What Does Pending Mean When Buying a House?
Navigate the "pending" stage of home buying with clarity. Understand what this status means and the essential steps to a successful closing.
When buying a house, understanding the “pending” status is important. It indicates a property is under contract and influences future opportunities.
What “Pending” Signifies in Real Estate
When a property is marked as “pending,” the seller has accepted an offer, and the home is under contract, moving towards a finalized sale. This means the transaction is progressing, and the listing is generally no longer available for new offers. While an offer is agreed upon, ownership has not yet transferred. This differs from an “active” listing, which is available for offers, and a “sold” status, where ownership transfer is complete. “Pending” represents the period after agreement but before final transfer.
Key Stages and Contingencies During Pending
A property enters pending status once an offer is accepted and the contract is executed. Finalization depends on certain conditions, called contingencies, being satisfied. These clauses in the purchase agreement outline requirements that must be met within a timeframe for the contract to be binding. They protect both buyer and seller, allowing withdrawal without penalty if conditions are not fulfilled. Common contingencies include:
Inspection contingency: Grants the buyer a period to conduct home inspections. If issues are revealed, the buyer can request repairs, negotiate a price reduction, or cancel the contract and receive their earnest money deposit back.
Financing contingency: Makes the sale dependent on the buyer securing loan approval within a set timeframe. This protects the buyer from being obligated to purchase if their mortgage application is denied, allowing them to exit the contract without losing earnest money.
Appraisal contingency: Ensures the property appraises for at least the agreed-upon purchase price. If the appraisal is lower, the buyer can renegotiate, cover the difference with cash, or withdraw from the deal while retaining earnest money.
Title contingency: Ensures the seller can legally transfer clear ownership, free from undisclosed liens or errors. Buyers examine a preliminary title report to identify potential issues.
Home sale contingency: Protects a buyer who needs to sell their current home to finance the new purchase, allowing cancellation if their existing property does not sell by a specified date.
Activities and Milestones During Pending
During the pending period, both buyer and seller fulfill contract conditions. For the buyer, steps include scheduling and conducting home inspections, which may include general home, pest, or radon assessments. After inspections, buyers may negotiate with the seller for repairs or credits.
Buyers also secure mortgage financing by submitting a loan application, undergoing underwriting, and providing financial documentation. The lender arranges an appraisal to determine market value. Buyers also review seller disclosures and examine title reports to be fully informed about the property and its legal status.
On the seller’s side, activities involve providing property access for inspections and appraisal. Sellers must respond to repair requests or renegotiation proposals. Ensuring the property’s title is clear for transfer is also a responsibility.
Submitting an Offer on a Pending Property
While a property in “pending” status generally means an offer has been accepted, some sellers may still consider “backup offers.” A backup offer is a legally binding contract that positions a second buyer to purchase the home if the initial pending contract falls through.
This provides a safety net for the seller, preventing the need to relist the property if the primary deal fails. Sellers might entertain backup offers, especially if the existing contract has a home sale contingency or perceived instabilities in the primary buyer’s financing.
Real estate listings sometimes indicate this openness through statuses like “Active with Contract” or similar terms in the Multiple Listing Service (MLS), suggesting the seller is still willing to show the property or receive additional offers.
However, making an offer on a pending property often has a lower chance of success compared to an active listing, as the current buyer and seller are actively working towards closing. Prospective buyers interested in a pending property should consult their real estate agent to determine the feasibility of submitting a backup offer and understand specific market conditions.