Can You Still Buy a House That Is Pending?

A home listed as “pending” indicates that a seller has accepted an offer from a buyer, and the transaction is progressing towards its final stages. While this status typically means the property is off the active market, it does not always signify a guaranteed sale. Specific circumstances and proactive measures can allow other potential buyers to still pursue such a property. Understanding a pending status helps individuals navigate the real estate landscape.

Understanding “Pending” Status

In real estate, a “pending” status means a purchase agreement has been signed, and the sale is moving toward closing. This differs from a “contingent” status, where an offer has been accepted but specific conditions, such as a satisfactory home inspection or securing financing, still need to be met. With a pending sale, major contingencies are satisfied, and both the buyer and seller are committed to completing the transaction.

During the pending phase, several activities occur to finalize the sale. These include the buyer’s mortgage lender completing underwriting, which involves verifying the buyer’s financial information and employment. An appraisal of the property is conducted to ensure its value supports the loan amount, and a title search is performed to confirm clear ownership and identify any liens or encumbrances. These steps are necessary before closing, where ownership is formally transferred.

Expressing Interest in a Pending Property

Even when a property is listed as pending, a buyer can still express interest if the initial deal encounters issues. One common method is submitting a “backup offer.” A backup offer is a legally binding contract that positions a secondary buyer to purchase the home if the primary offer fails to close.

To make a backup offer, a potential buyer works with their real estate agent to draft a formal purchase agreement, similar to an initial offer. This agreement includes terms, such as the proposed purchase price, any contingencies, and an earnest money deposit, often ranging from 1% to 3% of the purchase price. The earnest money is held in an escrow account, demonstrating the buyer’s serious intent. If the primary offer successfully closes, the backup offer is released, and the earnest money is returned.

While a backup offer provides a stronger position, simply expressing interest to the seller’s agent is another approach. This informs the seller there is another interested party, useful if the primary deal falters. It can ensure the buyer is considered if the property unexpectedly returns to the market. Some sellers may continue to show the home or accept backup offers while under contract, especially if a “kick-out clause” is part of their agreement with the primary buyer.

Common Reasons Pending Sales Fail

Despite a signed agreement, several issues can cause a pending home sale to fall through. One frequent reason is financing problems, such as the buyer’s loan application being denied or changes in their financial situation, including new debt or employment changes, affecting their loan approval. Lenders often re-verify financial information right up to the closing date.

Another hurdle can be issues discovered during the home inspection. If major defects, such as structural problems, mold, or significant repairs, are found, the buyer may negotiate for repairs, a price reduction, or choose to terminate the contract if their offer included an inspection contingency. Similarly, a low appraisal can derail a sale. If the home appraises for less than the agreed-upon purchase price, lenders will not finance more than the appraised value. This creates an “appraisal gap” that the buyer may need to cover with additional cash or renegotiate with the seller.

Other reasons include buyer’s remorse, where a buyer changes their mind, especially if contingencies allow them to withdraw without penalty. Seller-related issues, such as unresolved title problems, unaddressed liens, or survey discrepancies, can also cause delays or contract termination. A seller’s inability to find a new property or unexpected job changes can also cause them to back out.

Steps After a Pending Sale Falls Through

If a pending sale fails, the property reverts to an “active” status on the market. For buyers who previously expressed interest or submitted a backup offer, this can be an opportunity. If a formal backup offer was accepted, it automatically moves into the primary position, activating the contract and initiating the due diligence period for the backup buyer.

Upon activation of a backup offer, the buyer proceeds with the standard steps of a home purchase, including conducting inspections, obtaining financing approval, and securing homeowners insurance. The earnest money previously deposited by the backup buyer then applies to the purchase. If the backup offer was not formally accepted, or if no backup offer was in place, the seller’s agent notifies interested parties that the property is available again, often inviting new offers.

If a sale falls through due to a buyer’s inability to meet contractual obligations, such as failing to secure financing without a relevant contingency, they may forfeit their earnest money deposit. However, if the termination occurs due to a valid contingency, such as a failed inspection or low appraisal, the earnest money is returned to the buyer. The seller would relist the property, potentially adjusting the price or addressing any issues that caused the previous sale to collapse.