Key Highlights
- When a seller accepts an offer, a home enters the "under contract" or "pending" status in real estate.
- "Under contract" means the accepted offer has active contingencies, like a home inspection or appraisal.
- The "pending status" signifies that most or all contingencies have been cleared, and the home sale is nearing closing.
- Buyers can often submit a backup offer on a home in either the contract stage or pending status.
- A home purchase is more likely to fall through when it's under contract compared to when it's pending.
- Working with a skilled real estate agent is crucial for navigating these stages of a home sale smoothly.
Introduction
Navigating the real estate world can feel like learning a new language, especially when you're trying to sell your current home. You've accepted an offer, which is exciting! But now you see terms like "under contract" and "pending" pop up. What do they mean for your home sale? Understanding these statuses is key to a smooth transaction. This guide will clarify the differences between under contract and pending, helping you know what to expect and how to avoid common pitfalls on the path to closing.
Key Real Estate Statuses Every Seller Should Know
When selling your home, the real estate listing status changes as the deal progresses. These statuses communicate to other agents and potential buyers where your property is in the sale process. From "active" to "sold," each term has a specific meaning.
Understanding these different terms is crucial. It helps you anticipate the next steps and manage expectations during the contract stage. Knowing the nuances between statuses like "contingent," "under contract," and "pending" can make your real estate journey much clearer. Let's explore what each of these key statuses signifies.
Active Listings: What Does “For Sale” Really Mean?
When your real estate property is labeled as "active," it means it is officially on the market and available for sale. Your listing agent is actively seeking a buyer, scheduling viewings, and accepting purchase offers. For sellers, this is the initial phase where you showcase your home to attract interest.
For interested buyers, an active listing signals that no contracts are currently in place. It's the ideal time to view the property and submit an offer if you are interested. However, especially in a busy market, an active status can change very quickly.
If you're a seller with an active listing, be prepared for a flurry of activity. Prompt communication with your real estate agent is vital to review offers as they come in. For buyers interested in an active listing, it's wise to act swiftly and work with your agent to put together a competitive offer to secure the home sale.
The Role of “Under Contract” in a Real Estate Transaction
Once you accept a buyer's offer, your home's status changes to "under contract." This means both you and the buyer have signed a legally binding real estate contract to purchase the home. The agreement outlines the price, costs, and conditions that must be met before the sale can be finalized.
During this contract stage, the deal isn't complete yet. The term is often used interchangeably with "contingent," meaning the sale depends on certain conditions being fulfilled. These conditions, or contingencies, are key steps that must be completed before moving forward.
Because there are unresolved conditions, there's still a chance the deal could fall through. For this reason, many sellers continue to accept backup offers during the under contract phase. If the initial buyer cannot meet a contingency, you may have another offer ready to go.
Understanding “Pending” Status on Listings
A listing marked with a "pending" status indicates that the home purchase is much closer to the finish line. At this point, the buyer and seller have moved past the initial contract stage, and most, if not all, contingencies have been resolved. This could mean the inspections are done, the appraisal is complete, and the buyer's loan is approved.
While a pending sale is not absolutely guaranteed to close, it is much less likely to fall apart compared to a home that is under contract. The pending stage is for finalizing the last details, like title work and final loan processing, before the closing day.
Some listings might specify "pending - taking backups," which explicitly tells interested parties that the seller is still open to receiving offers. However, if you see a standard "pending" status, the chances of the original deal being canceled are quite low, though last-minute issues can still sometimes occur.
How Contingent Status Differs from Under Contract and Pending
The term "contingent" is often used synonymously with "under contract," but it specifically highlights that the home sale is dependent on certain conditions being met. A contingent sale means an offer has been accepted, but the contract has clauses that must be satisfied for the deal to proceed. If these conditions aren't met, the buyer can typically back out without penalty.
This status differs from "pending," which implies that these conditions have already been fulfilled. While a home under contract is always contingent on something, the "contingent" label explicitly communicates that these hurdles are still in place.
Some of the most common contingencies you will encounter include:
- Inspection Contingency: The buyer has the right to a professional home inspection and can negotiate repairs or cancel the deal based on the findings.
- Appraisal Contingency: The home must appraise for a value consistent with the purchase price for the lender to approve the loan.
- Financing Contingency: The buyer must successfully secure a mortgage loan to purchase the property.
- Home Sale Contingency: The buyer must sell their current home by a specific date to proceed with buying yours.
Under Contract vs Pending: Defining the Key Differences
So, what's the core distinction in real estate between "under contract" and "pending"? The primary difference lies in the status of the contingencies outlined in the purchase agreement. "Under contract" signals that an offer is accepted, but conditions are still actively being worked through.
In contrast, a "pending" status means those conditions have been met or waived, and the sale is in the final stretch before closing. Think of it as a timeline: a home typically goes under contract first, and once contingencies are cleared, it moves to pending. Let's look closer at the specifics that separate these two important phases.
Legal Distinctions Between Under Contract and Pending
From a legal standpoint, the main difference between the contract statuses of "under contract" and "pending" revolves around the contingencies. When a home is under contract, the buyer often has legal ways to exit the deal without penalty if a contingency is not met. For example, if the inspection reveals major issues, the inspection contingency gives the buyer an out.
Once the status shifts to pending, most of these "escape hatches" are gone. The buyer has signed off on the contingencies, making the contract much more solid. Backing out at the pending stage can be considered a breach of contract, potentially leading to legal consequences or the loss of their earnest money deposit. A real estate attorney can clarify the specific terms in your contract.
The legal standing of each contract status in a real estate transaction can be summarized as follows:
Feature
Under Contract
Pending
Contract Status
Offer accepted, but contingencies (e.g., inspection, appraisal, financing) are still active.
Offer accepted, and all or most contingencies have been satisfied or waived.
Buyer's Ability to Cancel
Higher. The buyer can often cancel without penalty if a contingency is not met.
Lower. Canceling at this stage may result in breach of contract and loss of earnest money.
Deal Security
Less secure. The sale is dependent on meeting several conditions.
More secure. The sale is approaching the final closing steps.
Typical Timeline: How Long Homes Remain Under Contract or Pending
The time period a home spends in the "under contract" stage can vary, but it typically lasts between one to two weeks. This window allows the buyer to complete essential due diligence, such as the home inspection and negotiating any potential repairs with you, the seller. The specific timeline for these activities is defined in the purchase contract.
Once all contingencies are met, the listing moves to the pending sale stage. A home generally remains pending for about 30 to 60 days. This duration depends heavily on the buyer's financing, the efficiency of the title company, and any local requirements. This is the time when the lender finalizes the mortgage, and all the necessary legal paperwork is prepared for closing.
Ultimately, the total time from accepting an offer to closing the sale depends on the complexity of the agreement and how smoothly each step progresses. A cash offer might close much faster, while a deal with a home sale contingency could extend the timeline significantly.
What Happens as Listings Move from Under Contract to Pending?
The transition from "under contract" to "pending" is a major milestone in a home sale. During the contract phase, several critical activities take place. This is when the buyer schedules a home inspection to check the property's condition and a home appraisal is ordered by the lender to confirm the home's value.
The buyer also works to secure their final loan approval during this time. As the seller, you might be involved in negotiating repairs based on the inspection report or waiting for the appraisal results. Each satisfied contingency brings the deal one step closer to the next phase.
Once the buyer has completed their inspections, obtained loan approval, and the appraisal is confirmed, they will sign off on these contingencies. At that moment, the deal is no longer conditional on these items. Your agent will then update the listing status from "under contract" to "pending," signaling to the market that your home sale is on solid ground and heading for the closing table.
What Sellers Should Expect When Their Home Goes Under Contract
When your home sale moves into the "under contract" stage, your work isn't quite done. This is an active period where several key steps must be completed to keep the transaction on track. You will need to be responsive and available to coordinate with inspectors, appraisers, and your real estate agent.
This phase can feel like a waiting game, but it's important to stay proactive. Your agent will guide you through negotiations that may arise from inspections and ensure all paperwork is handled correctly. Understanding what happens during this crucial contract stage will help you prepare for a successful closing.
Major Steps That Occur During the Under Contract Phase
After you've accepted a buyer's offer, the under contract phase kicks off a series of important actions. This period is dedicated to fulfilling the contingencies agreed upon in the sales contract. The buyer takes the lead on most of these tasks, but as the seller, you'll need to provide access to your home and be ready to respond.
The first major step is typically the home inspection, where a professional inspector examines your property for any issues. Simultaneously, the buyer's lender will order a home appraisal to ensure the property is worth the loan amount. A title search is also initiated to confirm that you have the legal right to sell the property and that there are no liens against it.
Key activities during this phase include:
- Home Inspection: The buyer hires an inspector to assess the home's condition.
- Appraisal: The lender's appraiser determines the property's market value.
- Securing Financing: The buyer works with their lender to finalize their mortgage loan.
- Title Search: A title company verifies the property's ownership and legal history.
Common Contingencies and Their Impact on Your Sale
Contingencies are conditions that protect the buyer, and they have a significant impact on your home sale. They give the buyer a legal way to back out of the contract and reclaim their earnest money if a condition isn't met. As a seller, it's vital to understand the most common contingencies and what they mean for your transaction.
The financing contingency is one of the most frequent. It allows the buyer to cancel the deal if they are unable to secure a mortgage. Another is the appraisal contingency, which protects the buyer if the home's appraised value comes in lower than the agreed-upon price. This can lead to renegotiating the price or the deal falling through.
Here are some of the most common contingencies:
- Financing Contingency: Ensures the buyer can walk away if their loan application is denied.
- Appraisal Contingency: Protects the buyer if the home doesn't appraise for the purchase price.
- Inspection Contingency: Allows the buyer to request repairs or cancel the deal based on inspection results.
- Home Sale Contingency: Makes the purchase conditional on the buyer selling their own home first.
Mistakes Sellers Should Avoid While Under Contract
During the contract phase, certain missteps can jeopardize your sale. One of the biggest mistakes is becoming unresponsive. Timely communication with your seller's agent and the buyer's team is crucial, especially when scheduling inspections or responding to repair requests. Delays can push back closing or even void the contract.
Another error is failing to maintain the property. The buyer expects the home to be in the same condition at closing as it was when they made the offer. Neglecting upkeep or causing damage can lead to last-minute disputes. It's also unwise to stop considering additional offers, as having a backup can be a lifesaver if the current deal falls through.
To ensure a smooth process, avoid these common mistakes:
- Ignoring deadlines: Missing contract deadlines can give the buyer an opening to cancel.
- Hiding known issues: Failing to disclose property defects can lead to legal problems later.
- Being inflexible on repairs: Unreasonable refusal to negotiate after an inspection can kill a deal.
- Making the home inaccessible: Not allowing access for inspections or appraisals can cause significant delays.
Navigating Offers During Under Contract and Pending Phases
Even after you've accepted an offer, the journey to selling your home isn't over. Sometimes, the original deal can hit a snag, such as a problem with the buyer's financing. This is where backup offers come into play. A backup offer can provide you with a safety net and prevent you from having to put your house back on the market.
Understanding how to handle interest from other buyers while you're already under contract or pending is a smart strategy. It can save you time and stress if your first deal doesn't work out, ensuring you have another prospective buyer ready for their new home. Let's discuss whether you can accept offers during these phases and how backup offers work.
Can Buyers Make an Offer On a Home Under Contract or Pending?
Yes, it is possible for a buyer to make a purchase offer on a home that is already under contract or pending. This is known as a backup offer. As a seller, you can choose to accept these offers to have a plan B in place. While you are legally bound to your primary contract, a backup offer can be activated if the first deal falls through.
For homes under contract, the chance of a backup offer being needed is moderate, as contingencies like inspections or financing can cause the original deal to fail. For pending homes, the likelihood is lower since most hurdles have already been cleared. However, some sellers explicitly state they are "pending - taking backups," inviting other buyers to submit an offer.
Submitting a backup offer can be a strategic move for a buyer in a competitive market. As a seller, having a strong backup offer provides peace of mind. It means you won't have to start the marketing process from scratch if your initial buyer has to cancel the contract.
Backup Offers: What They Are and How They Work
A backup offer is a legally binding contract submitted by a prospective buyer for a home that is already under contract with someone else. If you, the seller, accept a backup offer, it puts that buyer in the first position to purchase the home if the primary deal is terminated for any reason. It's essentially giving a hopeful buyer a second chance at the property.
This arrangement benefits you by creating a safety net. Instead of relisting your home and starting over, you can seamlessly transition to the backup contract, saving valuable time and money. The backup buyer gets the first right of refusal, preventing them from having to compete with others if the home comes back on the market.
Here’s how backup offers generally work:
- A buyer submits a formal purchase offer, just like the primary buyer did.
- If you accept it, you sign the backup contract, which becomes effective only if the first deal is canceled.
- The backup buyer is now in line, waiting to see if the primary contract closes.
- If the first deal falls through, the backup offer automatically moves into the primary position.
Why Listings Sometimes Return to the Market After Going Pending
Although a pending status means a sale is very close to closing, deals can still fall apart. When this happens, the listing returns to an "active" status on the market. This can occur for several reasons, often related to the original buyer or unforeseen circumstances that derail the original deal.
One of the most common reasons is an issue with the buyer's financing. Even with pre-approval, a buyer's financial situation can change—like a job loss or a drop in their credit score—causing the lender to deny the final loan. Another frequent cause is a major issue discovered during the final walk-through that wasn't present before.
Here are some common reasons a pending sale might not close:
- Financing Falls Through: The buyer is unable to secure the final mortgage loan.
- Home Inspection Problems: A significant, previously unknown issue is discovered late in the process.
- Appraisal Discrepancies: The home appraises for less than the sale price, and no agreement can be reached.
- Title Issues: A lien or claim against the property is found that cannot be resolved before closing.
Best Practices for a Smooth Selling Process
Selling a home involves many moving parts, but you can take steps to ensure the process is as smooth as possible. Being prepared, staying organized, and communicating clearly are fundamental. From understanding your net proceeds to navigating negotiations, a proactive approach will help you avoid common stressors.
Partnering with an experienced real estate agent is a good idea and arguably the most effective way to guarantee a seamless transaction. An expert can guide you through each stage, manage paperwork, and offer professional advice when you need it most. Let's explore why the right agent is so valuable and how to find one.
The Value of Partnering With the Right Real Estate Agent and How TrueParity Can Help Sellers Find the Best Agents
Navigating the complexities of under contract and pending statuses is where a skilled, licensed real estate agent truly shines. An experienced professional who is a member of the National Association of Realtors understands the local market, anticipates potential issues, and knows how to keep your sale on track. They manage deadlines, handle negotiations, and ensure all legal requirements are met, taking the pressure off you.
Finding the right agent can feel overwhelming, but it doesn't have to be. Using a reputable listing service to connect with top-rated agents is a great way to start. This is where TrueParity can help. Instead of spending hours researching and interviewing agents, you can find a qualified professional who is the perfect fit for your needs.
The best way to avoid mistakes and ensure a smooth selling process is to have an expert on your side. With the right real estate agent, you can confidently navigate every step, from accepting an offer to celebrating a successful closing. Let TrueParity connect you with the best local agents to make your home selling experience a positive one.
Conclusion
In summary, understanding the distinctions between "under contract" and "pending" is crucial for every seller navigating the real estate market. By grasping these terms and following best practices, you can avoid common pitfalls and ensure a smoother selling process. The right real estate agent is invaluable in this journey, offering expertise and guidance tailored to your unique situation. To find the best agents who can help you navigate these phases with confidence, be sure to explore TrueParity. Your successful sale starts with informed decisions and the right support!
