Imagine discovering your potential forever home, only to find that it's labeled as "contingent" or "pending" in the listing. But what exactly does this mean? While both terms indicate that the seller has accepted an offer, it doesn't necessarily mean that your offer would be automatically rejected.
What does Contingent Real Estate Mean?
When a property is labeled as "contingent," it signifies that the seller has accepted an offer; however, specific conditions must be fulfilled before the sale can be finalized. It's important to note that in this stage, there is still a possibility for the sale to not proceed if the conditions outlined in the offer are not met. In such cases, the house may return to the market for sale.
What are Common Real Estate Contingencies?
Contingency clauses, known as contingencies, play a significant role in real estate transactions. These clauses are included in the offer or sales contract and are designed to safeguard the interests of the buyer or seller. Depending on the circumstances, parties involved may choose to waive certain contingencies.
Appraisal: An appraisal contingency makes the offer conditional upon the results of a home appraisal. If the appraisal reveals a difference between the appraised value and the proposed purchase price, the buyer retains the right to withdraw their offer.
Inspection: An inspection contingency, often referred to as a "due diligence clause," states that the offer is contingent upon the outcome of a home inspection. The buyer typically has a specific timeframe to conduct the inspection. In the event of unfavorable findings, the buyer can negotiate repairs, financial compensation, or even withdraw the offer entirely.
Financing: A financing contingency clause ensures that the offer is contingent on the buyer securing a mortgage or suitable financing for the home purchase. This protects the buyer from being bound to a home they cannot afford or if they are unable to secure desired financing terms. If the specified loan amount or terms cannot be obtained, the buyer has the option to withdraw the offer.
Title: A title contingency allows the buyer to withdraw their contract if any questions arise regarding the ownership rights of the property during the title search conducted at the closing of the sale.
Buyer's Home Sale: In situations where a buyer needs to sell their current home to purchase a new one, a buyer's home sale contingency provides protection. This contingency makes the purchase contingent upon the successful sale of the buyer's current home, usually by a specified date. If the buyer fails to close the sale of their existing home by that date, the offer is rejected, and the sales contract is terminated.
These contingencies help manage risks and provide a framework for negotiation and protection for both buyers and sellers during the home buying process.
What Are Contingent Statuses?
The contingent status of a property is commonly seen on multiple listing service (MLS) platforms, which are private databases exclusively accessible to individuals with real estate licenses. If you seek further information about a property's contingent status, it is advisable to consult a real estate agent who can assist you. Here are some key terms related to contingent statuses:
Contingent no show: This status indicates that the seller has accepted an offer, resulting in the property being unavailable for viewing by potential buyers.
Contingent continue to show (CCS): In this case, the seller has accepted an offer, but the property remains open for viewing until the specified contingency is met.
Contingent kick out clause: With a contingent kick out clause, the seller has the freedom to consider other offers while the sales contract relies on another contingency. This means that the seller may accept an alternative offer, such as one without a contingency, which would result in "kicking out" the original offer. In such instances, the buyer is typically given an opportunity to waive their own contingency and proceed with the purchase before the sales contract is officially terminated.
Contingent short sale: A short sale occurs when the seller agrees to a sale price that is lower than the remaining mortgage balance on the home. This typically arises in two scenarios: when foreclosure is imminent, and the seller aims to quickly close a sale, or when foreclosure has already taken place, and the lender or owning bank is seeking to recoup losses promptly. In most pre-foreclosure short sales, the proceeds from the sale are directed to the seller's lender, who then determines whether to forgive the remaining mortgage balance.
Understanding these contingent status terms can provide insight into the specific conditions and circumstances surrounding a property's availability and potential sale.
What is Pending Real Estate?
So, what exactly does it mean when a property is marked as "pending," and how does it differ from contingent offers? In the realm of real estate, when a property is labeled as pending, it signifies that an offer on the property has been accepted and is currently in the process of being finalized. At this stage, there are typically no outstanding contingencies, or there may not have been any contingencies to begin with, and the sale is nearing its completion. However, it's important to note that a pending status doesn't guarantee that the sale will unquestionably proceed; it simply indicates that the transaction is in its final stages. The status of pending is usually communicated from the seller's real estate agent to the buyer's real estate agent. Let's delve into some common pending statuses and their implications:
Pending taking backups: If you're interested in making an offer on a property with a "pending taking back-ups" status, it can be a positive sign. This means that while the seller has accepted an offer, they are still open to considering "back-up" offers in the event that the initial sale falls through.
Pending no show/do not show: This pending status suggests that both the seller and the buyer are confident in the successful completion of the sale. The "no show" element signifies that the seller is no longer allowing showings of the property, indicating that it will soon be removed from listings.
Pending short sale: "Pending short sale" indicates that the property is in the final stages of a short sale process, implying that the seller is unlikely to accept additional offers.
Pending more than four months: When a property has held a pending status for more than four months, it suggests that there may be difficulties in closing the sale. However, it's worth noting that in some cases, the property may have been mistakenly listed as pending beyond the actual closure of the sale.
Understanding these different pending statuses provides insight into the current state of a property's sale process and helps buyers and sellers gauge the progress and potential outcomes of their transactions.
Can You Make an Offer on a Pending Home?
Don't lose hope just because the home you desire is listed as contingent or pending. There is still a chance that sellers may consider additional offers even in these statuses, depending on the specific circumstances. To increase your chances, it's advisable to get prequalified for a mortgage and collaborate with a real estate agent. These steps can make your offer more appealing, potentially giving you an advantage if the current sale falls through. By being proactive and well-prepared, you may be in a position to tip the scale in your favor and secure the home you've set your sights on.
Final Thoughts
Differentiating between contingent and pending homes, it's important to note that both indicate an accepted offer, but neither guarantees the finalization of the sale. Contingent homes are awaiting the fulfillment of specific pre-conditions before the sale can proceed, whereas pending homes are still undergoing the processing phase. If the home you're interested in is listed as contingent or pending, there may still be an opportunity to make an offer or view the property. Enhancing your chances, getting prequalified can elevate your offer's position when sellers assess backup offers and alternative buyers. By being proactive and obtaining prequalification, you increase the likelihood of standing out and being considered favorably in case the initial offer falls through.
Related: How to Build Equity in Your Home
King & Edge Real Estate in Boise, Idaho
As experienced Boise real estate agents, we are honored to have the opportunity to serve you and be a part of your real estate journey. Let us guide you towards a successful and rewarding experience, where your goals become our goals, and your vision becomes a reality. Contact us today and discover the unparalleled service and expertise that sets King & Edge Real Estate apart as we help you sell your home in Boise or find your place to call home.
