails, the seller is interested in other offers.
In a short sale, the owner asks the bank to accept an amount less than the amount owed to him on a mortgage. This can happen when the seller, who is usually a mortgage lender or bank, has said they are willing to accept less than they are owed.
More than 4 months
It just means the house has been listed as pending for more than four months.
How long does it take to go from contingent to waiting?
Depending on the type of contingencies in the offer, the duration of the contingency varies. The contingent period generally lasts from 30 to 60 days. A house generally remains in contingent status until the contingencies are met or for the specified period.
Some might ask: does the contingent come before the expectation?
A contingency or contingent means that the contract cannot be completed until the condition or contingency is met. This is generally in the interest of the buyer. While waiting for the means, the process has advanced and the conditions have been met to conclude the sale.
How often do contingent offers fail?
According to the National Association of Realtors March 2018 Economist Perspectives blog, 76% of buyer’s agents who closed a sale in January 2018 said the closed sale had a contingency for the buyer, with a home inspection being the most common contingency. The other most common eventualities were getting a proper valuation and getting funding.
Finally, some people have asked: can a seller go back on a contingent offer?
Certain conditions exist when a seller can withdraw from a conditional offer, for example, if the buyer does not complete their due diligence on time, fulfill their part of the contract, or add an addendum. It must be a legitimate reason relating to what the contract stipulates.
When buying a home, be sure to learn about the contract and contingencies you’ll want to put in place, and get your mortgage ducks in a row (i.e., get pre-approved) well in advance so that you know your precise financial limits. That way, once you like a house, all you have to do is (a) ask your agent to let the listing agent know when they can expect your offer (so they waiting for it if another one comes along), and (b) looking at recent sales of similar homes, to set an accurate offer price.
Once these preparations are complete, when you have finally found the “right” property, you will be able to make an offer soon after it goes on the market, reducing your chances of missing out on another property!