Reasons Homes Go to Pending Status in Real Estate

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When you are buying and selling homes, there are many terms and lingo that get used by real estate agents. Sometimes they are not always clear or just not explained.

Sometimes real estate agents assume that consumers know how the industry works. Taking things for granted is never a good idea when it comes to something so important as selling a home.

There are many statuses you are likely to see that are generated from the multiple listing service. The statuses are then transferred to the most popular real estate sites where consumers search for homes.

Some of the most common statuses will be current, sold, pending, and contingent. A home that is for sale or sold is pretty straightforward to understand.

It becomes a bit more complicated when a home is pending or contingent. For consumers, these statuses are a bit more confusing.

We are going to take a look at the definitions and why homes go pending in real estate.

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Why Homes Go Pending in Real Estate SalesDeposit Photos

What Does Pending Sale Mean in Real Estate?

The definition of pending as it applies to real estate is pretty straightforward. Pending means that the sale has not yet closed and is not yet final. Many folks will ask real estate agents what does pending in real estate mean. It can be a bit confusing, as it is often used interchangeably with the status "contingent." Both contingent and pending mean that a buyer and seller have come to terms on an offer to purchase contract.

Since the house is considered under contract, another buyer cannot come along and purchase the home. However, there are some differences in an under-contract home when comparing contingent vs. pending.

With contingent sales, there are usually open-ended conditions that need to be satisfied before a sale can be completed. These conditions are called contingencies in real estate sales. Some very common contingencies in real estate include a home inspection, mortgage financing, real estate appraisal, and possibly a home sale contingency.

Each of these contingencies can potentially cause a sale to fall through. Once each of these phases of a home sale is completed, the sale is then marked as "pending" in the multiple listing service. Most real estate agents will be confident at this point that the sale is heading to closing without any likely hitches.

Let's cover each of the reasons why a home will go pending.

The Most Common Reasons a House Will Go Pending

It's a Cash Sale

When you have a cash buyer, there fewer contingencies in the transaction. There is undoubtedly no mortgage contingency clause because the buyer is paying cash. There is almost never an appraisal contingency either because no mortgage lender is involved.

Many cash buyers also tend not to do a home inspection either. Cash sales become more prevalent in hot seller's markets with multiple offers and bidding wars. Sellers look upon cash offers very favorably, so buyers do what they can to make their offer the most attractive. As the saying goes, "cash is king."

The Home Inspection is Completed

A home inspection contingency will give the buyer the right to have the property inspected by a professional engaged in the home inspection business. The home inspection contingency usually gives the buyer seven to ten days to complete the inspection process.

When there are no issues to discuss, the sale can proceed forward. The contingency no longer exists.

The Appraisal is Completed

In non-cash sales, when the buyer is getting a mortgage, there will be a real estate appraisal completed by the buyer's lender.

The appraisal is never waived if the buyer puts less than a twenty percent down payment. Sometimes when the down payment exceeds twenty percent, an appraisal will not be completed. When there is a waiver, the lender feels there is enough equity.

A non-interested third-party appraiser will complete the appraisal. They will complete a comparative market analysis and submit their appraised value to the lender. If the appraisal comes in at or above the agreed-upon sale price, the contingency will be removed, and the sale will proceed.

If the home does not appraise, the buyer and seller must work out how to deal with the low appraisal. You may or may not be able to cancel the contract without an appraisal contingency.

The Buyer Gets Their Mortgage Commitment

The mortgage contingency clause is the most common contingency in all real estate contracts. Most buyers don't have the ability to pay cash for a home. The mortgage clause allows the buyer a specified amount of time to procure financing. It is usually between 4-6 weeks to get a mortgage.

The mortgage contingency clause will also specify how much the buyer is borrowing. Even when a buyer is pre-approved, some things go wrong with a buyer's financing. They might miss a few bills that cause their credit scores to drop or make a large purchase, such as a car that throws off their debt-to-income ratio. They could even lose their job.

It is always a significant relief to sellers when a mortgage commitment is issued.

Listing Agents Can Change Status to Pending Before Contingencies Are Satisfied

It is essential to note that nothing is stopping a listing agent from changing a home's status to pending before all the contingencies are satisfied. The agent could be confident the sale is not going to fall through.

Another likely reason is how some local MLS systems work, including my own in Massachusetts. When a home is marked as contingent, the days on market continue to increase as if the home was for sale even though a contract has been accepted. A home that is pending does not have days on the market increase.

So, if a home sale falls through, the days on market become artificially distorted if a home was left in contingent status until all the contingencies were met.

Final Thoughts on Pending Sales

It is always crucial for buyers and sellers to understand how things such as listing statuses work in real estate. Hopefully, you now have a much better understanding of pending in real estate.

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Bill Gassett is an avid writer for numerous real estate topics including finance, mortgages, moving, home improvement, and general real estate. His work has been featured on numerous prestigious real estate publications.

Massachusetts State
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