Under Contract vs Pending Property: What's the Difference?

In order to understand under contract versus pending real estate, we'll take a look at some steps within the real estate buying and selling process. We'll outline the key differences and similarities as well as other statuses a property might have.

Under contract versus pending

What does "under contract" mean on a real estate listing?

When a property is "under contract" in real estate, it means that a buyer has made an offer on the property and the seller has accepted it, but the sale has not yet been finalized. During the under contract phase, the buyer typically has a certain amount of time to complete their due diligence and make sure they want to move forward with the purchase.

One important aspect of the under contract phase are contingencies. Contingencies are conditions that must be met in order for the sale to go through. Here are some common contingencies that buyers might include in their offer:

• Financing contingency: This contingency states that the purchase of the property is contingent on the buyer securing financing. If the buyer is unable to secure financing within a certain timeframe, the contract can be terminated.

• Appraisal contingency: This contingency states that the purchase of the property is contingent on the property being appraised at or above the purchase price. If the property does not appraise at or above the purchase price, the buyer can terminate the contract or negotiate with the seller to lower the purchase price.

• Inspection contingency: This contingency states that the purchase of the property is contingent on the property passing a home inspection. If issues are found during the inspection, the buyer can ask the seller to make repairs or negotiate a lower purchase price.

• Title contingency: This contingency states that the purchase of the property is contingent on the buyer receiving clear title to the property. If any issues arise with the title, the contract can be terminated.

It's important to note that contingencies can vary depending on the location and specific transaction, and there may be other contingencies that are added or removed depending on the needs of the buyer and seller.

What does "pending" mean on a real estate listing?

When a property is listed as "pending" on a real estate listing, it means that an offer has been accepted and the sale is in the process of being finalized. The property is no longer available for showings or offers, as the seller has accepted an offer and is in the process of completing the sale.

One important thing to note is that a property can stay in "pending" status for as long as the set escrow period is. Escrow is the period of time between the acceptance of the offer and the finalization of the sale, during which all the necessary paperwork is completed and the necessary funds are transferred. This escrow period can vary depending on the location and specific transaction, but it typically lasts between 30-45 days.

There are several things that can affect the pending status of a property. For example, if the buyer is unable to secure financing or if there are issues with the property that arise during inspections, the sale may fall through and the property may return to active status. Additionally, if the buyer and seller are unable to come to an agreement during negotiations, the sale may also fall through and the property may return to active status.

Steps in a real estate transaction:

The process of buying or selling a home involves several key steps, including:

Step 1. Making an offer

Once a buyer has found a home they're interested in, they can make an offer to purchase the property. This offer will typically include details such as the purchase price, the desired closing date, and any contingencies or special requests.

Step 2. Entering under contract

If the seller accepts the buyer's offer, the property will typically enter the "under contract" phase. During this time, the buyer will typically have a certain amount of time to complete their due diligence and make sure they want to move forward with the purchase. This may include arranging for a home inspection, getting pre-approved for a mortgage, and finalizing their financing.

Step 3. Contingency period

As mentioned earlier, during the under contract phase, the buyer will typically include contingencies in their offer. These contingencies are conditions that must be met in order for the sale to go through. For example, the buyer may include a financing contingency, an appraisal contingency, an inspection contingency, or a title contingency.

Step 4. Pending

Once all the contingencies have been met, the property will typically move into the "pending" phase. This means that the sale is almost complete, but it's not quite final yet. During this time, the buyer will typically work with their lender to finalize their financing and prepare for closing.

Step 5. Closing

Finally, the sale will typically be finalized at a closing meeting. At the closing, the buyer will sign all the necessary paperwork, pay any remaining closing costs or fees, and receive the keys to their new home. The seller will receive their proceeds from the sale, and the transaction will be complete.

It's important to note that the exact steps of a real estate transaction can vary depending on the location and specific transaction, but these are some of the most common steps involved in buying or selling a home.

Other Property Statuses in Real Estate Transactions

In addition to "under contract" and "pending," there are several other statuses that a property might have during the real estate transaction process.

Active

"Active" is the most common status that a property has when it is listed for sale. It means that the property is currently available for showings and offers. This is typically the status that a property is listed under when it is first put on the market.

Active Under Contract

"Active under contract" is a less common status that a property might have. This status typically means that the seller has accepted an offer, but the buyer has not yet completed their due diligence or finalized their financing. It's similar to "under contract" in that the sale is not yet final, but it's different in that the buyer is still in the process of completing the necessary steps to move forward with the purchase.

Backup Offer

A property might be listed as "backup offer" if a buyer has made an offer on the property, but the sale is not yet final. In these cases, the seller has accepted an offer but is still considering other offers in case the current one falls through. This status is less common than "under contract" and "pending," but it does occur in certain situations.

Contingent

"Contingent" is another status that a property might have if a buyer has made an offer on the property, but the sale is not yet final. In these cases, the seller is still considering other offers in addition to the one that has been made.

Withdrawn

If a property is no longer available for showings or offers and has been taken off the market, it might be listed as "withdrawn."

Expired

If a property was listed but did not sell within the specified timeframe, it might be listed as "expired." The property is no longer available for showings or offers.

Cancelled

If the listing has been cancelled for any reason, the property might be listed as "cancelled." It is no longer available for showings or offers.

Real Estate Transaction FAQ

If you're buying or selling a property, you may have a lot of questions about the real estate transaction process. Here are some common questions and answers related to property statuses, offers, and timelines.

How long does it take for a property to go from under contract to pending?

The length of time that a property stays under contract can vary. In general, a property will move from "under contract" to "pending" once all contingencies have been met and the sale is nearing completion. This could happen in as little as a few days, or it could take several weeks. The exact timeline will depend on a variety of factors, including the specifics of the transaction and any issues that may arise during the process.

What is pending versus contingent real estate?

"Pending" means that the property is no longer available for showings or offers because the sale is nearly complete. "Contingent" means that the property is still available for showings and offers because the sale is not yet final. In other words, a property that is "pending" is closer to being sold than a property that is "contingent." Contingent properties are under contract.

Can a buyer make an offer on a property that's already under contract?

Yes, a buyer can make an offer on a property that's already under contract. However, the seller is not obligated to accept the offer, and they may be legally prohibited from accepting additional offers while the property is under contract.

How to make an offer on a property that's under contract or pending?

If a property is under contract or pending, you can still make an offer, but it's important to work with a qualified real estate professional who can guide you through the process. They can help you understand the current status of the property and any potential issues that may arise during the transaction.

What happens if a property goes from under contract to pending and then back to under contract?

If a property goes from under contract to pending and then back to under contract, it typically means that the sale fell through for some reason. This could be due to financing issues, problems discovered during the inspection process, or any number of other issues. If this happens, the property will once again be available for showings and offers.

What is the typical timeline for a real estate transaction?

The timeline for a real estate transaction can vary depending on a variety of factors, including the type of property, the location, and the specifics of the transaction. In general, the process can take anywhere from a few weeks to several months. It's important to work with a qualified real estate professional who can help guide you through the process and provide you with an estimated timeline based on your specific situation.