If you’re shopping for a home or looking to sell, you’ve probably encountered the terms “under contract” and “pending” during your real estate search. While they might seem interchangeable, they actually refer to different stages of a real estate transaction. Understanding these terms can help you navigate the market more effectively, whether you’re a buyer or a seller.
What Does “Under Contract” Mean?
When a property is listed as “under contract,” it means that the seller has accepted an offer from a buyer, and both parties have agreed to the terms of the sale. However, the transaction is not yet complete. There are still certain conditions and contingencies that need to be met before the deal can move forward. These may include:
- Home Inspections: The buyer may still need to schedule and conduct an inspection to ensure the home is in good condition.
- Financing Approval: The buyer’s lender must approve the financing, which can take time.
- Appraisal: The property must be appraised for its value by the lender’s appraiser to ensure the buyer isn’t overpaying.
- Contingencies: This could include contingencies related to the sale of the buyer’s current home, repairs, or specific timelines.
Until all these contingencies are cleared, the property is considered under contract but is not guaranteed to close.
What Does “Pending” Mean?
When a property is listed as “pending,” it means that all contingencies have been satisfied, and the sale is almost complete. This is the final step before closing. The buyer and seller have agreed to the terms, inspections have been completed, and financing is secured. At this point, no additional offers are being considered unless the deal falls through at the last minute.
A pending listing signifies that the property is on its way to being sold, and the only thing left is for both parties to sign the final paperwork and complete the transfer of ownership. There’s very little risk that the deal will fall through, barring any last-minute issues, such as problems with the title or financing.
Key Differences Between Under Contract and Pending
| Term | Under Contract | Pending |
|---|---|---|
| Stage in the Transaction | Early to middle stage; contingencies may still apply. | Late stage; most contingencies have been resolved. |
| Buyer and Seller Status | Agreement reached, but conditions remain to be met. | Deal is almost complete; only closing remains. |
| Risk of Deal Falling Through | Higher risk of the deal falling apart if contingencies aren’t met. | Low risk; most hurdles have been cleared. |
| Marketability | Still allows for backup offers in some cases. | No more showings or offers will be considered. |
Why Does It Matter?
Understanding these terms can help you set your expectations. If you’re a buyer, a property that is under contract still has a chance of falling through, meaning you might want to keep an eye on it in case the deal fails. Conversely, if you see a home marked as pending, you can typically assume the deal is near completion and there’s less of a chance that it will come back on the market.
For sellers, it’s crucial to know the difference because you might still be open to backup offers while a property is under contract, but once it’s pending, you can consider the deal all but final.
Conclusion
In short, “under contract” and “pending” describe two different stages in the real estate process. “Under contract” signifies that an offer has been accepted but conditions still need to be met, while “pending” means the transaction is almost complete and only closing remains. Understanding the distinction between these terms can help buyers and sellers make more informed decisions and set the right expectations throughout the process.
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