Is Pending and Under Contract the Same?
Unravel real estate transaction statuses. Understand the key differences and implications between 'under contract' and 'pending' property listings.
Real estate transactions use specialized vocabulary. Among the most common terms encountered in property listings are “under contract” and “pending.” These statuses indicate a property’s journey through the sales process, signaling distinct stages of commitment and progress toward a finalized sale. Understanding the nuances between these terms is helpful for anyone navigating the housing market, whether as a prospective buyer or seller.
The “Under Contract” Status
A property listed as “under contract” signifies that a seller has accepted a buyer’s offer, and a legally binding purchase agreement has been signed by both parties. This agreement outlines the terms of the sale, including the purchase price, anticipated closing date, and various conditions that must be satisfied before the sale can be completed. While an offer has been accepted, the transaction is not yet final, as it is contingent upon certain conditions being met.
Common contingencies include a home inspection, an appraisal contingency to ensure the home’s value aligns with the purchase price, and a financing contingency dependent on the buyer’s ability to secure a mortgage loan. Buyers may also include a home sale contingency, meaning their purchase is conditional on selling their current residence within a specified timeframe. During this phase, buyers actively conduct due diligence. The transaction can still fall through if these contingencies are not satisfied or waived by the buyer.
The “Pending” Status
When a property moves to a “pending” status, it indicates a more advanced stage in the real estate transaction. At this point, all or most contingencies outlined in the purchase agreement have been met or waived by both the buyer and seller. This transition signifies that the sale is moving toward closing, with a significantly higher likelihood of completion compared to the “under contract” phase.
During the pending stage, the final steps involved in transferring ownership are underway. These typically include the completion of final loan underwriting by the buyer’s lender, a thorough title search to ensure clear ownership, and the scheduling of the official closing date. While a pending status suggests the sale is nearly complete, a transaction can still encounter unforeseen issues, such as last-minute financing problems or title complications. Homes usually remain in the pending stage for approximately 30 to 60 days before the sale is finalized.
Understanding the Implications of Status Changes
The terms “under contract” and “pending” describe distinct stages in the home buying process, rather than being interchangeable. The key difference lies in the level of risk and commitment associated with each phase. A property “under contract” carries a higher risk of the deal falling through because various contingencies, such as inspection or financing approvals, are still in progress and could lead to contract termination. Around 5% of home sales may fall through during the “under contract” phase due to unmet contingencies.
A “pending” status signals that the major hurdles have been cleared, significantly reducing the probability of the sale collapsing. For potential buyers, it is possible to submit a backup offer on a property that is “under contract,” with higher chances of success than for a “pending” property. Sellers manage continued showings or backup offers differently based on the status; properties “under contract” might still solicit backup offers, while “pending” properties are no longer actively marketed.