When looking for a home, you have probably seen the terms “pending” and “contingent” quite a few times.
While most people understand that these terms are related to the availability and sale status of the house, many aren’t sure of the differences between pending vs contingent. They also don’t know what the options are in each scenario.
So, what does contingent mean in real estate? And what about pending? Let’s answer these and other important questions below.
What is “Contingent”?
Contingent in real estate means that while the seller of the home has accepted an offer for the sale to go through, certain conditions have to be met by one or both parties.
Therefore, since the deal has not been finalized, it is still marked as active with contingency. This leaves open the possibility that the original deal could fall through.
When answering what does active contingent mean, it’s important to note that the deal is actually in place, and it can only be voided if one of the agreed upon contingencies is not met.
But what types of contingencies are there?
Well, one of the most common ones is a financing contingency, which allows the seller or the buyer to opt-out if the buyer doesn’t get a home loan or mortgage they were hoping for.
Another common example is an inspection contingency. This allows the buyer to hire a professional to inspect the house. If unexpected issues or damages are found, the buyer can opt-out of the deal or request the issues to be addressed before the sale is finalized. Finally, with an appraisal contingency, which is often required by lenders, the house price is evaluated to make sure that the house is worth is at least as high as the asking price.
Can Buyers Still Make an Offer?
Now that we’ve figured out what does contingent mean on a realtor’s website, we need to figure out whether you can still make an offer in such a situation.
Well, the truth is, each contingency situation is different. There are some situations where an offer may still make sense. But, at the end of the day, a contract has already been signed.
When it comes to contingent real estate, an experienced realtor is probably the best source of information for how to proceed on any individual listing – they can find out what type of contingency is in the contract and inform you of the likelihood of the deal falling through.
While it’s still possible to place a back-up offer for a home in contingency, it will always depend on the specific situation that’s in play.
What is “Pending”?
Next we must look at what pending means in real estate so that we have a clear understanding of how the two terms differ.
Pending is the next stage of the sale process that comes after all of the contingencies have been resolved. Usually, when a listing is marked pending, that means that both parties are in agreement and moving towards a sale, and now must solve the last minor details until the sale can be finalized and closed. However, just because the offer is no longer active doesn’t mean that there aren’t situations in which you may have a shot at buying the house at a later time.
When analyzing pending vs contingent sale statuses, it’s important to understand that while they are different stages of the process, sometimes the action plan may be quite similar. Depending on the type of pending status, you may be advised to place an offer anyway. One of the most common types of pending situations is when the seller is taking backups. That means that while the sale is technically almost finalized, there are some potential issues that could cause it to fall through. Because of this, the seller is looking for back-up offers they could fall back on just in case.
Another common pending sale situation is a short sale, where both the seller and the buyer need to get approval from several lenders or banks. This places the finalization of the sale out of the hands of either participating party. Finally, when a pending status lasts for many months, this can mean that the process has stalled because of negotiations, financing, or other reasons.
Can Buyers Still Make an Offer?
Once again, it’s important to reiterate that every situation is different. It’s beneficial to consult a realtor who can provide insights into the specific situation and recommend the best course of action for making an offer on a pending piece of real estate.
Whether the negotiations have stalled, or approval is becoming too complicated, there is a significant chance that the buyer will back out and the house will hit the market. In that situation, having already placed an offer can help get you promoted to buyer status immediately.
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In this article, we’ve established the main pending vs contingent differences. Contingent refers to sales that will move forward if the contingencies do not get activated, while pending means that contingencies have been resolved, and only unexpected issues could prevent the sale.