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Buying a Los Angeles Home. "Pending" Explained.

By
Real Estate Broker/Owner with Home Jane Realty BRE# 01439865

I often get calls from people thinking of buying a Los Angeles home, who inquire about a property already in “Pending” status.

What does “Pending” mean?Buying a Los Angeles Home.  What does Pending mean?

In our MLS (Multiple Listing Service) we have four main statuses – Active (A), Looking for Backup (B), Pending (P), and Sold (S).  There are a few more, Hold, Withdrawn and Canceled, but they are not relevant for this conversation.

Buyers want to know if they can make a backup offer on a property in Pending status, so I will explain, how this works when handled correctly.

When an offer first gets accepted by the seller, the listing agent will put the property into Backup status.  This generally means that they will still accept backup offers, should the current buyer not perform.  This can happen for many reason, the main ones being that they conduct an inspection and find problems they don’t want to deal with.  Or they ask the seller to help with repairs, either by doing them or paying for them.  If the buyer is not satisfied they will back out.  Another reasonsis that the house does not appraise at the amount offered.  In this case, the buyer can pay the difference, ask the seller to lower the price, or they can back out.  And, there is the occasion where the buyer is unable to get a loan.

Until the above contingencies are removed, the longest of which is usually around 17 days, but given the state of the lending industry today, it can be a little longer, the backup offer is still in play.  Once the contingencies are removed, the status of the property will move into Pending.  This is usually an indication that the property is going to sell to the current buyer.  It is not a 100% guarantee, but not closing would be the exception to the rule.

If you really love a property, then it would not hurt to put in a backup offer.  This offer will go through the same process as the original offer.  It will need to be approved by the Seller. There can be more than one backup offer but they are put into position – first backup, second backup, etc.  If the original buyer backs out then the first backup offer has a chance to buy.  They are not bound to perform, but they are given the chance.  And if the first backup buyer has moved on, then the second one is approached and so on.

This is all good if the listing agent handles the statuses correctly.  Some will put the property straight into pending which can lessen the chance of getting a backup buyer.  That might also be because they have an all cash buyer so they are pretty certain the purchase will go through.   Certainly if you see a Pending listing that only just went into escrow it is worth asking your agent to see if you can submit a backup offer.  However, if you see a listing that has been off the market for at least 2-3 weeks in that status, it might be a little late.

If you are buying a Los Angeles home, don’t dwell on the one that got away, let’s see if you can find you another one where you will be the buyer and others will be looking to make a backup offer.

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Read more: http://www.homejane.com/buying-a-los-angeles-home-what-does-it-mean-when-a-property-is-pending.html#ixzz29gqA6rQL

Comments (26)

Al & Peggy Cunningham, Brokers
RE/MAX West Realty Inc., Brokerage - Brampton, ON
Our Family Wants To Help Your Family!

Excellent and precise explanation Jane. Some of our terms are confusing for the general public.

Oct 18, 2012 10:47 AM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Al & Peggy,  they sure are.

Oct 18, 2012 10:51 AM
Melissa Zavala
Broadpoint Properties - Escondido, CA
Broker, Escondido Real Estate, San Diego County

What a good idea for a blog post. The statuses (which we talk about constantly) may be terms that are not common to the lay person.

Oct 18, 2012 11:26 AM
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

Jane ~  Nice job of explaning back-up offers.  I am not sure in New Hampshire whether back-up offers have to be considered in the order they were received...

Oct 18, 2012 12:19 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Melissa,  I thinks so.

Joan,  they don't here either, Joan.  They are put in order.  i.e. the seller will accept one offer over another and that one is put in first back up position and down the line.

Oct 18, 2012 12:44 PM
Mary Douglas
United Country Ponderosa Realty, Red Feather Lakes, Colorado - Red Feather Lakes, CO
REALTOR, Red Feather Lakes, Colorado

Jane, another great post, but my favorite line is  "If you are buying a Los Angeles home, don’t dwell on the one that got away, let’s see if you can find you another one where you will be the buyer and others will be looking to make a backup offer."  Sometimes people get stuck on the one that got away,or just plain want what they can't have- it's important to move on and find the one that works.

Oct 18, 2012 01:01 PM
William Johnson
Retired - La Jolla, CA
Retired
Hi Jane, We don't have the Backup status down here. But it sure makes sense. We go from Active to Pending. But you certainly did a good job explaining your status changes.
Oct 18, 2012 03:33 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Mary,  so true. Making a backup offer is all well and good, but very few materialize.

William,  I am surprised.  I guess it is our MLS. I have changed my post accordingly.  Thank you.

Oct 18, 2012 03:50 PM
Roy Kelley
Retired - Gaithersburg, MD

Very good information for home buyers and home sellers.

Have a great day and an outstanding weekend.  Enjoy the colors of autumn with your camera in hand.

Oct 18, 2012 08:22 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Roy,  thank you.  But I am in L.A.  No fall colors :)

Oct 19, 2012 02:00 AM
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Hi Jane - That's a good explanation of how your MLS categorizes status of properties.  Ours is a bit different in the Sacramento area and we have a few more categories, but I suppose each area is a bit different.  Someone moving into your market will find your post very helpful - especially if they come from an area where their MLS is very different.  Good post!

Oct 19, 2012 09:26 AM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Susan,  thank you.  All these statuses can be confusing.

Oct 19, 2012 10:51 AM
Juli Vosmik
Dominion Fine Properties - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Jane, really good information for homebuyers in Los Angeles trying to negotiate through the realtorese.  Well done.

Oct 20, 2012 01:46 PM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Jane

So interesting - your MLS is so different from ours. No LOOKING FOR BACK-UP status, and things normally go pending once an offer is accepted, NOT after the Contingency period. We have a CONTINGENT status which is for short sales and REOs where an offer is in front of the lender(s) and being reviewed but technically the property is still available. THat, of course, varies from property to property and may depend on tenants, the number of back-up offers, etc.

Jeff

Oct 20, 2012 03:31 PM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Juli,  thank you.

Jeff,  and you are not that far from me.  Go figure.

Oct 20, 2012 04:19 PM
Norma Toering Broker for Palos Verdes and Beach Cities
Charlemagne International Properties - Rancho Palos Verdes, CA
Palos Verdes Luxury Homes in L.A.

Jane - We have a back-up offer out and waiting for counter today...we usually advice buyers to move on unless the house is unforgettable and this one was.  I don't think the buyer could move on without trying, plus the current offer is contingent upon the sale of another property--ups our buyer's chance of being able to step in if current buyer cannot perform.

Oct 21, 2012 02:30 AM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Norma, I can't believe the sellers accepted an offer contingent on another sale. Haven't seen one of those forever.  Wow.

Oct 21, 2012 02:56 AM
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL
REALTOR

Jane - Excellent explanation of what "pending" means.  I wish our MLS had a "back-up" option, but we don't.

Oct 21, 2012 09:16 AM
Teri Eckholm
Boardman Realty - White Bear Lake, MN
REALTOR Serving Mpls/St Paul North & East Metro

Jane--I find that many people think they know what something means because they sold a home previously but might not really understand the term. Your explanation will be helpful to many!

Oct 21, 2012 09:18 AM
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

Michelle,  I would lobby for one.

Teri,  thank you.

Oct 21, 2012 09:49 AM