Sale Pending vs Contingent in Real Estate

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You might have heard of or read the terms “pending” and “contingent” in the context of real estate listings. Both refer to properties where the seller has accepted an offer, but the deal hasn’t been finalized. The status is pending or contingent based on how close the house is to being sold. If a sale is pending or contingent, there is a slight chance of the sale falling through; thus, other buyers may still be able to make an offer for the property.

If a sale is contingent, it means that the home has a conditional offer on it. The sale will be completed after the conditions of the offer are satisfactorily met. There could be different contingencies during a house sale, such as mortgage financing and inspection contingencies. Such homes aren’t entirely taken off the market as the deal may still fail. Contingent houses can have different statuses. The common contingent statuses are listed below.

Contingent Continue to Show (CCS) is a status that allows the seller to continue showing the property to more buyers till certain contingencies are met. During this time, the seller may even accept an offer from another buyer or accept backup offers in case the sale with the original buyer falls through.

As opposed to CCS, in a no show status, the seller decides not to show the home to any other buyers. When the sellers choose not to show the house anymore or accept any more offers, they are usually confident that the sale will go through.

This is a clause that can be attached to a contingent sale, according to which the contingencies need to be met by a particular deadline. If the buyer fails to meet the conditions by the deadline, the seller can withdraw from the contract. If there is no kick-out clause, there is no deadline for the contingencies to be met.

A short sale typically refers to a situation where the seller has agreed to sell a property for less than what's owed on the mortgage. The seller here is typically a bank or a lender that has foreclosed the property. The short sale status usually means an offer is accepted, and the home is no longer for sale.

A probate status usually means that the previous owner has passed away and their estate is being sold off. The lawyer handling the sale usually gets a portion of the proceeds afterward.

The buyer and seller can agree on common types of contingencies in a real estate transaction.

• Inspection Contingency
  A home inspection is one of the most common contingencies to protect the buyer during a home sale. This contingency gives the buyer a right to back out of the sale based on the inspection results. The home inspection may be carried out by a professional on behalf of the buyer. If some issues are uncovered during the inspection, the buyer may ask the seller to fix the problems and can even negotiate the price. If the seller does not cooperate, the buyer can walk out of the deal.
• Financing Contingency
  This contingency is the most common reason for sales falling through. The financing condition protects the buyer when they are not approved for a mortgage or a sufficient mortgage amount. If the buyer cannot secure the funding for the home, the purchase contract becomes void, and the buyer can walk away from the deal without any penalty or consequences.
• Appraisal Contingency
  This condition allows a buyer to back out of a sale if the home's appraised value is significantly lower than the agreed-upon purchase price. The home appraisal is carried out with the help of a professional appraiser, who prepares an appraisal report. The buyer’s decision depends on the appraisal gap that is uncovered in the report.
• Title Contingency
  A home sale involves the transfer of the property title from the seller to the buyer. The title contingency allows a buyer to back out of a transaction if any liens or claims are revealed in the title search that could hinder the smooth transfer of the title. This issue is rare, especially if the seller has title insurance.
• Buyer’s Home Sale Contingency
  This contingency protects the buyers when they cannot sell their current home. If the buyer can’t sell their previous home in a specified time, they can walk out of the deal.

A pending sale refers to a sale where all the contingencies have been met, and the sale is about to close. At this stage, there is little possibility of something going wrong, and the deal will likely be successful. Like contingent statuses, pending sales can also have different types of statuses.

Even when the sale is near completion, there is still a slight possibility of the sale falling through. If a pending sale has a backup status, it means that the sellers are accepting backup offers in case something goes wrong with the original buyer.

If a property has a no show pending status, it generally stops showing on listing sites. This usually means that the sale is almost closed, and there is almost a negligible chance of the sale falling through.

This tag automatically appears next to properties listed as pending on the MLS for more than four months. It could be because the listing agent forgot to change the status to sold, or it could mean that the deal is taking longer to close.

Like the short sale contingency status, the short sale pending status also refers to a property being sold for less than what was owed on the mortgage by a bank or lender after having foreclosed the property. This typically means that the seller is likely only accepting offers.

If a sale is contingent or pending, you may still be able to make an offer on a home. The status of the contingent or pending home usually tells you if the buyer is still accepting offers on the home.

For homes with a ‘contingent continue to show (CCS)’ status; the seller would continue accepting offers from prospective buyers. In most cases, the contingent offer takes precedence if the contingencies are met, and the seller will pick a backup offer only if the sale falls through. However, the seller may accept your offer if it's better than the previous offer, provided the existing contract’s conditions allow it.

If you like a home and want to make an offer on it, you could do the following:

• Contact the seller’s agent and try to find out the status.
• Try to beat the buyer’s offer.
• Make an unconditional offer.
• Write a personal letter to the seller.

Once a home is in pending status, it is usually very close to closing, and there’s usually a clause that prevents the seller from accepting an offer from another buyer. That said, if the seller is still accepting backup offers, you could still make an offer on the home.

While contingent and pending are terms used to describe sales where the seller has an offer, the sale has yet to be finalized, and there is a slight chance of the sale falling through. Interested buyers may be able to make an offer on pending and contingent homes; however, in most cases, the original offer gets preference.