What Does Pending in Real Estate Mean?

In real estate, “pending” means a seller has accepted an offer from a buyer, and the transaction is progressing toward a final sale. It signifies the property is under contract but not yet complete. While typically off the active market, this status indicates that various conditions and processes are underway to bring the sale to a close.

Understanding the Pending Status

When a real estate listing changes to “pending,” a signed contract exists between the buyer and seller. This status differentiates the property from an “active” listing, which is openly available for offers, and a “sold” property, where ownership has fully transferred. A property moves into pending status once a purchase agreement is executed, signaling a commitment from both parties.

The property is no longer actively marketed on the Multiple Listing Service (MLS), though some sellers may still accept backup offers. This phase is a conditional period where the accepted offer progresses through various stages before final ownership transfer. While a pending sale is usually a strong indicator that the transaction will close, certain issues can still arise, potentially leading to the deal falling through.

The Role of Contingencies

Contingencies are conditions that must be met for a real estate sale to proceed, safeguarding both buyers and sellers. These clauses are integrated into the purchase agreement, allowing either party to withdraw from the contract without penalty if specified terms are not satisfied. Contingencies establish a period during which conditions are fulfilled before the sale can be finalized.

Inspection Contingency

This grants the buyer a specified timeframe to have the home professionally inspected. It allows the buyer to identify significant issues, such as structural problems or major system defects, and potentially negotiate repairs, a price reduction, or cancel the contract if issues are substantial and unresolved.

Financing Contingency

Also known as a mortgage contingency, this protects the buyer by making the sale dependent on their ability to secure loan approval within a set period. If the buyer cannot obtain financing, they can withdraw from the contract without losing their earnest money deposit.

Appraisal Contingency

This stipulates that the property must appraise for at least the agreed-upon sale price. If the appraisal comes in lower, the buyer may renegotiate the price, pay the difference in cash, or terminate the contract, as lenders do not finance more than a home’s appraised value.

Home Sale Contingency

This protects buyers who need to sell their current home to finance the new purchase. This condition allows the buyer to cancel the contract if their existing property does not sell within a specified timeframe.

These various contingencies allow both parties to address potential risks and ensure the property meets certain standards or financial requirements before the sale becomes fully binding.

Navigating the Pending Period

Once an offer is accepted and the property moves to pending status, a series of procedural steps guide the transaction towards closing.

The buyer first deposits earnest money, a good-faith deposit demonstrating serious intent to purchase. This sum, often 1% to 3% of the purchase price, is held in an escrow account by a neutral third party, such as a title company or real estate broker.

Inspections are scheduled and conducted within the timeframe specified by the inspection contingency. The appraisal process also commences, where a lender-ordered appraiser evaluates the property’s value to ensure it supports the loan amount.

Throughout this period, the buyer’s loan undergoes underwriting and approval, involving a comprehensive review of their financial standing by the lender. This includes verifying income, employment, and credit to finalize the mortgage. Concurrently, a title search is performed to identify any liens, encumbrances, or ownership issues that could affect the property’s clear transfer of title.

Nearing the closing date, a final walkthrough of the property is conducted by the buyer to confirm the home is in the agreed-upon condition and any negotiated repairs have been completed.

When a Pending Sale Terminates

Despite a property being in pending status, circumstances can prevent the sale from reaching its final conclusion. A primary reason a pending deal might terminate is if one or more contingencies are not met. For instance, a home inspection might reveal significant, unresolvable issues, or the buyer’s financing could fall through due to a change in their financial situation or a low appraisal.

If a contingency fails, the contract allows the buyer or seller to withdraw from the agreement without penalty. Another reason for termination can be a buyer or seller defaulting on the contract terms, such as failing to meet deadlines or adhere to agreed-upon obligations.

When a pending sale terminates, the property goes “back on the market” and becomes an active listing again, making it available for other potential buyers. This situation can also open opportunities for backup offers that may have been submitted during the pending period.