Contingent vs Pending Explained

If you are in the space of buying property you may have scrolled through the latest listings and seen phrases like “pending” or “contingent,” and wondered what they mean. Understanding these terms will help you understand the progress of the house and guide your decisions when making an offer. In this article, we will 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 information from the bank regarding financing. The seller can still accept another offer, but in most cases, they are committed to the sale. This being said, the offer has been accepted but the sellers are choosing not taking the listing off the market entirely because there are still certain circumstances that may lead to the sale falling. The buyer can also back out of the contract if certain conditions are not met. To ensure you know what conditions you must meet, it is always a good idea for both parties to converse with an agent or lawyer dealing with these agreements.

2. What is Pending?

In real estate, the term pending is used to identify a listing where all contingencies have been met but is yet to be closed. When a property is marked as pending, 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 ownership of the property will transfer from the seller to the buyer.

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 and contract have been met. In contingent, both parties agree to some conditions that must be met before the sale is completed. The buyer and seller can still change their agreements. 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 choose to.

4. Types of Contingencies

• Inspection Contingency

An inspection contingency is where a buyer and seller agree to wait until an inspection of the property has been done before the sale is complete. Usually, both the buyer and seller have to sign off on the inspection report. If the property passes inspection, then the sale is complete. 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 price. This can be done by an outside party or a specific company hired for this purpose. In this case, the buyer and seller will agree to wait for an appraisal of the property to be done before a sale is complete.

• 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 specific 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. The purpose of a financing contingency is to protect the buyer in case they cannot secure financing, despite their best efforts.

• Title Contingency

A title contingency is where both parties agree to wait until the buyer signs off on the property title before the sale is complete. 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 the sale is complete. 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 them to proceed with the contract, even if they are yet 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 the house is repaired and then has a new appraisal, it might regain its value.

5. Common Pending Statuses

• Pending - Taking Backup

In a real estate transaction, taking backup usually 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 4 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 property that is either pending or contingent. You shouldn’t however be surprised if the offer isn’t entertained. Finding a trusted real estate agent can help you through the process of buying or selling property and will be your best solution to know if making an offer on a contingent 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. Find the right real estate agent for you and put extra money in your pocket.

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