Can You Make an Offer on a Pending House?

It is common for individuals to encounter a desirable home listed with a “pending” status, prompting the question of whether it remains possible to submit an offer. A “pending” designation on a property indicates that the seller has already accepted an offer from a buyer. This means a contract has been signed, and the transaction is progressing towards completion, though the sale is not yet finalized. While the property is technically off the market, the accepted deal can still encounter obstacles before closing.

Understanding “Pending” Status

When a property is marked as “pending,” it signifies that an offer has been formally accepted by the seller, and the home is now under contract. This status means the property is no longer actively available for new offers. Despite this, “pending” does not mean “sold”; the sale is still in progress and awaits finalization.

The “pending” status often follows a “contingent” status, where specific conditions, known as contingencies, must be met for the sale to proceed. Common contingencies include the buyer securing financing, a satisfactory home inspection, or the property appraising at or above the agreed-upon price. Once these conditions are largely satisfied, the listing moves to a “pending” state, indicating that the transaction is closer to closing. However, some “pending” listings might still allow for backup offers, particularly if there is a “kick-out clause” in the primary contract or if the market is competitive.

The duration a home remains in “pending” status can vary, ranging from several weeks to a few months, depending on the complexity of the transaction and the speed at which all closing requirements are fulfilled. During this period, the initial deal could still fall through due to various reasons, such as financing issues, problems arising from the home inspection, or a low appraisal. This possibility creates an opening for other interested buyers to potentially secure the property.

The Purpose of a Backup Offer

A backup offer provides a strategic advantage for both buyers and sellers when a property is already under contract. From a seller’s perspective, accepting a backup offer creates a safety net. It ensures there is a ready alternative buyer should the initial agreement falter for any reason, preventing the need to re-list the property and restart the marketing process. This offers peace of mind and can reduce the time a home spends off the market if the primary deal collapses.

For the buyer, a backup offer positions them as the next in line to purchase a desired property. It allows them to secure a home they might have otherwise missed, especially in competitive markets where properties sell quickly. If the primary contract is terminated, the backup offer can automatically transition into the primary position, avoiding competition from other potential buyers if the home were to be relisted. This mechanism provides an opportunity for buyers to secure a property without engaging in a new bidding war.

While a seller is not obligated to entertain or accept a backup offer, many choose to do so to maintain leverage and security. This practice is common in strong seller’s markets, where having multiple offers provides additional negotiation power. A legally binding backup offer ensures that if the first deal fails, the seller can seamlessly move forward with another qualified buyer.

Steps for Submitting a Backup Offer

Submitting a backup offer requires a structured approach, beginning with communication through a real estate agent. The buyer’s agent should contact the listing agent to ascertain if the seller is open to considering backup offers and to inquire about the reasons the property is still in a pending status. This initial conversation can provide valuable insight into the likelihood of the primary deal’s success and any existing contingencies.

Once the seller’s openness to backup offers is confirmed, the buyer, in collaboration with their agent, can proceed to prepare the offer documents. This involves completing a standard real estate purchase agreement, which outlines the proposed terms of the sale, including the purchase price, financing details, and any contingencies. It is important to explicitly state within the offer document that it is a backup offer, contingent upon the termination of the primary contract.

An earnest money deposit is a standard component of any purchase agreement, including backup offers, demonstrating the buyer’s serious intent. This deposit, held in an escrow account by a third party, will be returned to the buyer if the primary offer successfully closes. The completed offer, along with proof of funds or a pre-approval letter, is then formally submitted to the seller’s agent for consideration.

Key Elements of a Strong Backup Offer

Crafting a compelling backup offer involves demonstrating strong financial capability and minimizing potential complications for the seller. A competitive purchase price is important, as sellers are motivated to secure a good return on their property. Offering a price that is at or above the listing price, or even slightly above the accepted primary offer if known, can significantly enhance the offer’s appeal.

Robust financing is another attractive element; a buyer with a pre-approved mortgage or a cash offer signals a lower risk of the deal falling through due to funding issues. A larger earnest money deposit than required can further underscore the buyer’s commitment and financial stability. This shows the seller that the buyer is seriously invested in the property.

Reducing or waiving certain contingencies can also make a backup offer more appealing. For instance, limiting inspection requests to major structural or system issues, or waiving an appraisal contingency if the buyer is comfortable with the risk, can streamline the process for the seller. Flexibility with closing dates, such as accommodating the seller’s timeline, can also be a differentiating factor. These strategic concessions can make a backup offer stand out as a more straightforward and secure option for the seller.

The Outcome of a Backup Offer

After a backup offer is submitted, the seller has several options: they can accept it as a formal backup contract, reject it, or choose to ignore it. If the seller accepts the backup offer, it becomes a legally binding agreement that activates only if the primary contract is terminated. This means the buyer is committed to the purchase if the initial deal fails, operating under the terms outlined in their backup agreement.

Should the primary contract fall through, the accepted backup offer automatically transitions into the primary position. At this point, the backup buyer proceeds with the standard due diligence process, including conducting inspections, securing final financing approvals, and moving towards the closing date. The earnest money deposit, which was held in escrow, then applies towards the purchase price.

In the event that the primary offer successfully closes, the backup offer is automatically released, and the backup buyer’s earnest money deposit is returned. The buyer is then free to pursue other properties without any remaining obligations from the backup contract. While the chances of a primary deal falling through can be low, submitting a backup offer provides a path to acquiring a desired home if circumstances allow.