What Does It Mean When a House Is Under Contract? Pending? Contingent?

Dated: April 5 2022

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After months and months of searching, it finally happens. You’ve found your dream home. But there’s a catch. Whether you scoured a home listing website late at night or you drive by the perfect property on a Sunday morning, it’s disappointing to find out that a home you’re interested in is under contract or pending. 

Even if the home isn’t for sale, you may find there are contingencies on the sale of the home that are hard for you to meet. Terms like “under contract” and “pending” tend to imply that the home is sold and off the market, but that actually isn’t the case. We’ll provide insight into what the difference between pending and contingent is, what it means for a home to be under contract, and more key details about the home buying process. 

What does it mean when a home is under contract?

what does it mean when a home is under contract?

What does active under contract mean? When a home is under contract (which is sometimes called “active under contract”), it means that the buyer has made a formal offer on the property and the seller has accepted their offer. While there is a good chance the sale will go through, if your dream home is under contract, you don’t have to necessarily give up hope. We’ll explain why in a minute. 

What does it mean when a home is pending?

what does it mean when a home is pending?

For a home to be listed as pending, that means the home is under contract and there are no longer any contingencies on the sale. Once a property is listed as pending, the home is much closer to actually being sold than when it’s under contract.  

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What’s the deal with contingencies? 

what does it mean when a home sale is contingent?

If a home is listed as being a contingent sale, that doesn’t mean the home is sold or an offer has been made. Instead, it refers to the sale of the home being dependent on a contingency working out. Both sellers and buyers can come to the table with contingencies that are required for the sale to go through (such as the buyer selling their current home first). 

You may see a home listed as being both a contingent sale and under contract. The good news for someone who wants to buy a home that is already under contract is that if there are contingencies in place, there is a better chance the sale won’t go through. 

How does the real estate transaction process actually work? 

It’s hard to conceptualize what these different sales terms mean if you aren’t familiar with what it takes to buy a home. This brief overview will give you an idea of how the process works and what order each of these statuses come into play.

Step 1: The buyer tours homes and finds one they want to make an offer on.

Step 2: The buyer makes a formal offer in writing, and they may agree to contingencies put in place by the seller or set their own.

Step 3: The seller considers the offer.

Step 4: Negotiations may ensue at this point.

Step 5: The seller accepts the offer (if all goes well).

Step 6: The seller accepts the offer.

Step 7: The seller and buyer sign a contract (that will be contingent on certain factors such as inspection results) — the home is now under contract.

Step 8: The buyer’s earnest money will be deposited into an escrow account.

Step 9: The buyer applies for a mortgage.

Step 10: The home will go through an inspection and appraisal — you are now at the sale pending stage.

Step 11: The deal will close.

If you see a house at this stage, is it too late to buy the home?

Not necessarily, especially when you take this fun fact into consideration: Real estate agents may use these status terms interchangeably if their multiple listing service (MLS) doesn’t have a tag for the applicable status. This means when you come across a home on an MLS, you can’t always take its current status at face value. It’s always worth asking your real estate agent to confirm the home’s status with the listing agent. 

If the home is listed correctly, here’s what your chances are of being able to buy a home that is under contract or pending. Remember, just because a home is contingent, doesn’t mean it has an offer — just a contingency placed on it for the sale to go through. 

  • Under contract: Can a house under contract be sold to someone else? Yes. Unless there is a clause in the contract between the seller and prospective buyer that doesn’t allow the seller to accept backup offers or continue to sell the home, then it’s definitely worth inquiring about the home. The sale of the home isn’t a done deal at this point and could fall through. 
  • Sale pending: This one’s a maybe. Once a sale is pending, the sale is pretty close to done. Some seller’s agents won’t want to accept additional offers at this point since their original deal is likely to go through. However, it can’t hurt to give them your contact info in case the sale does fall through. 

In either case, there’s no harm done if you reach out to inquire about if you can make an offer on a home that is under contract or pending. The worst they can say is no and in the best case, you may be the first one they contact if the first sale doesn’t work out. 

How to buy a house under contract

If a house is under contract, but you’re set on making an offer, your real estate agent will walk you through how to buy a house under contract. For some background information, here’s what the process generally looks like. 

Step 1. Put your agent to work

Ask your real estate agent to speak to the listing agent to find out if they are accepting backup offers at this stage of the game. Your agent should be able to get a feel for if the deal is expected to go through or not. If they are open to backup offers, have your agent inquire as to what their ideal offer is so you can make a competitive one. 

Step 2. View the home

Let’s slow down for a moment. If at all possible, before you make an offer on the home, try to arrange to view the home. Photographs don’t tell the whole story. When you’re eager to squeeze in an offer in case the current one falls through, you may think agreeing to not see the home in real life is worth it, but it’s not. If the seller wants your offer as a backup, they should agree to let you come see the home. 

Step 3. Make a competitive offer

Now that you know what the seller wants in an offer, such as a rent-back deal or a contingency that the sale can’t go through until they buy a new home, you can create a competitive offer. If you can accommodate the seller’s needs and can meet the price of their last offer, you’ll be in good shape. On your end, not having any contingencies will help a lot, although you should only agree to a sale that you’re fully comfortable with.

Step 4. Write an offer letter 

Including a personal offer letter alongside your offer that outlines why you want to buy their specific home is an extra special touch that goes a long way. If you can pull on the seller’s heart strings, you may stand out from other very similar backup offers. Of course, a personalized letter about why you love their home won’t be able to compete with a strong financial offer, but if you’re on equal footing otherwise, it can push the seller in your direction. 

Now that you know what these different terms mean, you can move more confidently when you finally find a home you love, even if an offer has already been made. Remember: It never hurts to ask. 

Reference to Orchard.com

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Roger Engstrom

Your home is your greatest investment and your satisfaction is the ultimate reward for my work. I am a REALTOR® dedicated to achieve results and provide exceptional service. If you are in the mark....

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