Contingent vs Pending Property Listings

Throughout your house hunting journey, you’re likely to come across the terms “pending” and “contingent”. While they may seem interchangeable, these terms describe two different stages of the real estate transaction process. Understanding these terms is important to homebuyers as they can help determine how close a property is to being sold and what opportunities remain to submit an offer.

A contingent listing means there is a situation where the seller has accepted an offer from the buyer, but the sale is contingent on certain conditions being met. These conditions protect both parties and allow for certain steps to be taken before the sale becomes final. Here are some examples of common contingencies:

• Home Inspection Contingency: The seller has accepted a buyer’s offer, but the offer is contingent on the outcome of a home inspection. After the inspection is complete, the buyer has an opportunity to negotiate repairs and price reductions, or even back out of the deal if they choose to do so.

• Home Financing Contingency: The seller accepts a buyer’s offer, but the buyer must first secure home financing. The home sale will only proceed when the buyer is approved for a mortgage.

• Appraisal Contingency: The seller accepts a buyer’s offer, but the sale is contingent on the value of the home as determined by an appraisal. Oftentimes, the property is required to be appraised at or above the agreed purchase price for the buyer’s mortgage to be approved.

• Title Contingency: The seller accepts the buyer’s offer, but it must first be confirmed that there are not any active legal disputes or liens on the property before the deal is binding.

If any of the above contingencies are not met within the agreed upon timeframe, or the results don’t satisfy the contingency, the buyer has the option to walk away from the deal without penalty. If a deal falls through due to a contingency, the property will typically go back to “active” status on the market.

A “pending” listing means that any contingencies have been satisfied, and that the home sale is in its final stages. When a listing is marked as pending, it typically means that the buyer and seller are simply waiting for the final paperwork to be processed, and no further negotiations are typically allowed. When a listing status is “contingent”, there may still be an opportunity to submit a backup offer to the seller. If the current offer falls through, your offer could be considered by the seller. When a listing status is “pending” however, the ship has typically sailed. A pending listing means the transaction is nearing completion, and further offers are not typically accepted.

Understanding the difference between pending and contingent listings is important for buyers and sellers alike. While a contingent property still has some hurdles to overcome before being sold, a pending property listing is almost at the finish line. Knowing what these terms mean can help you navigate the market more effectively and manage expectations while house hunting. By staying informed, you can make more strategic decisions during your home buying journey.

If you haven’t already, find a Summit Loan Officer to guide you through the home financing process.