Contingent vs. Pending: What’s the Difference?
When you’re looking at real estate listings, you might come across homes described as “pending” or “contingent” instead of “for sale” or “active.” If you’re wondering whether you should consider these listings in your home search, you’ll need to understand the difference between the two terms.
Here’s what contingent and pending mean in real estate, and whether you can place an offer on homes with one of these statuses:
What is the difference between pending and contingent?What does contingent mean in real estate?What does pending mean in real estate?Common contingency clausesCommon pending clausesCan you put an offer on a house that is contingent?Can you put an offer on a house that is pending?
What is the difference between pending and contingent?
The difference between pending and contingent lies in how many things still need to happen before the home sale can close. Both terms mean that the seller has already accepted an offer, however the difference lies in how far along the home is in the sale process:
Pending: A pending home indicates that all contingencies have been met by the prospective buyer.Contingent: A home listed as contingent still has certain contingencies open.
The seller of a pending or contingent home may or may not be open to receiving additional offers. It depends on how likely they think the transaction is to close.
Important: Since a pending home is closer to closing, you’re more likely to have your offer accepted on a contingent home than a pending home. Technically, either type of listing represents a home that hasn’t actually been sold yet, so it’s worth inquiring to the seller’s agent if it’s your dream home and you’re serious about buying it.
What does contingent mean in real estate?
Contingent means that certain conditions — aka contingencies — need to be met before the deal can close. A homebuyer will often include contingencies in their offer to make sure they can get their earnest money back if the home does not appraise high enough, their mortgage isn’t approved, or another specified condition can’t be met.
A contingent listing is less likely to end up sold than a pending listing because of these conditions. If the purchase contract contingencies can’t be met, then the buyer or seller can terminate the contract without penalty.
What does pending mean in real estate?
Pending means the home has not sold yet, but the deal is likely to go through. Either the contract did not have any contingencies, or all the contingencies have been met and the sale is being processed.
Tip: Some multiple listing services use the term “under agreement” instead of pending. Homes listed as pending are so likely to close that the National Association of Realtors uses the number of pending home sales to gauge how well the housing market is performing.
Common contingency clauses
Here are five common contingency clauses homebuyers and sellers often include in purchase agreements.
An appraisal contingency allows you to back out of the deal if your lender determines that the home’s value is less than the purchase price.
For a home purchase, a professional home appraiser typically evaluates the home inside and out to determine its fair market value.
A financing contingency, also called a mortgage contingency, allows you to exit the contract if you can’t secure a mortgage.
Ideally, you’ll get pre-approved for a mortgage before making an offer on a home. However, even with pre-approval, the lender may uncover additional information during underwriting, your financial situation may change for the worse, or mortgage rates may go up and make it harder for you to qualify.
In situations like these, you may be unable to secure a mortgage and, therefore, unable to buy the home.
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An inspection contingency involves you — the buyer — hiring a professional home inspector to look for major problems that could affect the home’s value, safety, or livability.
If the home inspection reveals significant issues, you and the seller can negotiate a solution to keep the deal intact. For example, the seller might make the necessary repairs or lower the purchase price by the estimated cost of the repairs so you can have the work performed after closing.
Contingency with a kick-out clause
A kick-out clause in a home purchase contract means the seller and buyer have agreed that the seller will continue accepting backup offers because the buyer’s offer is contingent upon the sale of their property.
A kick-out clause goes hand-in-hand with a sale contingency, described below. The listing might have a “48-hour kick-out clause” or “72-hour kick-out clause,” indicating how long the buyer currently under contract has to waive their sale contingency and provide proof of financing before the seller can accept a backup offer.
A title search is an important part of any real estate transaction. You’ll pay a title company to make sure the seller is the only one with any legal claim on the home.
A title contingency allows you to walk away if the title search reveals title defects that cannot be resolved. For example, if the home has a contractor’s lien from work the seller hasn’t paid for, a title contingency would require the seller to pay off that lien if they want to sell the home to you.
A sale contingency allows you to exit the contract if you cannot sell your current home. Let’s say you are moving from New Orleans to Nashville and you only want to move your belongings once. But to get the money to buy a new place in Tennessee, you’ll need to first sell your current place in Louisiana.
You’d want to put a sale contingency in your purchase agreement for the Nashville home so you won’t lose your earnest money if your New Orleans home doesn’t sell within the time period stated in the purchase contract.
Tip: You can avoid having to use a sale contingency by getting a bridge loan.
Let’s say you’ve found a buyer for your New Orleans home, but the deal isn’t final. A closing contingency, also called a settlement contingency, would allow you to get out of your Nashville contract without penalty if your buyer can’t close within a specified time.
Common pending clauses
If you see a home that’s listed as pending, it might come attached with one of these additional descriptions.
Pending – taking backups
“Pending – taking backups” means that the seller isn’t confident the deal with their current buyer will close. The buyer might be having trouble obtaining financing, for instance. Whatever the case may be, this status indicates the seller is willing and contractually able to accept backup offers should the current deal fall through.
Pending – short sale
This listing status describes a situation where the owner wants to sell but must get their mortgage lender’s approval first. That’s because in a short sale, the property’s market value is lower than the mortgage balance, and the lender will have to take a loss.
“Pending” in this case does not mean that the transaction is about to close. It means the seller has accepted an offer and is waiting for their lender to approve it. You’re more likely to see these types of listings during a recession or after a major housing market decline.
Good to know: Depending on which listing service you’re using to search for homes, you might also see a home in this situation listed as “contingent short sale.” And with some listing services, “pending short sale” does indeed mean that the seller is under contract with a buyer and the bank has approved the short sale.
Pending – more than 4 months
This is a self-explanatory status that means a property has been listed as pending for longer than four months. The property might still be under contract but experiencing delays, or it might have been sold and the listing status is incorrect. A public records search can determine whether the home was recently sold if the listing agent can’t be reached.
Can you put an offer on a house that is contingent?
It is sometimes possible to place an offer on a house that is contingent. One way sellers can indicate that they’re open to additional offers is to have their agent change the property’s listing status from “active” to “active under contract.” Active under contract means the seller has accepted an offer, but that offer has contingencies, and the seller may consider additional offers.
Ask your real estate agent to contact the seller’s agent for more information. Then, your agent can guide you through the process of making an offer on a contingent listing if it seems worthwhile.
Can you put an offer on a house that is pending?
You probably won’t be able to make an offer on a house that is pending because this status means the house has a scheduled closing date and everything is on track to close. Plus, the seller’s contract with their existing buyer may prohibit them from accepting additional offers.
If the seller is not accepting backup offers and it’s your dream home, you might want to contact the listing agent. You can always express your interest and ask them to get in touch with you if the home ends up back on the market.
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