When purchasing a home, homebuyers must navigate a tangled mess of paperwork that often includes new terms specific to the real estate industry. Two of these most common terms include “contingent” versus “pending” homes.
Both terms indicate that a buyer has been found, but the deal has yet to close. However, there are important distinctions between these two phrases. They may be new to you, but they aren’t complicated!
Let’s review the differences between pending and contingent listings, so you have a clearer idea of the status of a potential home.
What’s a Pending Listing?
If a property you’re looking to buy is listed as “pending,” the sellers have accepted the offer, the listing is no longer active on the market, and all conditions for the sale’s close have been met. The crucial thing to note is that the deal has still not closed.
The property could hit the market again should there be a problem in the final phase. In September 2022, 6% of all purchase agreements were scuttled before closing, a process which usually takes just under two months to complete.
This doesn’t mean homebuyers can easily submit an offer on a pending home. The contract between seller and buyer is locked in, so the seller has their hands tied, even if someone offers them more money for the property.
If your dream home is listed as pending, there’s no harm in asking your real estate agent if they can put in a backup offer. Don’t get too excited, though.
What is a Contingent Listing?
When the seller has accepted an offer, but certain conditions (or contingencies) must be met before it officially closes, that’s known as a “contingent” listing. The seller and buyer have agreed to come together and make a deal in both pending and contingent listings, but contingent listings are farther from closing.
Backup offers have a better shot of succeeding when a home is listed as contingent rather than pending. The seller and buyer may stake out certain conditions to protect their interests. Here’s a list of some common contingencies:
- Title contingency: If the title review uncovers major issues, like a lien, the buyer can safely walk away from the deal.
- Financing contingency: Homebuyers can back out of the deal without losing their deposit if they can’t obtain financing.
- Home inspection contingency: Home inspections may determine that the property requires substantial work, in which case buyers can request renovations, renegotiate the contract, or walk away from the deal.
Buying and selling homes can be nerve-wracking, so both parties create contingencies to ease their minds over sensitive issues. Finding the right agent to help navigate this process is essential, which is why more people use the latest real estate technology platforms to find the right agent.
According to Toronto Life, since its 2017 launch, the real estate platform Nobul created by tech mogul Regan McGee has signed up over 430,000 agents and handled more than 250,000 property listings across North America. Their secure and innovative platform helps buyers and sellers alike.
Informed homebuyers make sounder decisions. The right agent will help you understand issues you didn’t know you needed to know about, like contingent versus pending homes and anything else that comes your way.