What Does Pending Status Mean in Real Estate?

A “pending status” in real estate means an offer has been accepted, but the sale is not yet complete. Both the buyer and seller have agreed to the contract terms, initiating ownership transfer. The property is off the active market but not yet sold. This transitional period requires various conditions to be satisfied before closing.

Understanding “Pending Status”

When a property is listed as “pending,” it signifies a seller has accepted a buyer’s offer, and the transaction is progressing. The typical timeline for a property in pending status ranges from 30 to 60 days, though this can vary. During this period, crucial activities occur, including the buyer securing financing, conducting a home inspection, and obtaining an appraisal. This phase serves as a due diligence period for the buyer, allowing them to verify the property’s condition and financial viability before the sale becomes final. The property is no longer actively marketed to other potential buyers, signaling a strong commitment from both parties.

Common Contingencies in a Pending Sale

Real estate contracts frequently include specific conditions, known as contingencies, that must be satisfied for the sale to proceed. These clauses protect both buyers and sellers, allowing them to withdraw from the contract without penalty if certain terms are not met.

Financing Contingency

The financing contingency makes the sale dependent on the buyer securing a mortgage loan. This clause grants the buyer a period, often 30 to 60 days, to obtain loan approval. If the buyer’s financing falls through, they can terminate the contract and receive their earnest money deposit back.

Inspection Contingency

The inspection contingency allows the buyer to have the property professionally inspected. Buyers typically have a period, often 7 to 10 days, to conduct this inspection and review the report. If significant issues are discovered, the buyer can negotiate for repairs, a price reduction, or withdraw from the contract without losing their earnest money.

Appraisal Contingency

The appraisal contingency protects the buyer and their lender by ensuring the property’s appraised value meets or exceeds the agreed-upon sale price. If the appraisal comes in lower than the purchase price, the buyer may renegotiate the price, cover the difference out-of-pocket, or terminate the agreement and recover their earnest money. Lenders typically will not finance more than the appraised value.

Sale of Buyer’s Home Contingency

A sale of buyer’s home contingency is included when the buyer needs to sell their current residence to fund the new purchase. This condition allows the buyer to cancel the contract if their existing home does not sell within a specified timeframe. This contingency can make an offer less appealing to a seller due to added uncertainty and potential for delays.

Title Contingency

A title contingency ensures that the property has a clear legal title, free from liens, disputes, or other claims. A title search identifies any issues that might affect ownership rights. If unresolved title problems are discovered, the buyer can negotiate for them to be cleared or, if they cannot be resolved, exit the deal without penalty.

Making an Offer on a Pending Property

A buyer might still consider making an offer on a pending property. A backup offer is a legally binding contract that positions a buyer to purchase the home if the initial pending sale falls through. If a seller accepts a backup offer, it means that if the primary deal fails to close, the backup offer automatically moves into the primary position.

This provides a safety net for sellers, avoiding the need to relist the property. For the backup buyer, it offers a chance to secure a desired property. Sellers typically cannot consider new offers unless specific conditions are in place, such as a “kick-out clause” in the initial contract. A buyer interested in a pending property should have their real estate agent inquire about the status of contingencies and any potential issues with the current transaction.

When a Pending Sale Doesn’t Close

Industry data suggests that roughly 5% to 6% of pending offers are terminated. These cancellations often stem from the failure to meet one or more of the contingencies outlined in the purchase agreement.

Financing Falling Through

The buyer’s financing falling through is a common reason for a sale to fail. This can occur even after pre-approval if the buyer’s financial situation changes, such as a job loss, or if mortgage rates rise, making the agreed-upon price unaffordable. Lenders may also deny the loan if the property does not meet their underwriting requirements.

Failed Home Inspection

A failed home inspection can lead to a sale collapsing. If the inspection uncovers significant issues, such as structural damage, major repairs, or safety concerns, and the buyer and seller cannot agree on how to address them, the buyer may withdraw.

Low Appraisal Value

A low appraisal value can cause a sale to fail if the home appraises for less than the agreed-upon price. Lenders will only finance up to the appraised value, requiring the buyer to cover the difference or renegotiate the price with the seller.

Buyer’s Existing Home Not Selling

If the sale is contingent on the buyer’s existing home not selling, and that condition is not met within the stipulated timeframe, the buyer may be unable to proceed with the purchase.

Issues with the Property’s Title

Issues with the property’s title, such as undisclosed liens, boundary disputes, or errors in public records, can prevent a sale from closing. These issues must be resolved before ownership can be transferred cleanly.

Buyer’s Remorse

Buyer’s remorse, or simply a change of mind, can lead to a buyer walking away from the deal, sometimes forfeiting their earnest money deposit.