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Understanding Contingent vs Pending in Real Estate

You may hear the terms “contingent” and “pending” if you buy or sell a home in West Chester, PA. What do these terms mean? And why are they important?

Today, we’ll answer these and other questions about contingent vs pending in real estate. 

What Does Contingent Mean in Real Estate?

In real estate, contingent describes a transaction that’s currently in place but will only be completed if specific conditions are met. If a home is listed as contingent, the seller has accepted an offer on it. However, the listing remains active since all of the conditions required to finalize the transaction have not yet been met. 

What Is a Contingency?

A contingency is a condition that must be met before a real estate transaction is completed. For those who buy or sell West Chester, PA real estate, contingencies may be put into place that determine whether a transaction goes through. These may include:

Appraisal 

A lender will ask for a home appraisal before it approves a mortgage request. It won’t offer a mortgage that exceeds a home’s value, even if the buyer and seller reach an agreement for less than this amount. 

If an appraisal contingency isn’t met, a buyer may have to pay more upfront for a home to meet their lender’s requirements or look elsewhere for a mortgage. Alternatively, a seller may reduce their home’s price, so they and the buyer can proceed with the transaction. The seller may also choose to break the purchase agreement and do so without any penalties. 

Title

With this contingency, a buyer has the right to review a home’s title and see if there are any issues that may affect their intended use of a property. 

For example, a title easement may give someone the right to enter or use a property without actually owning it. Or, a title covenant may limit an owner’s ability to use their property however they choose.

If a seller can’t resolve these title issues or similar ones, a buyer has the right to walk away from a deal. 

Home Inspection

In the best-case scenario, a home inspection will reveal no significant problems, and a buyer can move forward with their purchase. Conversely, if an inspection shows a home has a leaky roof, structural defects, or other serious issues, the buyer may ask the seller to fix them or reduce their house price. Following an inspection, a buyer may also decide a home is more trouble than it’s actually worth, leading them to terminate their purchase agreement. 

Sale of a Prior Home

A buyer may have a home they have to sell before they have enough money to purchase a new one. In this situation, a seller may give a buyer a deadline to sell their current residence. If this deadline lapses, the seller may be able to get out of the transaction. 

Homeowners Insurance

There are times when a home seller or mortgage lender requires a buyer to get homeowners insurance as part of a real estate transaction. If a buyer can’t get homeowners insurance, they or the seller may back out of the transaction.

What Does Pending Mean in Real Estate?

When a home is listed as pending, a seller has received and accepted an offer on it. But the deal hasn’t been finalized, so the house hasn’t been officially sold.

Pending vs Contingent: What’s the Difference?

Contingent and pending in real estate are similar, but there are notable differences between them. When a home is listed as contingent, a seller has accepted an offer on it. Meanwhile, the listing remains active since not all of the purchase agreement’s contingencies have been met. If a home is listed as pending, all contingencies have been met, and the sale is in process. But just because a home sale is pending does not guarantee the deal will go through. 

What Can Cause a Home Sale to Fall Through?

Common reasons why home sales fall through include:

  • A buyer’s financial situation changes, which causes their mortgage financing to fall through. 
  • A home inspection reveals major damage, and a buyer and seller can’t come to terms on how to address it. 
  • Anyone involved in a real estate transaction misses a deadline for paperwork, which may lead to delays and cause a buyer or seller to call off the transaction altogether. 
  • A buyer or seller gets cold feet, prompting them to forgo a deal in spite of the fact that they may lose money by doing so. 

Is It Likely a Home Sale Will Fall Through?

According to research, only about 4% of real estate contracts don’t close. If someone agrees to buy or sell a house, it’s overwhelmingly likely the transaction will go through. 

Can You Make an Offer on a Home That’s Listed as Pending or Contingent?

There’s nothing to stop you from making an offer on a pending or contingent home.

But even if you offer more money than someone else for a house that’s listed as pending or contingent, the seller may still be contractually obligated to proceed with the agreement that’s already in place.

Frequently Asked Questions

Can a buyer withdraw their offer if a home is listed as contingent or pending, and what would be the consequences?

Yes, a buyer can withdraw their offer if a home is listed as contingent or pending, but the consequences depend largely on the contract’s stipulations and the stage of the transaction. If the withdrawal occurs before the fulfillment of contingencies, such as inspection or financing, the buyer might be able to reclaim their earnest money without penalties. However, if the buyer backs out after contingencies have been met, they risk losing their earnest money or could potentially face legal repercussions for breach of contract. It’s crucial for buyers to fully understand their contract and consult with their real estate agent or a legal professional before deciding to withdraw an offer.

How long does it typically take for a contingent offer to turn into a pending status, and what factors influence this timeline?

The transition from a contingent offer to a pending status can vary greatly, typically ranging from a few days to several weeks. This timeline is influenced by the nature of the contingencies in place, such as the time needed for home inspections, appraisals, securing financing, or the sale of the buyer’s current home. The efficiency of communication and action among all parties involved, including real estate agents, lenders, and inspectors, also significantly affects the speed at which contingencies are resolved and the offer moves to pending status.

Are there any specific strategies that buyers can use to make their offers more appealing when competing for a home that’s listed as contingent or pending?

To make an offer more appealing on a home listed as contingent or pending, buyers can employ a few strategies. Offering a higher purchase price is a straightforward approach, but flexibility in terms, such as agreeing to the seller’s preferred closing date or purchasing the home as-is, can also entice the seller. Demonstrating strong financial readiness through a lender’s pre-approval letter, a larger earnest money deposit, or proof of funds can further solidify the buyer’s position. In certain cases, a personal letter to the seller expressing the buyer’s connection to and plans for the home may also sway their decision. Waiving certain contingencies, though risky and requiring careful consideration, can make an offer stand out, showcasing the buyer’s commitment and reducing potential hurdles for the seller. Engaging a real estate professional can provide valuable guidance in navigating these strategies and understanding their implications.

Want to Buy or Sell a Home in West Chester, PA?

Trust Mike Ciunci, a real estate agent who knows what it takes to buy or sell a home in West Chester. As your friend in real estate, he’ll teach you about the West Chester real estate market and help get the best results out of your home transaction. 

Contact Mike Ciunci for help buying or selling a home in the West Chester area.

Mike Ciunci
Mike Ciunci
Mike Ciunci has been a Real Estate Salesperson for Keller Williams for over 16 years. He is a specialist in the West Chester real estate market. He has sold over 56 million dollars per year and helped nearly 100 clients each year with their local real estate needs. Mike has a PA Real Estate Salesperson License and is a member of the PA Association of Realtors (PAR) and the National Association of Realtors (NAR).