When a House Is Pending, What Does That Mean?

When a house is listed as “pending” in real estate, it means an offer has been formally accepted, and a contract signed. While the property is no longer actively marketed, the sale is not yet finalized, and various conditions must be met before ownership transfers.

Understanding the Pending Status

The “pending” status means a property is under contract and moving towards closing. It differs from an “active” listing, which is still available for offers. Unlike a “contingent” status, where the accepted offer is subject to significant unresolved conditions, “pending” implies most contingencies are satisfied or waived, bringing the transaction closer to completion.

A property transitions to pending after an offer is accepted and the contract executed, taking it off the active market. This indicates the buyer and seller have agreed on terms and are progressing toward ownership transfer. While the sale is well underway, the deal could still fall through, for example, if financing issues arise or unexpected problems are uncovered.

Common Contingencies

A contingency in a real estate contract is a condition that must be met within a specified timeframe for the sale to proceed. These clauses protect both parties, allowing withdrawal from the contract without penalty if conditions are not satisfied. Common contingencies address potential issues that could impact the sale’s viability.

The inspection contingency grants the buyer the right to conduct a home inspection. If the inspection reveals significant issues, the buyer can negotiate repairs, a price reduction, or withdraw from the sale. An appraisal contingency ensures the home’s value, as determined by a professional appraiser, meets or exceeds the purchase price. If the appraisal comes in low, the buyer may renegotiate the price, pay the difference in cash, or terminate the contract.

The financing contingency allows buyers who require a mortgage to cancel the purchase if they are unable to secure loan approval. This protects the buyer from losing their earnest money deposit if their loan application is denied. The sale of buyer’s home contingency makes the purchase dependent on the buyer selling their existing property within a defined period.

Activities During Pending

Once a home enters pending status, actions unfold to move the transaction toward closing. The buyer arranges for a home inspection, a detailed examination of the property’s condition. This inspection, usually paid for by the buyer and costing between $250 and $600, identifies any hidden defects or necessary repairs. If issues are found, the buyer may negotiate with the seller for repairs or financial concessions.

For financed purchases, the buyer’s lender orders an appraisal of the property. An appraiser assesses the home’s market value to ensure it supports the loan amount, costing $400 to $600 and paid by the buyer. This appraisal helps protect the lender’s investment and confirms the property’s value as collateral.

The mortgage underwriting process intensifies, where the lender evaluates the borrower’s financial health, including credit history, income, assets, and employment, to grant loan approval. A title search verifies clear ownership and identifies any liens, encumbrances, or disputes that could affect the transfer of title. Title insurance is then purchased to protect both the buyer and the lender against unforeseen title defects.

Implications for Parties Involved

The pending status carries implications for all parties. For sellers, a pending home means an accepted offer and progress toward a sale, but it is not guaranteed. While the property is off the market, sellers must be prepared for the deal to fall through due to unmet contingencies, such as a low appraisal or a buyer’s financing issue. Sellers may still accept backup offers, which can provide a safety net if the primary deal fails.

For buyers, the pending phase is a period of active engagement and financial commitment. They fulfill the requirements of their contingencies, such as scheduling inspections and ensuring their loan underwriting process proceeds smoothly. Buyers must provide financial documentation to their lender and work with their real estate agent to meet all contractual deadlines. Their earnest money deposit, held in escrow, is at risk if they default on the contract without a valid contingency.

For other interested buyers, a pending listing can be frustrating, but the home is not always out of reach. While less likely than a contingent sale, it is still possible to make a backup offer on a pending home. If the initial deal encounters problems, such as financing falling through or inspection issues, the seller might consider a backup offer. However, the likelihood of a backup offer being accepted on a pending property is lower than on a contingent one, as pending implies the transaction is further along.