Are you trying to figure out what’s the difference between a home being “pending” and “under contract“? Navigating the real estate world can be daunting, but understanding these terms can help make your home buying journey a bit smoother. We’re here to give you the full breakdown on these real estate statuses and the implications they hold for buyers and sellers. So, let’s dive right in!
What Does It Mean When a Home Is Under Contract?
A home is considered “under contract” when the buyer’s offer has been accepted by the seller, and a legally binding contract has been signed by both parties. However, the sale isn’t final yet. Before the deal can be closed, certain conditions or contingencies need to be met. During this stage, the property is often marked as “active under contract,” meaning it’s still open for potential backup offers.
The Nitty-Gritty of Pending Home Sales
On the other hand, when a property is “pending,” it means the offer has been accepted, and the sale is in its final stages before closing. In most cases, the contingencies have been met, and the parties are just waiting for the final paperwork to be completed. Pending sales are generally seen as a more advanced stage than under contract, making it less likely for potential buyers to make backup offers.
What’s the Deal with Contingencies?
Contingencies are crucial elements in real estate contracts, as they protect both buyers and sellers from unforeseen circumstances that may arise during the transaction. According to Zillow, some common contingencies include:
- Financing contingency: The buyer needs to secure a mortgage loan within a specified time frame.
- Inspection contingency: The buyer can request a professional home inspection and negotiate repairs or credits based on the findings.
- Appraisal contingency: The property must be appraised at or above the agreed-upon purchase price.
Navigating the Real Estate Maze: Pending vs. Under Contract and Deal Breakers
In the complex world of real estate, understanding the difference between “pending” and “under contract” is crucial for both buyers and sellers. These terms can indicate where a property stands in the sales process, and knowing their distinctions can help you make informed decisions. Additionally, it’s essential to recognize that deals can sometimes fall through, even when a property is pending or under contract.
Unraveling the Pending and Under Contract Puzzle
To recap, a “pending” property is in the final stages before closing, with the buyer and seller addressing any remaining requirements. In contrast, a property is “under contract” when a buyer’s offer has been accepted, but the sale has not been finalized due to unresolved contingencies.
When Real Estate Deals Fall Apart
Despite the progress indicated by pending and under contract statuses, not all deals end in success. According to a study by Trulia, about 3.9% of real estate transactions fail to close. Factors contributing to these deal breakers may include:
- Financing issues: Mortgage approvals can fall through if buyers experience changes in their financial situation or fail to meet the lender’s requirements.
- Appraisal discrepancies: When a property is appraised at a lower value than the agreed-upon price, lenders may not provide the necessary funding.
- Inspection surprises: Unforeseen problems discovered during inspections can lead buyers to reconsider their offer or request repairs that the seller is unwilling to make.
- Contingency failures: If either party fails to meet specific contingencies outlined in the contract, the deal can fall apart.
- Cold feet: Buyers or sellers may experience a change of heart, resulting in the termination of the agreement.
Is the Door Closed? Buying a Home in the Pending or Under Contract Stage
When browsing for a new home, you may stumble upon properties that are either pending or under contract. It’s natural to wonder if you’ve missed the boat or if there’s still a chance to make an offer on your dream home. Let’s explore the possibilities and strategies for buying a house in these stages of the sales process.
Making a Move on a Home Under Contract
If a property is under contract, it means the seller has accepted an offer, but the sale hasn’t been finalized yet. Although the chances might be slim, there are still opportunities for you to make a move on a home in this stage.
Submitting a Backup Offer
One option is to submit a backup offer. A backup offer puts you in line should the current deal fall through. According to Zillow, 23% of home sales experience delays and 5% fail to close, which means there’s still a chance the property could become available again. If the original buyer’s offer falls apart due to contingencies or other issues, having a backup offer in place can give you an advantage, as the seller may accept your offer without relisting the property.
Keep an Eye on the Property’s Status
Stay in touch with the seller’s agent to monitor the property’s status. If the sale encounters complications, you might be able to seize the opportunity to make an offer.
Chasing the Dream: Buying a Pending Home
If a property is pending, it’s in the final stages of the sales process, and the odds of snagging the home might be even lower. However, there are still some options to consider.
Inquire About the Possibility of a Backup Offer
Although less common for pending properties, you can still ask the seller’s agent if they’re open to accepting a backup offer. It never hurts to try, and if the deal doesn’t go through, you could be next in line.
Stay Prepared and Keep Looking
Even if you can’t buy the pending home, don’t lose hope. Stay prepared by having your finances in order and continue searching for other potential properties. You never know when another dream home purchasing might come onto the market.