Many people are familiar with the term “patent pending” in reference to an application for a US patent awaiting approval from the trademark office, and pretty much that’s what a pending sale means in real estate too. Pending by definition as an adjective means “awaiting decision or settlement.” If you see that in real estate for a house you’re really interested in buying, does that mean you should give up and pursue another opportunity? Maybe and maybe not.
What does pending mean in real estate?
A pending sale in real estate means a buyer has submitted an offer that a seller has accepted, but the deal hasn’t quite closed yet. At the moment that a contract is agreed upon, then the house is placed into pending status. But there’s still a chance the home will be available again, and yes you can and should definitely investigate further, if you are really interested in that house.
Difference between pending and contingent
A contingent listing isn’t the same thing as a pending listing, contingent is really one step before pending. When a buyer makes a contingent offer on a home, it means the seller has accepted the buyer’s offer with conditions the seller has accepted from the buyer. The buyer might still need to apply for a mortgage and to put money down for example, among other things. If all contingencies go through successfully for the buyer, then the home sale will move into the pending stage.
Difference between pending and under contract
When the offer has been accepted, all the contingencies have been solved or accepted, and all that’s left is the final paperwork and closing, then the status switches to “pending,” simply because closing hasn’t happened yet.
Reasons why pending sale can fall through
There are many reasons why a pending sale can fall through. Here are some of the more common ones:
Buyer unable to find a mortgage
Most buyers use a mortgage to purchase a house, but if a buyer can’t get a mortgage, they’ll need to cancel the sale, unless they’re paying 100% cash. There are any number of reasons why a buyer might not qualify for a mortgage even after being pre-approved. Some common reasons are: the buyer may have been inaccurate on the information supplied to the lender, the buyer may be trying to use their loan for a down payment, and the buyer might be experiencing financial difficulties unforeseen when getting pre-approved.
Short sale breakdown
A short sale is when the seller agrees to sell their home to avoid falling into foreclosure, and the financially distressed homeowner sells their house for less than the amount due on the mortgage. The buyer of the house is a third party (not the bank), and all proceeds from the sale go to the lender, not to the seller. The lender either forgives the difference or gets a deficiency judgment against the borrower requiring him or her to pay the lender all or part of the difference between the sale price and the original value of the mortgage. In some states, this difference must legally be forgiven in a short sale. If this scenario breaks down for the buyer, this will allow another buyer to step in.
Home inspection trouble
If after inspecting the home, there are too many issues the buyer and/or seller must need to fix, and it’s not an “as is” sale, the buyer can choose to back out, since they may be facing repair and maintenance costs they weren’t prepared for.
Buyers can occasionally back out of contracts at the last minute because they had a simple change of heart or for other reasons – not financially ready to buy after all, sudden job switch, hoping for more house choices in another part of town or a different time of year.
What can you do to help check/ find out a property’s status?
Based on all of the things that might happen for a pending sale house to fall out of contract, and if you’re really sure you’re interested in a house that already has a serious offer, it’s time to do some investigation.
One great way to learn more about a pending sale house is to have your buyer’s agent contact the listing agent for the house. Since it’s the listing agent’s job to sell the homeowner’s property for as much money as possible and to make sure that an offer goes through, if a pending sale doesn’t work out, it’s important that the listing agent knows exactly who you are.
Your buyer’s agent can hopefully gain a little more information about the condition of the home regarding inspection, and whether it’s likely to fall through on the current pending contract. Also try to have your agent figure out how many offers the house already had and how eager the seller is to close the current pending sale deal. And it doesn’t hurt to have your agent ask if the existing offer is at or below list price. This information is key should the previous buyer decide to back out of the contract.
Can a listing agent still show a home if the sale is pending?
Absolutely the listing agent can do this, as it’s in the best interest of the listing agent to sell the house quickly and for the most amount of money to benefit the seller. However. And this is a big “however.” The seller must obviously be willing to allow the listing agent to show the house to you. And these things almost always go hand in hand – if the seller is not thrilled about the contract with the current buyer, naturally of course the listing agent will already be aligned and willing to show the house to you. If the seller is happy with the pending sale, then you will find the listing agent equally happy to ignore your plea.
We Make Buying & Selling Simple!
List your home for one low fee and/or buy and get thousands cash back.Get Commission Free Realty
Should you still make an offer if the sale is pending?
And so of course this all comes down the funnel to the last decision. Should you make an offer on the house? If you really want to go for it, then go for it all the way and don’t be shy.
- Beat the other buyer’s deal – Make a better offer in a number of ways. You could offer more than asking price, you could waive inspection terms, you could put in a larger down payment and/or a higher earnest money down payment, you could offer to pay for all closing costs, including the seller’s, etc. Be as open as possible to negotiation and make your offer hard to refuse. Work with your buyer’s agent to make that happen.
- Use a personal touch – Selling a home is a very emotional process for most sellers, so tapping into a seller’s emotions is one way to win them over and add a human touch to the transaction. Focus on the things that are easy for sellers to relate to: your background, your job, your family, your pets, etc. And always include a picture. If you’re certain this house is your dream home, then send that handwritten letter.
- Be aggressive – B .. E … aggressive! Always be available to communicate via text, phone, email, if something falls through and there is a last minute decision to be made. Dial up your agent frequently to ensure they’re keeping the heat on the listing agent as well.
And yes, it may be a little harder to break through a pending sale, but if this is the home you want, you need to go for it 100% from all angles and with all cylinders firing and not back down.
Christopher has been been in the Real Estate industry for 8 years and has had the opportunity to close over 1,000 deals while acting as the Managing Broker for thousands more. Christopher is passionate about continuing to find ways to simplify, maximize, and serve Trelora’s clients exceptionally well and spends his time building teams to deliver high levels of service. When not doing real estate Christopher can be seen training for marathons and ultra relays with his 2 year old daughter, eating pizza, and drinking a steady stream of Diet Coke.