A pending sale, at least as it relates to a real estate transaction, represents a property that has gone through every step of the closing process, but has yet to actually be closed on. Agreements have been made, contracts have been signed, contingencies should have been met, and everything required by escrow has been fulfilled; all that remains is the actual close itself. Having said that, pending sales are not final. No deal, in fact, is final until a property has been closed on, which means properties pending sale may be worth looking into.
What Does Pending Sale Mean?
A pending sale is the sale of a home is awaiting a settlement, or — more likely — in the final stages of escrow. More often than not, pending simply means all the contingencies have been carefully removed and the buyer is “locked” in; all that’s left is to close the deal. In other words, a pending sale is nothing more than a sale that is awaiting closure. The offer has been accepted, a contract has been signed, all contingencies have been accounted for, and all that’s left is to comply with the terms laid out in the escrow account, but I digress. While a pending home sale may mean the transaction is close to complete, it’s anything but. That’s an important distinction to make when answering, “what does pending mean in real estate?”
Typically, for a sale to be pending it should have passed each and every one of the contingencies laid out in escrow, but there are exceptions. For one reason or another, the contingencies themselves may continue to hold a house pending hostage. Basically, a sale may remain pending if there are contingencies preventing it from closing.
The difference between a sale pending and contingent sale is that a sale pending is in the process of closing, while a contingent sale has to meet a few conditions before closing. In order to fully understand the difference, you must first exhibit at least some familiarity with the concept of a contingency. Essentially, a contingency is the best way to back out of a deal in the event unforeseen circumstances arise. In other words, contingencies are a safety net for those that know how to use them properly.
In their simplest form, however, contingencies are predetermined criteria that must be met for a sale to proceed. If, for example, a sale is contingent on the home passing inspection, the escrow will note as much. The only way to move forward will be for the home to, well, pass the impending inspection. And therein lies the meaning of a sale pending with contingencies: the only way for things to move forward is for all the criteria of each contingency to be met and signed off on by each party involved in the transaction. It’s not hard to understand how a contingency could delay a closing, or keep a sale pending.
As I already alluded to, a pending sale real estate is nothing more than a home that is in the process of selling. That said, there are a number of reasons the pending process can be extended, not the least of which may be contingencies. You see, it’s entirely possible for the contingencies laid out in escrow to maintain the pending status of a home sale. So to be clear, a sale pending with a contingency is essentially stuck in a holding pattern until the criteria of the contingency have been met.
You can absolutely make an offer on a home that is a pending sale. As I said before, pending sales are in no way final. While they are essentially on the final stages of the closing process, there is still plenty of room for things to go wrong. Financing can fall through, contingencies can go unmet, and any number of things can impede a home’s sale. That said, there are actually sellers that will welcome additional offers, even while their property is currently pending a sale. It is quite common for listing agents to “label a home with some contingency as ‘active with conditions’ or ‘active continue to show,’ letting other buyers and agents know that the seller will still entertain other offers,” according to Zillow.
In the event a seller is entertaining subsequent offers during a pending sale, there is no reason an interested buyer can’t submit an offer. Just know one thing: sale pending vs under contact mean two different things. Getting a property under contract means the seller has accepted an offer, pending sales are a few steps ahead. If a seller is under contract they won’t be able to enter into another; however, they may be interested in hearing other offers in the event the first plan falls through.
When all is said and done, you may submit an offer on a home that is already pending a sale, but you won’t be able to go into contract with the seller while they are already in contract with another buyer. All your offer will do is place you next in line in the event the original deal falls through.
A pending sale may take anywhere from a couple of days to several weeks. The window for a home pending is not set in stone, but rather contingent, well, contingencies. That means there is no universal timeline; only a window. For the most part, however, real estate pending sales will last somewhere in the neighborhood of a week or so.
Pending sales can and do fall through. For any number of reasons, a pending sale may not be seen to completion. As we have already discussed, contingencies may prevent a sale from transpiring. For example, savvy buyers may remove themselves from a deal in the event the home doesn’t pass inspection — that is, at least, if there was an inspection contingency included at escrow. What’s more, every contingency in the final contract represents an opportunity for a pending sale to fall through.
In addition to contingencies, pending sales may fall through because the buyer decided to simply walk away. It is entirely possible for buyers to remove themselves from a pending sale for any number of reasons; it’s not common but it happens. At this point buyers typically have some skin in the game in the form of an earnest money deposit. They can exit the pending sale, but they will have to forfeit this initial payment.
The most common reason buyers will leave a pending sale is if there is a problem with their mortgage application. If a buyer obtains a pre-approval letter and makes an offer on a house, they can still be denied when it comes time to granting the loan. This does not happen randomly, and is usually the result of a job loss or increase in debt. On the other hand, some buyers may still back out even if there are no paperwork issues. Buyers remorse can send a seller back to square one.
Again, a pending sale simply represents a home that is in the process of selling; it’s by no means final. A home appraisal could be lower than expected or a buyer could get caught in a deal selling their existing property. Basically, there are a number of things that can go wrong on either end of a deal. Get familiar with the transaction process to make sure pending sales don’t go astray for you.
A pending sale can go back on the market if the buyer backs out or the contingencies are not met in time. While this does not necessarily mean anything is wrong with the property, many potential buyers approach “back on market” properties with caution. In some cases properties are re-listed if they fail the home inspection, in turn causing buyers to be hesitant about back on market properties as a whole. In competitive markets, however, a back on market property will often have no trouble garnering attention. If you are a seller hoping to avoid re-listing your property, pay attention to the details when you receive an offer on a property. Why is the buyer looking to move? What clauses are included in the offer? Weigh your options carefully and you can hopefully avoid the hassle of a pending sale going back on the market.
Realtors can continue to show a house that is pending. As I mentioned above, a pending sale is not final and therefore sellers may be interested in courting back up offers. If this is the case sellers will allow the Realtor or real estate agent to continue to show the property during closing. Due to the many reasons a pending sale can fall through, it is not uncommon for sellers to continue to show the property. This can help attract alternative offers in the event of a problem, though the seller will be unable to act if they are under contract.
If you are a homebuyer looking to secure a sale pending home, there are a number of things you can do. First, by researching the ins and outs of a pending sale you have already completed step one in the process. Familiarizing yourself with the overall process will help make sure you are equipped to deal with any competition or obstacles that might be in your way. Here are a few tips as you aim to secure a pending sale home:
It is crucial to understand the mechanics of a pending sale, as they are an inevitable aspect of the real estate industry. A pending sale is essentially at the last stage of the closing process, but buyers are not in the clear yet. Pay attention to contingencies and contracts as you navigate each deal to make sure the process runs smoothly. Remember, a pending sale is not final—use this information wisely no matter what side of the transaction you are on.