While strolling through your neighborhood (or scrolling through online listings), you might see signs on homes that read “pending” or “contingent.” When a home you’ve been eyeing finds itself in either status, you may wonder if it’s now too late to buy.
The two concepts can stir up a lot of confusion: What exactly do these statuses mean to both a buyer and seller? Can you make an offer on a property listed as pending or contingent? What’s the difference between the two?
These are all great questions, and we’ll help you understand how and why you might still be able to nab your dream home.
(Note that getting a mortgage pre-approval in advance will be vital before you try to jump on a pending or contingent home.)
The Difference Between a Pending and a Contingent Home
“Pending” means that potential buyers have submitted an offer on a home and the seller has accepted an offer. But this doesn’t mean the deal has closed or that the home has sold “sold.” Rather, it only indicates that a contract has been signed between both parties and the deal is progressing toward completion.
A “contingent” home, on the other hand, means the deal still hinges on at least one major point. In real estate purchase agreements, a contingency is a clause stating a certain action or requirement must be met so a contract can become legally-binding.
When the seller accepts an offer, but chooses to keep the listing active in case certain contingencies aren’t met, it’s considered a contingent sale. For example, let’s consider an inspection contingency. Let’s say a home inspector finds something seriously wrong with the home’s foundation. A buyer can walk away from the home sale if an inspection contingency exists.
The four most common contingencies are the appraisal contingency, financing contingency, title contingency and home sale contingency. No matter the type, the home sale can only continue once all contingencies in the contract have been met.
Let’s walk through a few common contingent listing statuses:
- Contingent – Continue to Show (CCS): In a CCS, a buyer’s offer has been accepted, but hinges on one or several contingencies. Other homebuyers can continue to view the property and submit offers while these contingencies are resolved.
- Contingent – No Show: This term means that a solid offer on the property will probably make it to the closing table. Therefore, the seller does not want to continue showing the property to other potential buyers.
- Short Sale Contingent: A “short sale” is the sale of property where the lender will accept less than the amount still owed on the mortgage. A short sale contingency status means that a home is no longer for sale because an offer has been accepted, but the short sale is still in process.
- Contingent – With or Without a Kick-Out: With a kick-out clause, the home sellers can continue showing and accepting offers even after they have accepted a contingent offer.
- Contingent – Probate: In this situation, when someone dies without a beneficiary, a home is sold in probate court. When that happens, the state takes over and administers the sale of the property.
Now, let’s walk through a few common pending statuses:
- Pending – Taking Backups: A seller is accepting backup offers to guard against issues coming up in the final steps of the home sale.
- Pending – Short Sale: Mortgage lenders or other financial institutions may have to approve a short sale deal.
- Pending – More Than Four Months: This phrase means that an accepted offer is pending for more than four months. Delays in construction or processing are a few factors that can lead to long pending statuses.
Can You Make an Offer on a Contingent or Pending Home?
Yes, you can put an offer on a house that is still pending or contingent, though the final decision largely rests on the seller’s shoulders. You may not have as strong of a chance of getting the home as when you’d make an offer on a house for sale on the open market because another buyer may already be lined up ahead of you.
A backup offer can also increase your chances of getting a home. You can make a backup offer to ensure a legally binding contract with the seller. This means that if the first offer falls through, you’ll be next-in-line to purchase the home.
Ways to Win a Home Before it Goes Contingent or Pending
Want to be first in line? Think you have the stamina for contingent deals? It’s no easy task, but you have multiple options when trying to make one happen:
- Have your real estate agent speak with the listing agent. Your agent can find out about the contingency period or when the release date is up.
- You can also consider making an offer without contingencies, though this presents risks. Waiving contingencies could mean that you’re on the hook for thousands of dollars if things don’t go as planned. For example, if you waive contingencies find that the home has expensive repairs that must be made, you might not be able to legally back out of the home sale.
- You may also consider writing a heartfelt, personal letter to the seller, stating your reasons for wanting the home. However, this tactic is prohibited in some states.
It’s easy to get caught up in the action, but it’s important to remember that deals often fall through. This outcome is even more likely when you’re the one trying to buy a pending or contingent home. In some cases, no amount of earnest money deposits can get you the home. But in most cases – it doesn’t hurt to try.
Looking for more information from Morty? Read through calculating debt-to-income ratio and whether an FHA loan might be right for you.