If you’re new to the world of real estate, you might have come across the term “pending” when searching for properties. But what does pending mean in real estate? In this article, we’ll explore the meaning of pending status, its various types, the stages of a pending transaction, reasons why transactions fail, and tips for both buyers and sellers. So, let’s dive in!
Definition
In real estate, the term “pending” refers to a stage in the property sale process when the seller has accepted an offer from a buyer, and the parties are working towards closing the deal. At this point, the home is no longer actively marketed, and both parties are fulfilling their respective obligations to complete the transaction.
The Pending Process
When a property is pending, it’s crucial to understand that it’s not yet sold. There are various contingencies and steps that need to be addressed before the deal is officially closed. However, a pending status typically implies a strong likelihood that the sale will go through.
Different Types of Pending Statuses
There are several types of pending statuses in real estate. Understanding these different statuses can help you navigate the market more effectively.
1. Contingent
A contingent status means that the seller has accepted an offer, but the sale is dependent on specific conditions being met. These conditions could include the buyer obtaining financing, selling their current home, or the property passing inspections.
2. Under Contract
When a property is under contract, it means that the buyer and seller have agreed on the price and terms, and they have signed a contract. However, there may still be contingencies to fulfill before the sale is finalized.
3. Short Sale Pending
A short sale pending status indicates that the seller has received an offer, but the bank or lender must approve the sale due to the home being sold for less than the outstanding mortgage.
4. Pending – Taking Backups
In this scenario, the seller is still accepting backup offers even though they have a primary offer. This is usually done to ensure that there’s an alternative in case the initial deal falls through.
What is the difference between “pending” and “contingent”?
A pending status means that the seller has accepted an offer, and the parties are working towards closing the deal, while a contingent status indicates that specific conditions must be met before the sale can be finalized.
Stages of a Pending Real Estate Transaction
A pending real estate transaction typically goes through several stages before it’s completed:
1. Offer Acceptance
The process begins when the seller accepts the buyer’s offer, and both parties sign a purchase agreement.
2. Inspections and Contingencies
During this stage, the buyer conducts property inspections and addresses any contingencies outlined in the contract.
3. Financing
The buyer works on securing jumbo mortgage loan or other financing for the purchase. This may involve getting pre-approval, submitting the loan application, and providing any required documentation.
4. Title Search and Insurance
A title search is conducted to ensure the property has a clear title, and there are no outstanding liens or claims against it. The buyer typically purchases title insurance to protect against any issues that may arise after the sale.
5. Closing
Once all contingencies have been met and financing is in place, the closing process begins. This involves signing the necessary paperwork, transferring funds, and recording the deed.
Why Do Real Estate Transactions Fail?
While many pending real estate transactions successfully close, some may fall through. Common reasons for failed transactions include:
- Buyer’s financing falls through
- Appraisal comes in lower than expected
- Inspections reveal significant issues with the property
- Title issues arise
- Personal circumstances change for the buyer or seller
Can You Make An Offer On A Pending House?
If you’re wondering, “what does pending mean in real estate?” you may also be curious about whether you can make an offer on a pending house. The answer is yes, you can make an offer on a pending property, but you should approach it strategically. In this section, we’ll discuss how to make an offer on a pending house and what you need to consider during the process or you can renovate a house using a mortgage plan.
How To Make An Offer On A Pending House
1. Work with an experienced real estate agent
An experienced real estate agent can provide valuable guidance on making an offer on a pending house. They can help you determine whether it’s worth pursuing and navigate the intricacies of submitting an offer in this situation.
2. Monitor the property’s status
Keep a close eye on the property’s status, as it may change from pending to contingent or active if the initial deal falls through. This could signal an opportunity for you to submit an offer.
3. Submit a backup offer
Even if a property is pending, you can submit a backup offer. This means that if the initial deal falls through for any reason, your offer will be next in line for consideration by the seller. Ensure your offer is competitive and attractive to the seller.
Understanding the Risks and Benefits of Making an Offer on a Pending House
Risks:
1. Limited chances of success
While it’s possible to make an offer on a pending house, the chances of success may be limited, as the property is already under contract with another buyer.
2. Emotional investment
Making an offer on a pending house may involve an emotional investment, and the disappointment if the property doesn’t become available can be disheartening.
Benefits:
1. Potential opportunity
If the initial deal falls through, your backup offer may be accepted, allowing you to secure the property you desire.
2. Less competition
As many buyers may not consider making an offer on a pending house, there could be less competition compared to properties in active status.
Tips for Buyers
Monitoring Pending Statuses
Keep an eye on pending properties that interest you. If the status changes back to active or contingent, it could signal an opportunity to submit an offer.
Making Backup Offers
Consider submitting a backup offer on a pending property if you’re particularly interested in it. This puts you in a position to move forward if the initial deal falls through.
Tips for Sellers
Accepting Backup Offers
Be open to accepting backup offers on your property. This ensures that you have options in case the primary deal doesn’t close.
Reducing the Risk of a Failed Transaction
To minimize the chances of a failed transaction, consider the following:
- Work with a reputable real estate agent
- Price your property competitively
- Prepare your home for inspections and address potential issues
- Be proactive in addressing any title concerns
There’s still hope in Pending Real Estate
When you stumble upon a dream home purchasing, only to discover it’s labeled as pending, it can feel disheartening. However, it’s essential to remember that a pending sale isn’t the same as a done deal. The current offer could fall through, leaving the door open for you to seize the opportunity and make the house yours.
As you embark on your home-buying journey, the most crucial step is to kick off the approval process as soon as possible. Organize your finances and find a mortgage that suits your budget. This proactive approach will put you in a strong position when navigating the world of pending real estate transactions, ensuring a seamless and successful process when it’s finally time to secure your dream home.
