Can I Still Buy That House? Contingent, Pending, & Under Contract in Real Estate
At long last, after much thought and careful research, you’ve finally found the home of your dreams… but when you look at the listing on the web, it’s marked as being “contingent,” “pending,” or “under contract.” What does that mean? Can you still make an offer, or do you need to restart your search?
Not to worry! This post explains how to tell the difference between contingent vs. pending vs. under contract and outline your options with regard to making an offer on a home of your own.
What does contingent mean when a house is for sale?
“Contingent” is one of many real estate terms you may see used to describe the status of a listing. In fact, you may see it quite often when looking to purchase a home. It can be quite frustrating, especially if you’ve found a house that looks perfect for your family…and then you notice the status is listed as “contingent”. So, what does it mean when a property is contingent in real estate?
When a property is marked as contingent, it means that the buyer has made an offer and the seller has accepted that offer, but the deal is conditional upon one or more things happening, and the closing won’t take place until those things happen. If they don’t happen within a set period of time, the deal is off.
Real estate contingencies can be based on a number of issues and factors. Some of the more common contingencies when buying a house include:
Home inspection contingency – When a buyer’s offer has been accepted and the buyer has laid down an “earnest money” deposit on a home, the deal is almost always contingent on the home receiving an acceptable home inspection from a professional home inspector. If the inspection uncovers issues with the home that were not disclosed prior to the agreement being struck, the buyer and seller revisit the agreement and try to work out a solution. The buyer might insist that the seller perform needed repairs or reduce the sale price to cover the cost of addressing the issues. If the two sides are unable to come to an agreement on an equitable resolution to the matter, the buyer’s earnest money is refunded and the home goes back on the market.
Mortgage contingency – If a home buyer is not already pre-qualified for financing, the deal may be contingent upon the buyer being able to do so. If the buyer is not able to find a lender who will approve a mortgage, the deal is void, the seller keeps the earnest money, and the home goes back on the market.
Appraisal contingency – When a home buyer is applying for a mortgage, the mortgage lender may hire a professional third-party appraiser to assess the fair market value of the home, in order to ensure that their investment makes sense. If the appraised value is lower than the sale price, the buyer may need to secure additional funding. In the event that the buyer is unable to do so, the deal is void, the seller keeps the earnest money, and the home goes back on the market.
Home sale contingency – Sometimes, a home buyer who already owns a home will make an offer that is contingent on being able to sell their current home within a set time frame. This is usually done to enable the buyer to achieve financing on the new purchase.
It is not at all uncommon for contingent deals to fall apart as a result of the contingency in the agreement. Owners whose home is in contingent status can accept a backup offer, and that offer will have precedence if the initial deal does not go through, so if you like a contingent property, it makes sense for you to make an offer on the listing so that you are in position to buy if something goes wrong with that transaction. Contingent deals can get complicated, however, so it’s best to work with a real estate agent when making these sorts of offers. If you have questions or are in need of assistance navigating this type of sale, be sure to contact a local Howard Hanna agent.
What does under contract mean in real estate?
As with a contingent property, a home that is active under contract is one where the buyer and the seller have agreed to terms, but the deal is still in its early stages and may not come to fruition. A house under contract could easily return to the market due to unforeseen issues interfering with the conditions laid out in the current contract between the seller and the prospective buyer. You can still make an offer on a property that is under contract, and if it is accepted and the first deal falls through for some reason, you will be in position to purchase.
What does pending mean in real estate?
For a home that is listed as pending, there is an agreement in place, all contingencies have been addressed, and the deal is on the cusp of being completed. At this stage, the contract has been executed due to its required conditions being met. It is still possible for a deal in this situation to fall through, usually due to a home inspection or financing issues. However, it is much less common. Some real estate agents may not be willing to accept offers on homes where a sale is pending. Still, there is no harm in asking, as there is no legal barrier to making an offer on a house until the sale is final.
If you would like more information on what different listing statuses mean, take a look at our Real Estate Glossary entry on real estate listing statuses!
If you’re in need of mortgage services or other financial services, you can learn more about how we can help at our website.
If you still have questions about how to buy a home, or would like to make an offer on a specific listing that is contingent, pending, or under contract, we’re here to help.