A Comprehensive Guide for Buyers and Sellers What Does "Pending" Mean in Real Estate?

In the world of real estate, you’ll often come across various status updates that describe the progress of a property sale. One term you might see frequently is “Pending.” Whether you’re a homebuyer, seller, or simply browsing listings out of curiosity, it’s important to understand what “Pending” means and how it affects you. This term can raise questions like, “Should I make a backup offer?” or “What could cause a pending deal to fall through?”

In this guide, we’ll dive deep into the meaning of “Pending” in real estate, what it implies for buyers and sellers, and what could cause a deal to unravel. We’ll also explore whether making a backup offer is a good idea and how you can stay proactive throughout the process.

What Does “Pending” Mean in Real Estate?

In real estate, when a property is marked as “Pending,” it indicates that the seller has accepted an offer from a buyer, but the sale is not yet final. The property is still in the process of closing, and the sale may or may not go through. The buyer may have already reviewed the seller disclosures and if there is an HOA the Bylaws, but there’s still work to be done to finalize the deal.

Again, it’s important to note that the “Pending” status doesn’t mean the deal is complete. It simply signifies that the buyer and seller are in the middle of finalizing the transaction. The property is no longer actively listed for sale, but there are still important steps that need to be completed before the deal is officially closed.

The Stages of Real Estate Transactions Leading Up to “Pending”

To understand what can happen between an accepted offer and the final closing, let’s break down the process that typically occurs in a real estate transaction:

Offer Acceptance: A buyer submits an offer to purchase a home, and the seller accepts it. This is when the property moves from “Active” or “For Sale” status to “Pending.” The terms of the offer, including price, contingencies, and closing date, are agreed upon.

Escrow Period: After an offer is accepted, an escrow period begins. This is a neutral phase where a third party (escrow company) holds the buyer’s deposit, and the buyer and seller complete their due diligence. During this period, the buyer usually arranges for a home inspection, secures financing, and ensures all conditions of the sale are met.

Inspections and Contingencies: During escrow, the buyer has the right to conduct various inspections, such as a home inspection, pest inspection, and sometimes even a radon test. If issues are found, the buyer can ask the seller to fix the problems or request credits to cover the costs. If an agreement is reached, the sale proceeds.

Financing and Appraisal: If the buyer is obtaining a mortgage, the lender will require an appraisal to confirm the home’s value. If the appraisal comes in lower than the sale price, the buyer may need to renegotiate with the seller or come up with the difference. The financing process must also be completed, ensuring the buyer is approved for the loan amount needed.

Title Search and Closing: Before the deal can be finalized, a title search is conducted to ensure the property’s title is clear (i.e., there are no legal issues, such as liens or unpaid debts). Note: Title Lock Insurance is a good thing for property owners to inquire about. Once all contingencies are satisfied, and both parties are ready, the closing process begins. At closing, the buyer signs paperwork, pays any remaining closing costs, and officially becomes the new owner.

Should You Make a Backup Offer?

When a home is listed as “Pending,” some buyers may wonder whether they should submit a backup offer in case the original deal falls through. The answer depends on your situation, but in many cases, making a backup offer can be a smart move.

A backup offer is a secondary offer made on a property that is already under contract with another buyer. If the original deal falls apart for any reason, the seller may turn to the backup offer as an alternative. Here’s what you need to know about making a backup offer:

Advantages of Making a Backup Offer:

No Waiting for New Listings: If you’ve found a home you love, you might not want to wait for other homes to hit the market. By submitting a backup offer, you’re essentially in line for the property in case something goes wrong with the primary transaction.

Proactive Positioning: If the deal falls through, your offer could be the next one on the table, meaning you might not need to re-enter a bidding war or go through the same competitive process.

It Keeps You in the Game: If you’re particularly keen on a property, a backup offer shows the seller that you are serious and could give you an edge if the deal collapses.

Disadvantages of Making a Backup Offer:

No Guarantee: Just because you make a backup offer doesn’t mean the seller will accept it. There’s still a chance that another buyer could swoop in with a better offer if the original deal fails.

You’re Not in Control: Until the primary deal falls through, you don’t have much say in the situation. You may spend time and energy on a backup offer without ever seeing the outcome.

Limited Negotiation: Sellers might not be as willing to negotiate on a backup offer, as they’re primarily focused on the original contract.