What Does a Pending Home Sale Mean?

A pending home sale indicates a seller has accepted an offer from a buyer, and both parties have entered a purchase agreement. This status signals a property is off the active market but not yet officially sold.

Defining “Pending” in Real Estate

When a home’s status changes to “pending,” it signifies a legally binding contract between the buyer and seller. This agreement outlines the terms of the sale, including the purchase price, closing date, and any contingencies that must be satisfied before finalization. A pending status implies the sale is progressing toward closing, with conditions actively being addressed.

A pending status differs from an “active” listing, where a property is available for offers. It also differs from “contingent,” where an offer is accepted but specific conditions, like buyer financing or selling their current home, still need to be met. While “pending” involves contingencies, these are typically well underway or nearly satisfied, and the seller ceases to solicit new offers. A pending status indicates a higher likelihood of sale completion compared to a contingent status.

The Typical Timeline After a Home Goes Pending

After a home goes pending, several steps occur before the transaction concludes. The home inspection is an initial stage, where a professional evaluates the property’s condition, including its structural integrity, systems, and major appliances. The buyer pays for this inspection, and any significant issues discovered may lead to negotiations for repairs or credits.

Following a successful inspection or resolved negotiations, an appraisal is conducted if the buyer obtains a mortgage. An independent appraiser assesses the home’s market value to assure the lender the property serves as sufficient collateral for the loan. If the appraisal comes in lower than the agreed-upon purchase price, the buyer and seller may need to renegotiate the price or the buyer covers the difference.

Simultaneously, the buyer’s financing approval process moves from pre-approval to final loan commitment. This involves the buyer submitting financial documentation to the lender for underwriting review. The lender verifies the buyer’s creditworthiness and ability to repay the loan, which can take weeks.

A title search is performed to examine public records for liens, encumbrances, or ownership disputes against the property. This process ensures the seller has clear legal ownership and the right to transfer the property. Title insurance is then purchased to protect against future claims on the property’s title. Before closing, the buyer conducts a final walk-through to confirm the property is in the agreed-upon condition and any agreed-upon repairs have been completed. The closing then occurs, where all documents are signed, funds are transferred, and ownership is legally conveyed.

Common Reasons a Pending Sale May Not Close

Despite reaching the pending stage, various issues can cause a home sale to fall through before closing. Significant problems uncovered during the home inspection are a common reason. If the inspection reveals major issues that the buyer and seller cannot resolve through negotiation or repairs, the buyer may withdraw from the contract.

An appraisal gap can also derail a sale, occurring when the home’s appraised value is less than the agreed-upon purchase price. Lenders only finance up to the appraised value, leaving the buyer to cover the difference in cash or requiring the seller to reduce the price. If an agreement cannot be reached, the sale may terminate.

Buyer’s financing falling through is another frequent obstacle. Even after pre-approval, changes in the buyer’s financial situation can lead to loan denial. If the buyer cannot secure the mortgage, the contract becomes void.

If the buyer’s offer was contingent upon the sale of their current home, and that sale does not materialize, they may be unable to proceed with the new purchase. Unresolved issues with the property’s title can also prevent a clear transfer of ownership. These issues must be resolved before closing, or the sale may be canceled.

What Buyers and Sellers Should Know

For buyers, maintaining open communication with their real estate agent and lender throughout the pending period is important. Buyers should avoid major financial changes, as these actions can negatively impact their financing approval. Promptly responding to all requests for documentation from the lender or agent helps keep the process moving efficiently.

Sellers should ensure the home is kept in good condition for the inspection and appraisal, addressing any minor issues. They should be prepared for potential negotiations from inspection findings. Ensuring all required disclosures about the property are complete and accurate is a legal requirement.

Both parties benefit from understanding the terms of their signed purchase contract and communicating clearly with their agents. This ensures all conditions are met and the transaction proceeds smoothly toward a successful closing.