What Does Pending Mean in Real Estate?

In real estate, “pending” signifies a property with an accepted offer that is under contract but has not yet reached its final closing stage. Various conditions must be satisfied before ownership can officially transfer.

Defining Pending in Real Estate

When a property listing changes to “pending,” it means a seller has formally accepted a buyer’s offer, and a signed purchase agreement is in place. This differs from an “active” listing, which is still open to offers, or “under contract,” which can sometimes imply that contingencies are still being negotiated rather than fully met. A “sold” status, conversely, indicates that the transaction is complete, funds have transferred, and new ownership is recorded. It implies that most, if not all, contractual contingencies have been satisfied or waived. This status also means the property is no longer actively marketed to other potential buyers, as there is an existing commitment.

Common Contingencies and Their Role

Contingencies are specific conditions written into a real estate contract that must be met for the sale to proceed. These clauses protect both buyers and sellers, allowing them to withdraw from the agreement without penalty if certain conditions are not satisfied.

A common type is the financing contingency, which makes the sale dependent on the buyer securing a mortgage loan. If the buyer is unable to obtain the necessary financing within a specified timeframe, they can terminate the contract. This clause protects the buyer from being obligated to purchase a home they cannot afford.

Another frequent condition is the appraisal contingency, ensuring the property’s appraised value meets or exceeds the agreed-upon sale price. Lenders require an appraisal to confirm the home’s market value, and if it appraises for less than the purchase price, the buyer may renegotiate, cover the difference, or withdraw from the sale. This protects both the buyer and the lender from overpaying for the property.

The inspection contingency grants the buyer the right to have the home professionally inspected for defects or issues. Buyers have a period to conduct inspections and can request repairs or price adjustments based on findings. If significant problems are uncovered that the seller is unwilling to address, the buyer can cancel the contract and receive their earnest money back.

A less common but significant contingency is the sale of prior home contingency, where the buyer’s purchase is dependent on the successful sale of their current residence. This provides flexibility for buyers who need to sell their existing property to fund their new purchase. Sellers may include a “kick-out clause” in such situations, allowing them to accept another offer if the buyer’s home does not sell within a set period.

The Timeline from Pending to Close

The period from a property moving to pending status until the sale officially closes involves several procedural steps. This timeline spans 30 to 60 days, though cash purchases can close in as little as a week. The initial step after an accepted offer is the opening of an escrow account, where the buyer’s earnest money deposit is held.

Following this, the buyer schedules the home inspection to assess the property’s condition. Concurrently, the lender orders an appraisal to determine the property’s fair market value. Loan underwriting then commences, involving a thorough review of the buyer’s financial profile and the property details.

A title search is conducted to ensure clear ownership and identify any liens or encumbrances on the property. This step secures title insurance, which protects both the buyer and lender from future claims against the property’s title. Closer to the closing date, the buyer conducts a final walkthrough to confirm the property is in the expected condition and agreed-upon repairs have been completed. The closing process culminates with the signing of numerous documents, the transfer of funds, and the official transfer of ownership.

Submitting a Backup Offer

Even when a property is in pending status, it is sometimes possible for an interested buyer to submit a backup offer. A backup offer is a legally binding contract that positions a buyer to purchase the home if the primary pending sale falls through. While a seller is committed to the initial buyer, unexpected issues like financing problems, appraisal gaps, or inspection concerns can cause the first deal to collapse.

Sellers might consider accepting backup offers, especially in competitive markets, as a safety net to avoid relisting the property if the primary sale fails. If the initial contract terminates, the backup offer can automatically move into the primary position. Buyers making a backup offer should be prepared to provide an earnest money deposit, similar to a primary offer, which would be held in escrow. If the primary deal closes successfully, the backup offer becomes void, and the earnest money is returned to the backup buyer.