What Does Sale Pending Mean in Real Estate?
2013
What does Sale Pending mean in real estate? Does it mean the home is totally unobtainable? Or does an interested buyer still have a chance? Here’s what you should know to decide if a Sale Pending home may be worth pursuing.
Understanding the Home Purchase Contingency
To begin, a buyer generally makes an offer “subject to” or “contingent upon” a property inspection, a bank appraisal or full loan approval. In these situations, the buyer is telling the seller he plans to close on the home but wants to be certain the property is in good condition and he can get financing. If the buyer can’t get financing, or there’s an issue with the inspection that can’t be worked out, the buyer has the right to exit the contract.
In some places, a home with some sort of contingency may be labeled as Active with Conditions or Active Contingent. Assuming all goes well, the buyer will move ahead with the sale. Typically, the buyer has a week or two to do the inspection and a few weeks to get an appraisal and loan.
During this period, the seller can’t enter into an agreement with another buyer, even though the sale hasn’t closed. This means another interested buyer could make a “back-up” offer. That way, if the first offer collapses, the seller has a back-up offer ready to go.
A True Home, Pending Sale
A pending sale has had all contingencies removed. The buyer has had inspections and told the seller he’s moving ahead. The property appraised appropriately, and the buyer’s loan was approved.
At this point, the buyer, having removed all contingencies, is now “locked in” to buying the home. The final step is closing, which can take anywhere from a few days to a few weeks. Most agents won’t label a home Sale Pending until the buyer has removed all contingencies and the sale is a done deal.
Keep in mind that a buyer can still walk away after removing all contingencies. On occasion, a buyer has an emergency and needs to exit the contract. Most likely, the buyer risks losing his earnest money deposit.
Bottom line: If you love a property with a Sale Pending sign, you may still have a chance.
Advice for Buyers
Find out about the property’s status. Did the buyer’s inspections go well? Were issues uncovered during the inspections? Get your agent to ask the listing agent these questions to understand the current deal on the table. This will help you understand whether or not you have a shot at the home.
Don’t get your hopes up, of course. Instead, put the home on the back burner but continue to follow the sale. Particularly in changing markets, buyers get cold feet or banks lending standards get more rigid, causing deals to fall apart. A smart buyer will make himself known. Then, if a deal falls apart, the buyer is ready to step in.
