What Does Pending vs Under Contract Mean?

The real estate terms “under contract” and “pending” often cause confusion for those navigating the housing market. While both statuses indicate that a seller has accepted an offer on a property, they represent different stages of the home sale process. Understanding these distinctions is important for prospective buyers and sellers alike, as they signal varying levels of commitment and opportunity within a transaction.

Understanding “Under Contract”

When a home is listed as “under contract,” it signifies that a seller has accepted an offer, and both the buyer and seller have signed a purchase agreement. This agreement formalizes the accepted offer, but the sale is not yet final. The transaction at this stage is contingent upon certain conditions being met. These conditions, known as contingencies, are clauses in the contract that protect both parties and must be satisfied for the sale to proceed.

Common contingencies include the buyer securing financing, a satisfactory home inspection, and the property appraising at or above the agreed-upon purchase price. A financing contingency protects the buyer if they cannot obtain a mortgage, allowing them to withdraw from the deal without penalty. An inspection contingency provides a window for the buyer to have the home professionally inspected and potentially negotiate repairs or even cancel the contract if significant issues are found. An appraisal contingency ensures the home’s value aligns with the purchase price. Some contracts may also include a contingency for the buyer to sell their current home.

During the “under contract” phase, the buyer submits an earnest money deposit, a good-faith payment demonstrating intent to purchase. This deposit, 1% to 3% of the home’s sale price, is held in an escrow account and is applied toward the down payment or closing costs at closing. If contingencies are not met, or if the buyer backs out for a reason not covered by a contingency, they may risk losing this deposit. While a home is under contract, sellers may still accept backup offers, as the deal can fall through if contingencies are not cleared.

Understanding “Pending”

A “pending” status indicates that all or most contingencies have been met or waived, signifying that the transaction is much closer to closing. The deal is considered more secure, with a higher likelihood of completion compared to an “under contract” status. It suggests that significant hurdles, such as financing approval, home inspection issues, and appraisal concerns, have been resolved.

While a pending sale is nearing its conclusion, it is not entirely final. Sales can still fall through, though it is less common, due to unforeseen issues like last-minute financing problems, title complications, or other extraordinary circumstances. A title search ensures the property has a clear title, free from liens or disputes, and any issues found must be resolved before closing. The period from a home going under contract to closing typically ranges from 30 to 60 days, with the “pending” phase often occupying the latter part of this timeline.

When a home is pending, it is considered off the active market, and sellers are less likely to actively seek or entertain new offers. However, some sellers may still accept backup offers in competitive markets, or if there is any lingering uncertainty about the current deal. The primary difference between “under contract” and “pending” often lies in the stage of contingency fulfillment and the overall proximity to the final closing.

Key Differences and What It Means for You

The distinction between “under contract” and “pending” primarily revolves around the progression of the sale and the remaining conditions. An “under contract” listing means an offer has been accepted, but the sale is still conditional on various protections for the buyer, such as a successful home inspection or securing a mortgage. This phase carries a higher risk of the deal collapsing if these conditions are not met.

Conversely, a “pending” status indicates that most, if not all, of these conditions have been satisfied, and the transaction is well on its way to completion. The likelihood of a pending sale falling through is significantly lower, making it a more stable status. For a potential buyer, encountering an “under contract” listing means there is still a reasonable opportunity to inquire and potentially submit a backup offer. If the initial deal encounters issues with contingencies, such as an unfavorable inspection report or financing falling through, your backup offer could become active.

For “pending” listings, the chances of the home becoming available again are considerably reduced. While it is technically possible to express interest or make an offer, especially in highly competitive markets, the probability of the current deal failing is low. Sellers, in turn, might manage backup offers differently based on the status; they are more likely to actively consider them for “under contract” properties due to the higher number of outstanding contingencies.