Last updated on August 3rd, 2024 at 08:05 am
When it comes to real estate transactions, the term “pending” is important and should be understood well by both the buyer and the seller.
Understanding the Concept of
It refers to a status given to a property listing that has received an offer from a buyer and has been formally accepted by the seller.
The property is no longer actively available on the market, the seller cannot accept another offer from a buyer, and the home has not closed either.
Differences between Active and Sold Listings
An active listing indicates that the property is actively for sale, and buyers can make offers and schedule showings.
On the other hand, a sold listing means that the property transaction has been successfully completed, and ownership has been transferred to the buyer.
The Process of Pending Sale
Once a seller accepts an offer, the listing is typically marked as pending.
If you have ever looked on any MLS listing before, you have probably seen both active, pending, and sold.
However, it’s important to note that the a listing can stay in pending status for awhile.
These factors usually include contingencies, inspections, appraisals, mortgage approval processes, and any potential negotiations between the involved parties.
During the pending stage, various tasks are undertaken to move the transaction forward.
It is also during this period that the buyer will submit an earnest money deposit and option money.
While pending status indicates progress toward a closing, not all pending sales successfully reach completion.
Several factors can lead sale that does fall through.
Some common reasons include buyer’s remorse, issues arising during both the inspection and appraisal, and issues with the buyer getting approved for financing.
Accepted Offer and Contingencies
Pending status is when a seller accepts an offer from a buyer.
This means that the parties have reached an agreement on the terms of the sale, including the purchase price and closing date.
The pending status allows for the completion of certain contingencies, which are conditions that must be satisfied before the sale can proceed.
Benefits of a Pending
A pending status indicates that an offer has been accepted by the seller, and the transaction is currently in progress.
Security for the Seller
A pending status offers a sense of security for the seller. Once an offer has been accepted and the property is marked as pending, the seller has peace of mind knowing that they have successfully secured a buyer.
It also allows the seller to start moving forward with their future plans, whether it be purchasing a new home or something else.
Time to Address Contingencies
Once a property is in pending status, it allows time for inspections, appraisals, and other contingencies to be carried out.
Buyers can conduct a thorough home inspection to uncover any potential issues before finalizing the purchase.
This period of due diligence provides an opportunity for negotiation if any significant findings arise during the inspection process.
Additionally, buyers can work with their mortgage lender to secure financing and ensure the property appraises at the agreed-upon price.
Reduced Marketing Efforts
For real estate agents and sellers, a pending status means that marketing efforts can be scaled back.
Rather than spending time and resources promoting a property that is already under contract, agents can focus their attention on other listings and potential leads.
This streamlining of marketing efforts can lead to increased efficiency and productivity in the real estate business.
Reduced Risk of Falling Through
Although it is not foolproof, a pending status generally indicates a reduced risk of the sale falling through.
Common Misconceptions
Homebuyers and sellers alike can find themselves uncertain about the implications of this status.
A pending sale means the deal is done.
Many people assume that once a property is marked as pending, the sale is finalized.
However, this is not entirely accurate. A pending status indicates that an offer has been accepted by the seller, but the sale is not yet complete.
There are still several steps that need to be taken before the transaction can be considered fully closed.
Pending means the property is off the market.
While it is true that a pending status typically indicates that a property is under contract, it doesn’t necessarily mean that it’s completely off the market.
In some cases, the listing agent may choose to continue marketing the property as a backup option in case the current deal falls through.
Contingent offers are the same as pending offers.
Contingent offers and pending offers are not synonymous. A contingent offer means that the sale of the property is dependent upon certain conditions being met, such as a successful home inspection or mortgage approval.
On the other hand, a pending offer signifies that all contingencies have been satisfied, and the sale is moving forward towards closing.
A pending home sale is immune to complications.
While a pending sale indicates progress, it doesn’t guarantee a smooth sailing experience.
Various factors, such as issues with financing, appraisal contingencies, or buyer’s remorse, can still arise and potentially lead to the deal falling through.
It’s essential for both buyers and sellers to remain diligent and stay informed throughout the pending period.
Why Do Homes Stay in the ‘Pending’ Status
There are several factors that contribute to homes staying in the ‘pending’ status:
This timeframe allows for necessary inspections, appraisals, and other crucial steps in the home buying process to take place.
Additionally, it gives both the buyer and seller time to address any contingencies or potential issues that may arise before finalizing the sale.
Contingencies and Inspections: Buyers often include contingencies in their purchase agreements that allow them to inspect the property and assess its condition. These inspections can include home inspections, pest inspections, or other assessments. The time required to complete these inspections can cause a property to remain in the ‘pending’ status.
Financing and Appraisal: Securing financing is a crucial step in the home buying process. Lenders typically require an appraisal to determine the value of the property. Delays in financing approval or appraisal issues can prolong the ‘pending’ status of a home.
Title Checks and Legal Processes: Title checks ensure that there are no legal claims or issues associated with the property. Sometimes, complications with title searches or unresolved legal matters can cause delays in the sale process.
Negotiations and Counteroffers: During the negotiation phase, buyers and sellers may go back and forth with counteroffers, leading to extended negotiation periods. These negotiations can prolong the ‘pending’ status until an agreement is reached.
Buyer’s Remorse or Cold Feet: In some cases, buyers may change their minds or have second thoughts about the purchase. This can lead to delays or even the cancellation of the sale, resulting in a property remaining in the ‘pending’ status.
It is important to note that the length of time a property stays in the ‘pending’ status can vary. It depends on the specific circumstances, market conditions, and the efficiency of the parties involved in the transaction.
Can You Make an Offer on a House that is Pending
Once a house is labeled as ‘pending,’ it generally indicates that an offer has been accepted by the seller, and the necessary paperwork is being processed.
At this stage, most sellers prefer to focus on the existing offer and do not entertain new offers.
However, there are a few exceptions and considerations to keep in mind.
Backup Offers: In certain cases, sellers may consider backup offers. A backup offer is submitted when a property is already in pending status, offering a contingency plan in case the initial offer falls through. The backup offer is not given immediate priority but can be accepted if the initial deal falls through.
Contingencies: If a pending offer has contingencies, such as a financing or inspection contingency, it may be possible for another buyer to make an offer. If the contingencies are not met, the initial offer may be canceled, providing an opportunity for fresh offers.
Local Market Dynamics: Real estate markets can vary in terms of competitiveness and demand. In certain markets, sellers may be more open to considering additional offers on a pending property, whereas in others, they may be less receptive.
How Long Do Homes Stay in this state
According to recent market data, homes tend to stay in the ‘pending’ status for an average of 30 to 45 days.
In the US, the average time for a real estate transaction to go from pending to closed is 50 days. (Source: National Association of Realtors)
In the US, 92% of real estate transactions go from pending to closed. (Source: National Association of Realtors)
In the US, the average time for a real estate transaction to go from pending to withdrawn is 28 days. (Source: National Association of Realtors)
The duration that a home stays in the ‘pending’ status can vary depending on several factors.
One significant factor that influences the timeline is the local real estate market conditions.
In a competitive market with high demand, homes tend to stay in the ‘pending’ status for a shorter period.
Conversely, in a slower market, homes may spend a longer time in the ‘pending’ status.
Another factor that affects the duration is the complexity of the transaction.
If the sale involves contingencies or additional negotiations, such as a home inspection or securing financing, it can extend the time spent in the ‘pending’ status.
It’s essential to note that the typical time frame for a home to stay in the ‘pending’ status can range from a few weeks to a couple of months.
However, there are instances where homes may return to an active listing if the pending sale falls through due to unforeseen circumstances.
Common Reasons for a Pending Sale to Fall Through
There are numerous contingencies and circumstances that could potentially derail the pending sale.
Financing Difficulties
One of the primary reasons for a pending sale to fall through is financing issues. If the buyer’s mortgage loan application is denied or they fail to meet the lender’s requirements, the sale can be jeopardized.
Home Inspection Problems
Another frequent cause of a pending sale falling through is the discovery of significant issues during the home inspection.
If the inspector identifies structural defects, pest infestations, or other major problems, the buyer may negotiate repairs or back out entirely.
Appraisal Shortfalls
Appraisal shortfalls occur when the appraised value of the home is lower than the agreed-upon purchase price.
If the lender deems the home’s value insufficient to support the loan, the buyer may need to secure additional funds or renegotiate the price.
Title Issues
Title issues can arise during a pending sale, such as unresolved liens, undisclosed ownership disputes, or errors in public records. These issues can delay or even cancel the transaction, as lenders require clear title for mortgage approval.
Contingent Sale Collapses
In cases where the buyer’s offer was contingent on selling their current home, a failed sale on their end could cause the pending sale to fall through. The buyer may not have the necessary funds to proceed without selling their property.
Ultimately, navigating the complexities of a real estate transaction requires thorough preparation, open communication, and diligence in addressing potential pitfalls.
What Does the Seller Do during this time period
During the pending status in a real estate transaction, the seller plays a crucial role in ensuring a smooth process.
Understanding what the seller should do during this time is important for both buyers and sellers involved.
Maintain Communication with the Listing Agent:
The seller should remain in constant communication with their listing agent throughout the pending status.
This ensures all updates and important information regarding the transaction are promptly relayed to the seller.
Regular contact with the listing agent allows the seller to stay informed about any changes or requests from the buyer’s side.
Complete Necessary Paperwork:
During the pending status, the seller will need to complete various paperwork required for the transaction. This may include signing documents such as disclosures, amendments, or addenda.
It’s important for the seller to carefully read and understand these documents before signing them.
Accommodate Home Inspections:
Buyers often conduct a home inspection during the pending status to assess the condition of the property.
The seller should cooperate with this process by allowing access to the home for inspections.
It is important for the seller to address any maintenance or repair issues that may arise from the inspection to keep the transaction moving forward.
Respond to Contingencies:
Depending on the terms of the purchase agreement, there may be contingencies that the seller needs to address.
These contingencies could include items such as repairs, appraisal, or financing related matters.
The seller should carefully review the details of these contingencies and provide necessary information or actions within the specified timeframes.
Monitor Appraisal and Financing Process:
The seller should keep track of the progress of the buyer’s mortgage approval process and the appraisal contingency.
This allows the seller to be aware of any potential issues that may arise. In case of a low appraisal or financing difficulties, the seller may need to negotiate with the buyer to find a solution that works for both parties.
Secure Earnest Money Deposit:
During the pending status, the earnest money deposit provided by the buyer is typically held in an escrow account.
The seller should ensure that the deposit is being held securely. If there are any disputes or complications related to the earnest money, the seller may need to work with their listing agent or legal counsel to navigate the situation.
Contingencies and Financing Issues:
When a home is pending, it means that certain contingencies, such as a home inspection or appraisal, need to be satisfied before the sale can proceed.
These contingencies provide buyers with an opportunity to back out of the deal or request repairs.
If issues arise during this process, it can lead to delays or even the cancellation of the sale.
Additionally, if a buyer encounters problems with obtaining financing or their mortgage approval process, it can cause complications and potentially terminate the deal.
Additional Offers and Backup Offers:
While a property is pending, it’s common for real estate agents to continue showing the home and consider backup offers.
A backup offer is an alternative offer that is accepted by the seller, in case the primary offer falls through.
This situation can create uncertainty for both the buyer and seller, as the seller may decide to switch to a stronger backup offer, leaving the original buyer out of the equation.
On the other hand, if the primary offer proceeds smoothly, backup offers become irrelevant.
Property Condition and Disclosures:
In some cases, the pending status may reveal issues with the property that were not initially disclosed or discovered during the inspection.
This situation can lead to renegotiations or the buyer withdrawing their offer altogether.
Sellers should ensure that they disclose all known defects and issues to avoid potential legal complications or buyer’s remorse.
Emotional and Financial Impact:
Pending status can be an emotionally challenging time for both buyers and sellers.
For buyers, the fear of losing out on their dream home due to a negative inspection report or other unexpected factors can cause anxiety and stress.
Similarly, sellers may experience nervousness about the deal falling through, especially if they have already made plans to purchase a new home.
Financially, both parties may have invested time and money into the transaction, including appraisals, inspections, and earnest money deposits, which may be lost if the pending sale doesn’t proceed as planned