Pending vs. Contingent: What’s the Difference?
When you’re looking for a new home to buy, you’ll often see on listing sites that they’re marked as either pending or contingent.
There are differences between the two, and understanding those differences can help you know if a house is worth trying to pursue.
First, there’s contingent. Contingent means that a seller has accepted an offer. These listings are still active, so you can see them when you’re searching online, for example. They could fall out of contract if all the provisions aren’t met.
The closing on a contingent house doesn’t happen until certain things happen, and they have to happen in a particular period of time.
Some of the contingencies that are common include:
A home inspection contingency: When an offer has been accepted, the buyer puts down earnest money as a deposit on a home. Then, there’s almost always a contingency that the home inspection goes well, done by a professional inspector. If there’s an issue that arises that the buyer didn’t know about, then the deal needs to be revisited, and sometimes, the buyer and seller can’t come to an agreement.
Mortgage contingency: This happens when a buyer isn’t pre-qualified for a loan, and so there’s a contingency depending on the buyer being able to get financing. If the buyer can’t, the home goes back on the market.
Appraisal contingency: With this situation, the mortgage lender for the buyer might hire an independent appraiser to determine the home’s fair market value. That then shows the lender that it makes sense for the loan to go through, based on that value.
Home sale contingency: This common scenario happens when a home buyer already owns a home, and they make an offer that’s contingent on them being able to sell the home they currently own.
It’s fairly common for deals to fall apart because of contingencies. If you’re selling a home, you can accept a backup offer in case your first offer and deal don’t go through.
What Does Pending Mean?
You might see a home marked as pending. That means that there is an agreement, and all the contingencies are dealt with. In that case, the home is much closer to actually being sold.
The deal could potentially fall through still at this stage because of something with financing or the inspection, but it’s a lot less likely than it is at the contingency phase.
Most real estate agents won’t accept additional offers when a home is pending, but there’s not a legal reason for that. It’s more preferential.
What About Under Contract?
Finally, you might also see that a house is under contract. That means the terms are agreed upon, but the deal is new and could break down. A house under contract can go back on the market pretty easily, and you can make a deal on a property.
If the deal falls through, then you may still be able to buy the home.
Essentially what this all means is that you shouldn’t let contingent or under contract scare you from making contact with a seller or their agent. There are often situations where deals fall through, although if a home is pending, there’s a much lower likelihood you would have a chance.
Realty Times, Pending vs. Contigent: What's the Difference?, by Ashley Sutphin