What Does Contract Pending Mean in Real Estate?

A “contract pending” status in real estate signifies an important stage in a property transaction. This designation indicates that an offer has been accepted by the seller, and a purchase agreement has been signed by both the buyer and the seller. It marks the period when the agreed-upon terms are actively being fulfilled before the property officially transfers ownership.

Understanding “Contract Pending”

When a property is marked “contract pending,” it signifies a legally binding agreement between a buyer and seller. While the property is no longer actively marketed for new offers, the sale is not yet finalized. The property is essentially off the market, awaiting completion of steps in the purchase agreement. This period involves dedicated work to ensure all conditions are met before closing. It signifies a commitment from both sides to move forward with the sale.

Key Activities During the Pending Period

Once a contract is pending, several activities begin to move the sale toward completion. The buyer arranges for a professional home inspection within a specified timeframe. This inspection assesses the property’s condition, including structural integrity, systems like HVAC and plumbing, and potential issues. If securing a mortgage, an appraisal determines the property’s fair market value. Concurrently, the buyer’s loan underwriting process progresses, where the lender reviews financial documents to approve the mortgage.

Common Contingencies

Real estate contracts often include contingencies, which are specific conditions that must be satisfied for the agreement to become binding. An inspection contingency allows the buyer to have the home professionally evaluated and potentially negotiate repairs or adjustments based on findings. An appraisal contingency ensures the property’s appraised value meets or exceeds the purchase price. Financing or loan contingencies provide a period for the buyer to secure mortgage approval, allowing them to withdraw if financing cannot be obtained. A home sale contingency may be included, making the purchase dependent on the buyer selling their current residence within a set timeframe.

Resolution of a Pending Contract

The “contract pending” status concludes in one of two ways. Most often, all specified contingencies are met or waived by both parties. Once these conditions are satisfied, the transaction progresses toward closing, where ownership is transferred. This outcome means the buyer has secured financing, inspections are cleared, and the appraisal is satisfactory.

A pending contract can fail if one or more contingencies are not met within the agreed-upon timeframe. For instance, if a home inspection reveals significant issues that cannot be resolved, or if the buyer fails to secure financing, the contract may be terminated. When a contract fails, the property may return to an active market status, becoming available for other buyers.

Making an Offer on a Pending Property

A property in “contract pending” status is considered close to being sold, as contingencies are often met. However, a “backup offer” can still be made.

A backup offer is a legally binding agreement positioning a buyer next in line if the initial contract fails for any reason. If the primary contract fails, the backup offer moves into the primary position, allowing the new buyer to proceed.

While the chances of a pending deal failing are lower, it can still occur. Buyers interested in a pending property should consult their real estate agent to determine if the seller considers backup offers and the likelihood of the primary deal not closing.