People often use the terms “pending offer” and “contingent offer” interchangeably, but there is actually a difference when you are talking about real estate.
When a property is said to be contingent, that means the seller accepted an offer that is contingent on particular conditions requested by the buyer. These conditions could involve anything from an inspection to financing.
If, however, you see a house on the market switch to pending, there’s a different status involved. The seller has accepted an offer, and all contingencies have either been waived or addressed.
Yes, the distinction may be subtle. However, the bottom line is that neither status actually means a property is sold. If you have found your dream home and it says “contingent” or “pending,” there is still a chance you could snag it.
Key Points
• Contingent offers involve unresolved conditions, while pending offers have typically cleared or waived such conditions.
• Properties with contingent offers can typically accept backup offers; those with pending offers can as well, but may be less likely to want backups.
• Contingent deals are considered less secure compared to pending deals.
• Homes in pending status are generally closer to the final closing than homes with contingent status.
• Both contingent and pending statuses indicate that the sale is not yet finalized.
Contingent Offers vs. Pending Offers
Here’s a closer look at the difference between contingent and pending offers.
What is a Contingent Offer?
When a home’s status switches to contingent, it means contingencies stand in the way before the deal is done. If closing on a home is a race, then buyers still have miles ahead of them when they enter the contingency process.
There are many types of contingencies buyers can include in their offer that make it easier for them to back out of a real estate deal, but these are some of the most common:
• Financing contingency. The buyers put some money or the promise of a mortgage behind their offer, right? This condition ensures that if the buyers aren’t approved for a mortgage, they’re not on the hook for finding cash to buy the property.
Some buyers choose to have a preapproval letter in hand to make the financing contingency move faster.
• Inspection contingency. A home inspector is paid to search the property top to bottom to uncover any issues. With a home inspection report in hand, buyers can ask the sellers to solve the issues or give them a credit against the purchase price of the home.
With this contingency, buyers can also walk away from a deal based on the findings of the inspection. Alternatively, if both parties don’t come to an agreement on repairs or credits, they can terminate the deal.
• Appraisal contingency. In order for a buyer to secure financing for a home, it must be professionally appraised for the value of the offer or more. If the home appraises for less than the offer, the buyer can either make up the difference in cash, negotiate with the seller for a lower offer, or walk away from the deal.
Recommended: What Is a Mortgage Contingency?
• Home sale contingency. If buyers need to sell their existing home to help finance the purchase of a new home, they may include a home sale contingency in the offer. That means if an offer on their home falls through, they’re no longer on the hook to buy the home they made an offer on.
Contingencies are in place to protect buyers and sellers in the event of snags throughout the negotiation process.
Prospective buyers can include as many contingencies as they like in an offer, and if the sellers agree, the buyers will need to work through each one before they make it to closing.
For people salivating over a hot property that looks taken, contingencies may signal opportunities for a deal to fall through. If you have your heart set on a home that’s contingent, you can hold out hope. Thanks to contingencies, there’s a chance the existing offer will fall through.
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What is a Pending Offer?
Just because a home is pending doesn’t mean the deal is done. A home often enters pending status once buyer contingencies are cleared, but it can also enter pending status immediately if a buyer makes an offer without contingencies.
A pending home sale may still fall through, but the buyer and seller have worked through most of the contingencies. For a pending sale to fall through, there likely has been an unexpected issue with the inspection or financing.
In fact, a pending home is still on the market. The listing agent and seller can choose to continue showing the home and even accept other offers while its status is pending. However, this is largely up to the sellers and their agents.
Recommended: First-Time Homebuyer Guide
Can Pending and Contingent Homes Take Other Offers?
If a home is contingent and the buyers are still working through the inspection, financing, or selling their current home, a competing buyer can make a backup offer on the property. If the initial offer falls through for any reason, the seller can take the other buyer up on their offer.
It’s up to the sellers whether they will accept a backup offer or not, but if the buyer loves the property, it can’t hurt to ask.
In many markets, a home with pending status means it’s not open to additional offers, but the deal isn’t sealed. It’s not over till it’s over, and the buyers could still back out based on their contingencies, as outlined above.
A home could be marked “pending, taking backups,” indicating that the seller is still showing the house and accepting backup offers.
When a home is pending or contingent, it’s not against the law for another buyer to ask for a tour, express interest in the home, or even make a competing offer. But compared with a home that is not under contract, a contingent or pending property is less likely to end up going to a competing buyer.
While you may make offers on these properties, don’t get your hopes up. Depending on how close the buyer and seller are to closing, it may not be legally possible for the seller to accept another offer.
Additionally, the closer a home gets to closing, the more complicated competing offers can be. This is when a seasoned real estate agent may come in handy. They will understand the market, process, and legalities better than most first-time buyers do as well as how to navigate a hot housing market.
Recommended: Guide to Buying, Selling, and Updating Your Home
The Takeaway
Contingent vs. pending: Though some use the words interchangeably, the two statuses are different. A contingent deal may have a long way to go, as buyers firm up financing, await an appraisal, or sell their current home. A pending property is nearer to closing, but the deal still isn’t final.
Buyers eyeing a dream property may hold out hope that contingent or pending deals fall through. In that case, having everything set up for a backup offer could pay off.
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FAQ
For a home deal, how long does it take from pending to closed?
How long it takes for a house to move from pending status to sold depends in large part on what issues are still being resolved. Generally, it can take anywhere between a week to two months. For cash deals, it tends to be on the lower side of that range; for financed deals, more likely the middle to the high end.
Can you still make an offer on a home that is contingent?
You may be able to make an offer on a house that’s already in contingent status, meaning that the sale will go forward if certain conditions are met. The catch is that most likely, if those conditions are successfully met, the sale will go forward with the original buyer. Your offer will be most likely to succeed if the contingencies are not met and the sale falls through. Then you could potentially be next in line as a buyer.
Can a home seller accept another offer while pending?
Generally, no, if the home is pending, the seller has probably accepted the first offer and can’t accept two offers on their home simultaneously. However, they may be open to backup offers, especially if there are obstacles to the sale going through. If you are interested in buying a pending property, just realize that even if the seller is accepting backup offers, it’s a long shot.
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