Contingent vs Pending Real Estate Contracts
When it comes to buying or selling a house, there are several stages and terms involved that can be confusing for both buyers and sellers. Two terms that often cause confusion are “contingent” and “pending.”
In this article, we will explore the key differences between these terms and how they impact real estate transactions. So, let’s dive in and understand the contingent vs pending dilemma!
Contingent vs Pending – What Do They Mean?
Before we delve into the differences between contingent and pending, let’s clarify what each term means:
Contingent
Contingent refers to a stage in a real estate transaction where an offer has been made by the buyer, but certain conditions must be met for the sale to proceed. These conditions, or contingencies, are typically outlined in the purchase agreement and may include items such as a satisfactory home inspection, mortgage approval, or the sale of the buyer’s current home.
Pending
On the other hand, pending indicates that all contingencies have been satisfied, and the transaction is moving forward towards closing. At this stage, the buyer has fulfilled all the necessary requirements, and the property is considered under contract. The sale is pending final completion, which usually involves the transfer of funds and the transfer of ownership.
Key Differences Between Contingent and Pending
Now that we have a basic understanding of the terms contingent and pending, let’s explore their differences in more detail:
Contingent – The Waiting Game
When a property is labeled as “contingent,” it means that the seller has accepted an offer from a buyer, but certain conditions must be met before the sale can proceed. These conditions can vary widely and are usually outlined in the purchase agreement. Some common contingencies include:
Home Inspection Contingency
This contingency allows the buyer to have the property inspected by a professional to identify any potential issues or repairs needed. If significant problems are discovered, the buyer may request repairs or negotiate a lower price.
Financing Contingency
A financing contingency protects the buyer in case they are unable to secure a mortgage loan. If the buyer fails to obtain financing within the specified timeframe, the contract becomes void, and the buyer may be able to back out of the deal without penalty.
Sale of Home Contingency
This contingency is applicable when the buyer needs to sell their current home before being able to complete the purchase of the new property. The sale of their current home is a condition for the purchase to move forward.
During the contingent stage, the seller may continue to show the property to other potential buyers, although offers made during this time are considered backup offers. If the contingencies are not met within the agreed-upon timeframe, the seller may choose to terminate the contract and consider other offers.
Pending – Moving Forward to Closing
Once all the contingencies have been met and removed, the status of the property changes to “pending.” At this stage, the buyer and seller have agreed on all terms, and the transaction is in the final stages before closing. The pending stage involves completing the remaining paperwork, obtaining financing, and preparing for the transfer of ownership.
During the pending period, the property is typically taken off the market, and the seller stops accepting offers from other potential buyers. The length of the pending stage can vary depending on factors such as the complexity of the transaction, financing processes, and any specific requirements outlined in the purchase agreement.
FAQs: Clearing Up Common Questions
1. Can a contingent offer be accepted over a pending offer?
No, a contingent offer cannot be accepted over a pending offer. Once a property is marked as pending, it means that the seller has accepted an offer, and the transaction is in progress. Contingent offers may still be considered as backup offers, in case the pending sale falls through.
2. What happens if a buyer backs out during the contingent period?
If a buyer backs out during the contingent period and the contingencies have not been waived, the buyer can usually walk away from the transaction without any penalties. However, it’s important to review the purchase agreement to understand any potential consequences or refund policies.
3. Can a contingent offer be withdrawn?
Yes, a contingent offer can be withdrawn if the contingencies have not been satisfied within the agreed-upon timeframe. The buyer may choose to withdraw the offer if they are unable to meet the conditions outlined in the purchase agreement or if they find another property they prefer.
4. How long does the pending stage typically last?
The length of the pending stage can vary depending on various factors. It can range from a few weeks to several months, depending on the complexity of the transaction, financing processes, and any specific requirements outlined in the purchase agreement. It’s best to consult with your real estate agent for a more accurate estimate based on your unique situation.
5. What happens if a buyer makes an offer on a pending property?
If a buyer makes an offer on a property that is already pending, the seller’s agent will usually inform the buyer’s agent that the property is under contract. The buyer can still submit an offer as a backup offer in case the pending sale falls through, but the seller is not obligated to consider it.
6. Is it possible for a contingent property to become pending again?
Yes, it is possible for a contingent property to become pending again if the initial pending sale falls through. In such cases, the property is typically relisted as contingent, and the seller can consider backup offers or new offers from interested buyers.
Conclusion
In the realm of real estate transactions, understanding the difference between contingent and pending is crucial. Contingent refers to the stage where certain conditions must be met before the sale can proceed, while pending indicates that all contingencies have been satisfied, and the transaction is moving forward towards closing.
Buyers and sellers should familiarize themselves with these terms to navigate the real estate market more effectively. Remember, contingent offers are subject to certain conditions while pending properties are in the final stages before closing. If you’re unsure about the status of a property, consult with The Jack Coden Group’s real estate agents who can guide you through the process.
Want to know more about contingent vs pending contracts? Simply contact us anytime for personal service from our Realtors 🙂
