Contingent vs. Pending and What It Means for Buyers

According to U.S. News & World Report, properties go through several statuses on multiple listing services and online platforms in the real estate world. In addition to active listings, you may encounter "contingent" and "pending" statuses. Understanding the difference between these terms is crucial to know if you still have a chance to make an offer or if you should look elsewhere.

What Does Contingent Mean?

A contingent property means an offer has been accepted, and the home is under contract. However, certain conditions—known as contingencies—must be met before the sale can proceed.

Contingencies are clauses in the sales contract that must be negotiated and agreed upon by the buyer and the seller. If these conditions are not fulfilled, the buyer may have the option to back out of the contract while retaining their earnest money.

According to Chloe de Verrier, a real estate agent, "Once they have an accepted offer with a buyer, then that's entered under contract. During this phase, the buyer conducts all due diligence. Once all contingencies are removed, meaning they are 100% committed to closing the deal, then the home will be considered pending."

Common Contingencies in Real Estate

Basic home sale contingencies typically relate to inspections, appraisals, and financing. Some common contingencies you may find in a home sale contract include:

• Inspection contingency: Allows the buyer to inspect the home within a certain timeframe. If issues arise, the buyer can negotiate repairs or cancel the contract.
  
  
• Appraisal contingency: If the home’s value is appraised at less than the offer, the buyer can withdraw from the deal.
  
  
• Financing contingency: Provides the buyer time to secure financing; if unable to do so, the contract can be terminated.
  
  
• Title contingency: The offer is contingent upon the title being clear of liens or discrepancies.
  
  
• Home sale contingency: The offer is contingent on the successful sale of the buyer’s current home.
  
  
• Homeowners insurance contingency: The buyer must purchase and own homeowners insurance before the sale is completed.
  
  

What Does Pending Mean?

When a property is listed as pending, it indicates that an offer has been accepted, all contingencies have been met or waived, and the home listing is no longer active on the market. However, the deal hasn’t closed yet, and a property with a pending status can still return to the market.

Once a home is pending, sellers cannot legally back out of the deal. However, the buyer can still cancel the contract. "Even if a buyer came to the seller two days after selecting an offer and said, ‘I'll offer you 500 grand more,’ the seller legally can't take that deal," explains de Verrier.

How Often Do Contingent and Pending Offers Fall Through?

While it's challenging to determine exactly how many contingent and pending offers fall through each year, the National Association of Realtors reported that 5% of purchase agreements were terminated before closing in June 2024, with 12% of sales experiencing delayed settlements and 7% delayed due to appraisal issues.

It's often risky to pay above the appraised value for a home, as lenders rely on appraisals to determine financing. Many buyers do not have the cash to cover the difference. If the appraisal is low, buyers may negotiate a lower price with the seller to keep the deal alive, and the appraisal contingency offers an exit strategy if necessary.

Can You Make an Offer on a Contingent or Pending Home?

Once a home is under contract, the seller is committed to that buyer but may still accept backup offers. "If buyer No. 1 cancels or doesn’t perform, then the seller can consider buyer No. 2 or buyer No. 3," says de Verrier.

If you have any questions about contingent and pending properties or need assistance navigating the real estate market, contact Indigo Skye Group today. We're here to help you find your dream home and ensure a smooth buying process!


Source: U.S. News & World Report