Realtor: What Does Pending Mean in Real Estate?

In real estate, a ‘pending’ status means an offer has been accepted by the seller, and a purchase agreement is signed. This indicates the home sale process has progressed beyond initial negotiations. While an agreement exists, the sale is not yet finalized, with various steps remaining before ownership officially transfers.

Understanding Pending Status

When a property listing shows as ‘pending,’ it means a buyer’s offer has been accepted and a purchase agreement signed. This status indicates the property is under contract and no longer actively available for new offers, unlike an ‘active’ listing. It differs from a ‘sold’ status, which signifies the transaction has fully closed and ownership has transferred.

The ‘pending’ designation suggests initial conditions or contingencies have likely been met or waived. The sale is not yet complete, and the property remains in this status until all legal and financial formalities are finalized. Homes typically remain pending for 30 to 60 days as the final steps are completed.

Key Stages During Pending

Once a property moves into pending status, several important stages unfold, often protected by contractual contingencies. These contingencies allow buyers to conduct due diligence and ensure conditions are met before the sale becomes final. Should any condition not be satisfied, the buyer can renegotiate or withdraw from the contract without penalty.

Home Inspection

A common initial step is the home inspection, where a qualified professional examines the property for defects or issues. Findings from this inspection can lead to the buyer requesting repairs, credits, or a price reduction from the seller, or even lead to contract termination if significant problems are discovered and not resolved.

Appraisal

An appraisal is conducted, usually mandated by the buyer’s lender, to determine the property’s fair market value. This ensures the property serves as adequate collateral for the loan. If the appraisal value is lower than the purchase price (an appraisal gap), it can necessitate renegotiation, require the buyer to pay the difference, or lead to contract dissolution if an appraisal contingency is in place.

Loan Underwriting

Buyers seeking financing undergo the loan underwriting process, where the lender reviews their financial stability to grant final loan approval. A financing contingency provides a timeframe for the buyer to secure this approval. If the buyer cannot obtain the mortgage within this period, this contingency allows them to exit the agreement without losing their earnest money deposit.

Title Search and Review

A title search and review confirms the seller’s legal right to transfer ownership and identifies any existing claims or encumbrances. This search examines public records for issues like unpaid taxes or outstanding mortgages. Discrepancies must be resolved to ensure the buyer receives clear ownership, preventing legal complications after closing.

Contingency Removal

The final phase before closing involves the formal removal of contingencies, typically through a written document signed by the buyer. Once removed, the buyer is legally committed to the purchase, and their earnest money deposit may become non-refundable if they fail to close. Deadlines for contingency removal are outlined in the purchase agreement.

Outcomes of Pending Status

A property in pending status typically progresses toward a successful closing or the contract falling through. A successful closing signifies the culmination of the real estate transaction, occurring when all agreed-upon contingencies are satisfied, and both buyer and seller fulfill their contractual obligations.

During a successful closing, final documents are signed, funds disbursed, and the property deed recorded, transferring ownership. Various parties, including the buyer, seller, real estate agents, lenders, and a closing agent or attorney, are involved in ensuring a smooth transfer.

While less common, a pending sale can sometimes fail to reach closing. A small percentage of pending contracts are terminated, often due to factors related to the contingencies built into the agreement.

Common reasons include the buyer’s inability to secure financing approval or an appraisal gap where the home’s appraised value is lower than the purchase price. Significant unresolved home inspection issues or complications from the title search, such as undisclosed liens, may also cause contract termination.

Making Offers on Pending Properties

It is possible to submit an offer on a pending property, though acceptance is often lower. This type of offer is known as a ‘backup offer,’ and it represents a legally binding agreement. A backup offer positions a buyer to purchase the home if the initial contract fails to close.

Sellers may consider backup offers, especially in competitive markets or if they have concerns about the primary buyer’s ability to meet obligations. These offers provide a safety net for the seller. A buyer interested in a pending property should have their agent contact the listing agent to determine if backup offers are being entertained.