Understanding the difference between active under contract and pending in real estate is crucial for buyers and sellers. Active under contract refers to a property that has accepted an offer but still has conditions to be fulfilled. In many places, it is also called a contingent sale.
On the other hand, pending status indicates that all requirements have been met and the sale is in the final stages. When homes are under contract, they are also called under-agreement properties.
These distinctions impact the seller's acceptance of backup offers and the buyer's ability to make an offer. Knowing the implications and navigating the process is essential in the real estate market.
Understanding the Difference between Active Under Contract and Pending in Real Estate
In the world of real estate, it is essential to understand the distinction between active under contract and pending status. These terms indicate the various stages of a property's sale process and affect buyers and sellers.
Let's explore what active under contract and pending mean in real estate.
What is Active Under Contract?
When a property is labeled as 'active under contract,' it signifies that the seller has accepted an offer from a buyer. However, certain conditions or contingencies must still be fulfilled before the deal can be finalized. These conditions typically include inspections, appraisals, and mortgage approvals.
While the property remains actively listed, the seller may consider backup offers if the initial bid falls through.
Over the years, working as a real estate agent, many of my clients have asked what active under contract means. Buyers and sellers need to understand the various listing statuses that can be chosen in the Multiple Listing Service. Maximum Real Estate Exposure has an insightful explanation of everything you should know about active under contract.
What does Pending Mean in Real Estate?
A property in a pending status means that all the contingencies and conditions outlined in the contract have been met or waived. At this stage, the sale is in its final phase, and the closing process is underway. Pending listings no longer accept additional offers as the property is essentially sold, pending any unforeseen issues that may arise during the closing process.
Understanding the difference between active under contract and pending is crucial, as it determines the position of both buyers and sellers in real estate transactions. The terms reflect the progress in meeting specific requirements for closing the deal.
Buyers must know when to make offers on properties labeled as active under contract, while sellers must understand the implications of accepting backup offers. Additionally, knowledge of contingencies and conditions associated with these statuses helps both parties confidently navigate the sales process.
It should be noted that nothing is ever final in real estate until the fat lady sings. Home sales fall apart right up until the day of closing. You can still buy a house that is pending. For example, buyers may lose their job right before signing papers to close.
Critical Distinctions between Active Under Contract and Pending Status
Understanding the differences between active under contract and pending status is crucial for sellers and buyers in the real estate market.
Seller's Position and Acceptance of Offers
When a property is listed as active under contract, the seller has accepted an offer, but conditions still need to be met before the sale can be finalized. The seller may continue receiving backup offers during this stage if the first offer falls through.
On the other hand, when a property is listed as pending, it indicates that all the conditions have been satisfied and the sale is in the final stages of completion. In this case, the seller typically no longer accepts backup offers.
Implications for Buyers
For buyers, distinguishing between active under contract and pending is essential when considering an offer. While making an offer on a property listed as active under contract is still possible, the chances of success are lower due to the existing accepted offer.
However, buyers must stay informed, as situations may change if the initial offer falls through and the property returns to active status. The bottom line is you can still buy a house active under contract.
In contrast, when a property is pending, making an offer becomes unlikely as all contingencies and conditions have been satisfied, and the sale is close to finalization.
Contingencies and Conditions
Both active under-contract and pending statuses involve contingencies and conditions that must be fulfilled before the sale can proceed. These contingencies can include factors such as inspections, financing, and appraisals.
During the active under-contract stage, the buyer and seller work together to satisfy these contingencies and move towards a successful sale. Once all contingencies are met, the property moves into the pending status, indicating that the deal is ready to be finalized.
Understanding the critical distinctions between active under contract and pending status allows buyers and sellers to navigate the real estate process effectively. Buyers need to consider the implications of each status when making an offer, while sellers need to be aware of their position in accepting submissions and whether backup offers are being considered.
Exploring the Impact of Active Under Contract and Pending Status
Understanding the impact of active under contract and pending status is crucial for real estate transactions. Let's dive deeper into the implications and considerations associated with these statuses.
Being a Backup Offer
While a property is under contract, you may still be able to make a backup offer as a buyer. If the original buyer fails to meet the contingencies or backs out of the deal, you could step in as the primary buyer. However, it's important to note that the chances of accepting a backup offer are typically low.
Sellers usually prioritize the original buyer and exhaust all options before considering backup offers.
Potential Risks and Rewards
Making a backup offer comes with both risks and potential rewards. On the one hand, you might secure a property previously under contract, granting you an advantage over other potential buyers. On the other hand, if the original buyer successfully closes the deal, you may lose time and opportunity.
Working closely with your real estate agent to evaluate the market conditions and determine if making a backup offer aligns with your goals is crucial.
Understanding the Sales Process and Timelines
Once a property enters the pending status, all the contingencies have been satisfied, and the sale is nearing completion. At this stage, the buyer and seller work to finalize the necessary paperwork and ensure a smooth closing process.
It's essential to have a clear understanding of the sales process and timelines to anticipate potential delays or complications that may arise.
- Prepare for the appraisal and financing steps to ensure a smooth transaction.
- Stay in close communication with your buyer's agent and relevant professionals.
- Be aware of any additional requirements or agreements that need to be fulfilled.
- Understand the timeline for inspections, surveys, and any other necessary procedures.
- Coordinate with your lender to secure financing and meet all deadlines
Frequently Asked Questions about Active Under Contract and Pending
Can You Make an Offer on a House that is Active Under Contract?
Absolutely! Although the chances of success may be lower, it is possible to make an offer on a house listed as active under contract. This indicates that the seller has accepted an offer but has not completed all the contingencies. The seller may consider backup offers if the original buyer fails to meet the contractual obligations.
Working closely with your agent to determine the best strategy and understand the potential challenges is essential.
What Happens if the Sale Falls Through in a Pending Status?
The contract has been terminated if a sale falls through while a property is pending. This can occur if there are inspections, financing, or appraisal issues. In such cases, the property returns to the market, and new offers can be considered.
It's essential to note that the reasons for the termination may impact potential buyers' perception of the property.
How Contingencies Affect the Purchase Process
Contingencies are conditions that are added to a real estate contract. They play a crucial role in protecting both the buyer and the seller. Typical contingencies include financing, inspections, appraisals, and more.
If all contingencies are met successfully, the sale can proceed to completion. However, if any contingencies are not satisfied, the contract may be terminated, and the property returns to active status. Buyers must understand the contingencies involved in a purchase and work closely with their agent to navigate them effectively.
The Bottom Line: Navigating Active Under Contract and Pending in Real Estate
Understanding the intricacies of active under contract and pending status is crucial when engaging in real estate transactions. Navigating these terms requires understanding their implications for sellers and buyers.
As mentioned, with active under-contract status, the seller has accepted an offer, but certain conditions still need to be met before the deal can be finalized. It is important to note that the seller may still consider backup offers during this stage. However, making a successful offer on a property in active under-contract status can be challenging.
On the other hand, pending status signifies that all the contingencies and conditions of the contract have been fulfilled, and the sale is in the final stages of completion. In a pending sale, the property no longer accepts backup offers.
What Percentage of Home Sales Fall Through?
Buyers should be aware that around 7% of real estate contracts are canceled due to issues such as home inspections, financing, and appraisals. This highlights the importance of carefully considering the contingencies and conditions when looking for a home.
While it is possible to make an offer on a house in active under contract status, the chances of success may be low. Sellers typically only entertain backup offers if the original buyers fail to meet the contract's contingencies.
Working closely with a knowledgeable agent is essential to navigate active under-contract and pending status effectively. They can guide buyers through the process, explaining the potential risks and rewards of submitting a backup offer or pursuing a pending sale.
Understanding the sales process and timelines is also crucial. While there may be some variations in terminology between different websites and geographical areas, having a clear understanding of the differences can help buyers and sellers make informed decisions.
In conclusion, active under contract and pending status play significant roles in real estate transactions. Attention to the specific conditions and contingencies associated with each status is essential for buyers and sellers to navigate the process successfully.