Contingent vs. Pending Explained

If you're looking to buy property, you may have scrolled through the latest listings, seen phrases like "pending" or "contingent," and wondered what they mean. Understanding these terms will help you follow a house's progress and guide your decisions when making an offer. In this article, we'll look at the differences between pending and contingent.

1. What Is Contingent?

A contingent agreement means the sale is only final once certain conditions are met. The buyer and seller agree to these conditions and sign a contract. These conditions may include a survey of the property or pending financing information from the bank. The seller can still accept another offer, but in most cases, they are committed to the sale. In other words, the seller has accepted the offer but is choosing to keep the listing on the market in case the deal falls through. The buyer can also back out of the contract if certain conditions are not met. It's always a good idea for both parties to speak with an agent or lawyer when dealing with these agreements to ensure you know what conditions you must meet.

2. What Is Pending?

In real estate, the term pending is used when all contingencies have been met, but the deal has yet to close. A pending property means that the seller has accepted an offer from a buyer, and both parties have signed an agreement.

During the pending phase, the buyer usually has a certain period to perform inspections, obtain financing, and satisfy any other contingencies in the purchase agreement. If everything goes smoothly, the transaction will move forward to the closing phase, at which point property ownership will transfer from the seller to the buyer.

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3. Pending vs. Contingent

What's the difference between contingent vs. pending? The difference between a property in contingent vs. pending status is that in a pending agreement, the sale is final, the home is already under contract with another buyer, and all the terms have been met. In contingent, both parties have agreed to some conditions that must be met before completing the sale. The buyer and seller can still change their agreement. The buyer can back out of the contract if the conditions are not met, or the seller can decide to complete another sale if they so choose.

4. Types of Contingencies

Inspection Contingency

An inspection contingency is where a buyer and seller agree to wait until after a property inspection is completed to close the sale. Usually, both the buyer and seller have to sign off on the inspection report. If the property passes inspection, then the sale is finished. If the property fails the inspection, the buyer can back out of the agreement.

Appraisal Contingency

An appraisal contingency is when the sale is only final once professionals appraise the property's value. An outside party or a specific company hired for appraising can complete this step. In this case, the buyer and seller will agree to wait for a property appraisal before completing the sale.

Financing Contingency

A financial contingency in a real estate purchase allows a buyer to cancel the contract and receive a refund of their earnest money deposit if they cannot secure financing for the property purchase. The financing contingency typically specifies a timeframe in which the buyer must obtain loan approval from a lender. If the buyer cannot obtain financing within that time frame, they can notify the seller in writing and cancel the contract without any penalties. A financing contingency protects the buyer in case they cannot secure financing, despite their best efforts.

Title Contingency

A title contingency is where both parties agree to wait to complete the sale until after the buyer signs off on the property title. If the buyer does not trust the legitimacy of the title or has other concerns about the title, they can back out of the agreement.

Buyer's Home Sale Contingency

A buyer's home sale contingency is where a seller agrees to wait for the buyer to sell their home before completing the sale. If a buyer needs to sell their current home before buying the property, they can include a Buyer's Home Sale Contingency in the agreement. This allows the buyer to proceed with the contract, even if they still need to sell their old house.

Mortgage Contingency

If your house is worth less than your mortgage and you have a fixed interest rate, your loan will be automatically forgiven, and the IRS will not seek any further taxes on the sale as long as you meet certain conditions.

Homeowners Insurance Contingency

If a covered event damages your house, the insurance company will pay. The insurance company will not ask for any further taxes on the sale. In this case, the home might lose its value; however, if it is repaired and has a new appraisal, it might regain its value.

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5. Common Pending Statuses

Pending - Taking Backup

In a real estate transaction, taking backup typically means that an offer has been accepted and the sale is in the final stages, but the seller is still willing to accept backup bids in case the initial offer falls through.

Pending - Short Sale

When a real estate listing is marked as pending - short sale, it means that the property is in the process of being sold for less than the outstanding mortgage balance. A short sale refers to a real estate transaction where the lender agrees to accept a lower amount than what is owed on the mortgage to avoid foreclosure.

Pending - More Than Four Months

When a real estate listing is marked as pending - more than four months, the property has been under contract for more than four months, but the sale still needs to be completed.

6. Can You Make an Offer on a Home That Is Contingent or Pending?

Legally, you can make an offer on a pending or contingent property. However, you shouldn't be surprised if your offer isn't entertained. Finding a trusted real estate agent is the best way to know whether making an offer on a contingent or pending property is realistic.

​​At BidMyListing, our first-of-its-kind marketplace connects home sellers with top real estate agents who bid for the opportunity to represent their home sales. Each bid includes a cash offer, listing term, commission rate, and information about the agent. By putting all the negotiating cards on the table – and having the agent invest in the home sale upfront – we empower home sellers to make more informed decisions. Get started today to find the right real estate agent for you and put extra money in your pocket!

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