What does pending mean in real estate?


What does pending mean in real estate

29 Oct 2020

What Does Pending Mean In Real Estate?

A house listing where the status is 'pending' indicates that the property is no longer active. Therefore, it stops other potential buyers from making an offer to purchase it. If you see a pending status of a house in the property listings, it means the seller has accepted an offer from a buyer, and both the seller and buyer are in the process of negotiations. And the real estate agents are guiding them to get to an agreement as per the terms of the deal acceptable to both. The status also shows that the seller and buyer have agreed on the price, the possession date, and the conditions and have executed the contract. Sale pending means the seller accepted the offer from the buyer, but the deal has not yet closed. 

During the "conditional period," the buyer is doing the due diligence by submitting the offer to their lending institution, such as a bank, to get final approval for the loan. It means the buyer will need an appraisal and an inspection of the house he chose to buy.

The conditional period lasts from 5 to 14 days, and during this time, the seller can show their house if the buyer backs out last minute. After that, however, they cannot accept any other offer—except a backup offer. A backup offer says you're next in line if the initial offer falls through.

It's important to know that pending and contingency status means the same thing in some real estate markets, though, in other markets, it means that all contingencies have been met.

What is the sale pending?

sale pending is different from a contingent state, where a property status is pending when the contract is executed, but there's still a chance that one can sell a home again. So until the contract is complete and the transactions related to it come to an end, the status shows sale pending.

What does pending mean when you are selling a property"Pending' does not mean 'sold' as there can be someone who offers better deals on the ads posted by the seller. The realtor pending sale status shows the transactions are not yet completed. 

If you are interested in buying a sale pending, ask agents to show the property to know if there are any issues like why the pending home sale failed. Try to see reasons like failed financing, inspections, or other unmet contingencies that can snag a real estate transaction.

You can try to find out how many offers are there on the property. Most listing agents have insight into parts of the contract which are not completed, and you can ask the agents to know if there are other offers or the bids on the house as you do not know what details might help sway the odds in your favour.

You can bid higher or offer flexible moving dates to the seller to get their attention if you are interested in such a house.

If you're financially comfortable, you could consider offering more than the asking price to get the bid in your favour. You can also agree to terms and conditions like paying closing costs, waiving a mortgage contingency, or offering flexible moving dates. Finally, if you are open to negotiation, you can ask to negotiate to improve the odds of your offer being accepted. The goal is to convey the message of urgency to the seller while you make an offer, so it may be hard for them to refuse.

Be aggressive as you approach the seller or their agent. One can be pushy and tenacious, asking for the seller's response even if that isn't your normal style, or you can just send a personal letter to them to tell them how much you would like to buy the house. If the initial sale does fall through, yours will be the backup offer. 

What Is the Difference between Contingent and Pending in Real Estate? 

Pending status means that the house is no longer active, and a contingent status means the house is still active where the seller allows the buyers to post their offers. Contingencies are commonly used in a buyer's market where sellers are more likely to agree to keep the buyer happy. However, in a seller's market, buyers may give up the safeguards because they are in a position where they get multiple bids; they might only consider offers with no contingencies. [Contingencies are clauses added to the buyer's offer that allow them to back out and get the invested/deposited money back.]

Buyers can request contingencies, and if the seller accepts it as a part of the offer, it is said to be a contingent sale. The seller can't accept another offer after one, though the buyer can refuse the deal if the contingency terms aren't met.

When comparing contingent vs pending sale, the seller has accepted one of the buyer's bids; a contingent sale will become pending once the contingencies are fulfilled. In some places, the status is called active contingent.

If the terms of the contingency are not met, one can cancel the sale, and the buyer can ask to get back the deposit returned. Sometimes (referred to as a good faith deposit), the deposit can be 1% and 5% of the offer value.

Sometimes a listing agent will move a home into selling pending status before all the contingencies have been satisfied.

How long does it take for a house to go from pending to sell? 

It can take from about a week to a couple of months for a home to move to close. The average time to close a deal is between 45 to 60 days. Once all the stages in the home purchase are completed in this time frame, including title checks, home inspections, and mortgage approvals, one can move forwards, exchange contracts and get the title deeds.

Many different factors influence an agreement deal and affect the chances of sales pending, and things like the time of year also influence it.

If a home is priced appropriately and moves to the pending status, in that case, it means either a lower price is necessary for the deal to close, or when a significant amount of time goes by in the process, owners see their homes won't sell without adjusting the price, they may reduce the offer price.

Sale pending (on median wage) typically extends between one week to two months; though there isn't much point in asking for such a home, it is still on the market. If the sale is unlikely to fall through, realtors are unlikely to bother another buyer to show a home that already has a buyer; the seller may not agree to have their home shown to another potential buyer.

What does pending mean in a house?

A pending sale in real estate means the seller received and accepted an offer on their home, but the deal is not yet completed— hence the status is "pending" and not "sold." If you're interested in a pending property, your agent may have to consult with the seller's agent to learn more about the negotiation state. You may have a chance, though it may be less.

When you see a house listed as for sale pending, the agent considers an agreement on the property but knows that perhaps the unpaid transaction doesn't somehow signify the transaction is completed.

Can you buy a house that is pending? 

To be able to buy a house that is pending, the sale would need to fall through first. If you want to buy a property, it might make sense to submit a backup with the hope of the sale falling apart. It is possible for "under contract" sales to get back on the market.

House rates may revise on the market listings after being under the agreement for some time.

Some of the reasons why the real estate purchase transactions sometimes fall through are given below - 

Financing issues 

Most buyers are preapproved for a mortgage when they make an offer on a home, and in most cases, a deal does not fall through before closing the deal. However, the loan is not approved until the property documents are submitted, it goes through underwriting and the buyer's assets, income and other information are verified. If there are any issues during the process, the seller could choose to put the home back on the market.

Home inspection

A buyer may wish to back out of a real estate deal if significant issues are uncovered during the home inspection. 

Short sale

A short sale happens with the lender's permission; if the bank does not agree to lend on the offer price, the deal falls through, and the home will return to the market.

Buyer cancellation

A buyer may sometimes have to relocate for work, suffer financial emergencies, or decide the home is no longer the best fit. Also, most people buying a home and selling their home at the same time may not work as anticipated. In such cases, having a buyer's contingency allows them to back out if they cannot sell their home as expected. 

Can you make an offer on a house that is pending?

In short, yes, you can make an offer on a house that shows a pending status. But it may not be worthwhile. A pending deal can be unclear as it's not open for discussion. Unless the pending deal falls through, you can't simply win over the seller by offering more money or waiving certain contingencies. Most sellers are contractually obligated to honour the offer, even if you offer a higher bid.

Nevertheless, if you're interested in the home and counting on the current deal to fall through, you have the option to make a backup offer. But, again, consult with your real estate agent for advice on the best way to move forward in this situation.

In terms of the pending sale, the buyer or the seller may refuse to close the deal anytime, so nothing is definite in pending purchases. In addition, sometimes, the pending offer falls through because of snagged negotiations, problems with getting a mortgage, delayed construction, longer-than-usual processing times, and contingencies that may remain unfulfilled.

If the property remains pending and unsold ahead of purchasing of a house, some buyers may opt-out of the deal due to delays in loan approvals.

What does pending mean in real estate?

In some markets, the pending status means the seller still accepts backups from other buyers. Some continue to show the property to other interested parties, and some are set as "do not show". As a result, the seller may no longer show the house or accept other parties' bids. 

Pending over four months show the listing has been ongoing for over four months, and such cases will have a tentative closing date.

Although different pending meanings are similar in some ways, different MLS listings will use different phrases—it's good to familiarize yourself with a broad understanding. The main thing is to understand the difference between a normal offer and the status that show -  a sale pendingreleasetaking backup offers, or continuing to show, where you may still have a chance to purchase the house.

What percentage of pending sales falls through?

According to a survey, 3.9 per cent of pending sales failed in 2016, which is a huge increase over the previous year. Some reasons which cause a pending sale to fail are given below – 

 

  • Low appraisal - A financial institute won't approve a loan for more than the house's market value. If issues arise during appraisal, the lender could refuse the loan. Financial issues that prohibit the buyer from securing funds could arise if significant changes in a buyer's earning status, job location, personal requirements, or credit rating. It is one of the most common causes of failing pending sales.
  • Buyer remorse- Sometimes, buyer changes their mind and want to cancel the deal. Almost half of the buyers, up to 42 per cent, are first-time buyers, and they may cancel or choose not to buy the house at the last moment due to indecisiveness. 
  • Property title issues- Before closing, buyer lenders will ensure all the details, and any title-related issue can seriously prolong closing or lead to cancellation of the deal.
  • Financing falls through - One of the most common reasons a transaction falls out of escrow is that the buyer's income drops or a change in lender guidelines cause the lender to revoke the financing.

If a house is pending, can you make an offer?

Yes, one can still make an offer on the house with a pending status; though one may not be sure of the offer, a backup offer can still be posted if a house is listed as pending.

If you make a backup offer, you might not be provided with a tour or not get the option to see the house, so you should try to make sure your finances are in order, as it is still a legally binding contract where you need to have your finances ready.

Pending real estate transactions have a higher probability of closing. So, yes, you can offer your bid for a pending property, even if the buyer has moved along in the process and is very near to closing.

Why would a house be pending for so long?

The offer can be pending for more than four months due to disagreements during negotiations, problems related to acquiring a mortgage, delays in construction, or longer-than-usual processing times. It can also happen because of an agent's oversight in updating the status. If you're planning to make an offer on the house listed as pending, it's important to understand why some pending cases fall through. Some reasons are given below -

1.   Financing Falls Through:  Financing fall throughs are the most common reasons homes are listed as pending fall-throughs.

2.   Legal Issues:  Title issues on a property keeps an offer from going through. 

3.    Low Appraisal: If a financial institute makes a low appraisal for the house and the buyer cannot come up with the difference amount, the deal can end without closing.

4. Buyer home sale contingency and home inspection are other reasons for such fall-through.

Most of the contracts cover a home inspection contingency. A pending home sale occurs after the seller accepts the offer and the agreement is signed between the two parties. For obvious purposes, most real property purchase contracts include a contingency clause, where the seller accepts the offer only when the buyer is ready for certain contingencies. 

What does pending listing mean?

It merely means listing properties, perhaps the house that remains subject to an agreement but is unavailable to other buyers before the transaction concludes. It also assumes that the house will return to the marketplace if the assessment finds issues or the purchaser fails to get a mortgage.

Conclusion:- In the case of pending transactions, the buyers and sellers should satisfy the criteria for the contingencies to close the deal. Buyers usually have a financial requirement, an estimation contingency of land worth, and investigative contingencies, including records reviews and assessments. Sellers may use the term to hide any disagreement with the buyer before the sale is completed. 

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