Well, you’ve combed through various listings and have finally found it. The ideal solution is right there on your laptop, staring back at you. Maybe it’s a cottage, a single-family house, an apartment, or a multifamily house. What matters is this – within your budget, it has all of the facilities you desired and is in the ideal area. However, there is one minor issue: it’s “sale pending.” What is pending in real estate?
What does this exactly mean? Does this mean you missed your window of opportunity or can still grab the property for yourself?
These are some of the things that a real estate investor can keep in mind in this case. Let’s start with a definition of pending in real estate.
Definition of “Pending” in Real Estate
What does the term “pending” in real estate mean?
A sale pending (or active under contract) status indicates that the home seller has accepted a bid from a prospective buyer, but the transaction has yet to close. The seller and buyer didn’t yet sign the contract. Also, they didn’t waive or discuss the contingencies. Pending transactions aren’t the same as active listings. An income property will remain pending until both parties sign the legal requirements. A pending sale will take anything from a few days to several weeks to complete.
In real estate, there are various forms of pending sales. Here are a few examples of the most common:
- Pending Short Sale – The agreed bid is a short sale that other banks or lenders must approve outside of the seller’s or buyer’s control. Such a sale will take a longer time to process.
- Pending – Taking Backups – The seller has accepted a bid, but the transaction has reached a snag in the final stages. The seller is now receiving contingency deals in case the deal falls through.
- Pending – Over 4 Months – An offer was accepted but had been pending for over four months. The pending status may be due to stalled negotiations, a realtor mistake, or a longer-than-usual processing period.
Many people get the terms pending and contingent mixed up. Let us examine the distinction between pending and contingent.
Definition of “Contingent”
What exactly does the term contingent mean?
Contingent means that the seller accepted a bid from a prospective buyer, but certain conditions have yet to be met. During the contingent time, the buyer has the option to withdraw from the transaction without losing his or her earnest money deposit. The following are some of the most common contingencies when buying a home:
- Financial contingency – If the buyer does not receive the mortgage or home loan that he or she applied for, he or she has the option to back out of the contract.
- Inspection contingency – If the home inspection reveals significant flaws, the buyer has the option of requesting compensation or repairs or opting out entirely.
- Appraisal contingency – If an appraisal shows that the property is worth less than the asking price, the buyer may negotiate a reduced price or opt-out.
- Title contingency – If the title report shows a muddled ownership status, the buyer has the option to walk away.
So, what exactly is the distinction between a contingent and pending status?
We can say that when both sides reach contingencies, contingent deals become pending deals.
Can you Make a Bid on a House that is Market with Pending?
It is essential to understand the distinction between a pending sale and a sold house. “Pending” indicates that the seller has accepted a bid. It also means that no money has exchanged hands, and the property has not yet been transferred to the seller. There is no reason why you should be unable to make a bid if the seller accepts backups.
It is also essential to keep in mind that contracts can fall through at the last minute for various reasons. For example, the buyer could lose or leave his or her employment, resulting in a loss of access to financing. Or the buyer can get cold feet and back out of the deal at the last minute.
If you come across a property that is for sale pending that you are interested in, here is what you can do to improve your chances of winning:
Organize Your Finances
Save up for a down payment. Also, get pre-approved for a loan before making a bid on a pending sale. You can make a reasonable bid and back it up when the time comes to a close.
Show Your Enthusiasm
Request that your realtor discusses your interest in the home with the seller’s representative. The majority of sellers’ agents will continue to present the home to potential buyers until the last minute in the hopes of getting a better bid.
Make a Deal with the Seller
To get the seller’s attention, you must make your bid stand out from the crowd. Consider making a bid with no conditions, even though it is risky. You may also offer flexible moving dates and pay closing costs. Providing convenient terms to the seller will increase the likelihood of your bid being accepted.
Send a Personal Letter
Make an emotional appeal to the seller if you are sure that this is the rental property you want. Send a letter (preferably handwritten) describing why you want to purchase that particular house. This persuasive letter may be the difference between you and the other bidders.
Keep an eye out for contact from the seller and your buyer’s representative. That includes reading your inbox daily and responding to messages and phone calls. Being readily available would demonstrate that you are seriously interested in the home and make a favorable impact on the seller.
If you’ve ever asked, “What does pending mean in real estate?” now you know.
Don’t be disheartened if you see a pending sale status next to your ideal investment property. If you play your cards correctly, the house may be yours.