Before real estate listings were available online, you would know a home sale was pending by the big red sticker across the “For Sale” sign. But for homebuyers searching online, it isn\'t uncommon to discover that the home you’ve fallen in love with has the words “Pending” and “Sale Pending” attached to it. Many buyers assume that “Sale Pending” means a property is not available, but that isn’t always the case. It can mean a few different things depending on how a local market or real estate agent works. Here’s what you need to know if a “Sale Pending” home will be worth pursuing.
Understand “Subject to” and Contingent Upon”
To better understand these stipulations, it helps to know how a basic real estate transaction normally works. A buyer generally makes an offer “subject to” or “contingent upon” a property inspection, a bank appraisal, or full loan approval. In these situations, the buyer is planning on closing a home, but wants to assure that the property is in good condition and that financing can be secured. If a buyer is unable to get financing, or there is a problem with the inspection, the buyer has the right to exit the contract subject to one of those terms.
A Property With An Offer May Still Be For Sale
In some places, a home with some sort of contingency may be labeled as “Active with Conditions” or “Active Contingent.” If all goes well, the buyer will move ahead with the sale. Typically, the buyer would have a week or so to complete the inspection and a few weeks to get an appraisal and loan, depending on the local market. During this interim, the seller is unable to enter into an agreement with another buyer, but the sale is not a “done deal.” To another interested buyer, this communicates that there is an opportunity for a “backup” offer. If the first falls through, the seller would prefer to go with another buyer who has made a backup offer and is ready to go. Otherwise, the seller has to start over again.
No More Contingencies = “Sale Pending”
A sale that is pending is one in which all contingencies have been removed. In that case, the buyer has had inspections and is ready to move ahead. The property has been appraised appropriately, and the buyer’s loan was fully approved. At this point, the buyer is locked into buying the home and all contingencies have been removed. The final step is to move towards closing, which can take anywhere from a few days to a few weeks. Most agents won’t label a home as “Pending” until the buyer has removed all contingencies and the sale is complete. In this case, the sale is pending the final closing.
Still An Opportunity?
A buyer can STILL walk away after removing all contingencies. The buyer isn’t the legal owner until the property has closed and the deed is recorded. From time to time, a buyer has an emergency and needs to exit the contract. Most likely, the buyer risks the earnest money deposit.
Is A “Sale Pending” Home Worth Pursing?
It never hurts to give it a shot if your heart is set on a property. What is the status of the property? Has the buyer had the inspections? How did they go? Have your agent ask the listing agent these questions to understand the current deal on the table. This will give you an indication of whether or not there is a potential opportunity. Don’t get your hopes up when your desired home has a “Sale Pending” status. Instead, put the home on the back burner and follow the sale. In changing markets, buyers often times get cold feet, or bank’s lending standards get rigid, which causes deals to fall apart. A smart buyer will make his or her interest known, so if the deal falls apart, the buyer is there and ready to step in.
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