This post will cover some real estate basics. Do you know the difference between a contingent and a pending contract? 
In my Charlottesville real estate market reports two of the statistics that I follow are the number and average price of the contingent and pending contracts each month. However it was recently pointed out to me that all of my readers may not know what contingent and pending contracts are.
By definition a contingency is "a provision in a contract that requires a certain act to be done or a certain event to occur before a contract becomes binding". This definition is from Modern Real Estate Practice which is the standard text for the basic real estate course.
When a contract for purchase is written it may be contingent upon many factors. For example the contract can be contingent upon the purchaser being able to obtain a mortgage. Or it can be contingent on the sale of the purchaser's current home. Another common contingency is a home inspection contingency. All of the contingencies will include a time frame in which the action must be performed. Until the contingency is removed the home is listed in the mls as contingent.
After all of the contingencies are removed, and the parties are just waiting for the closing to take place the contract is pending.
In market reports we look closely at the homes with contingent and pending contracts, because this represents the most recent real estate activity. It is important to look at the sales figures, but we must remember that the majority of the homes that closed went under contract 30-60 days before.
In the current Charlottesville real estate market, the contingent and pending statistics will be the best barometer of when the market is rebounding. We will see these figures rise before we see the rise in closed transactions.
My fellow Active Rainer Russel Ray gave me the idea for this topic in his comment on one of my Central Virginia market reports.
Contact Pam Dent, e-PRO, SRES, NHD, REALTOR®, Real Estate III, Charlottesville, Virginia at 434 960-0161 to buy a property in the following areas in Central Virginia: Charlottesville, Albemarle County, Keswick, Glenmore, Ivy, Crozet, Earlysville, Free Union, Cismont, Scottsville, Fluvanna County, Troy, Palmyra, Lake Monticello, Louisa County, Louisa, Mineral, Spring Creek, Orange County, Gordonsville, Orange, Barboursville, Greene County, Ruckersville.
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Copyright © 2009 by Pam Dent, all rights reserved, "Real Estate Basics - The Difference Between a Contingent and a Pending Contract".
First published on Charlottesville Real Estate Talk.
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