Pending vs. Contingent: What's the Difference?
What is the main difference between homes that are contingent or pending?
When a home has contingent status, the seller has accepted an offer blocked on certain conditions. Typical contingencies are home inspections, value appraisal, and mortgage approval. Moving to the pending stage requires first clearing of all contingencies. In the Western Pennsylvania market, "under contract" is another name for pending status.
What are the different contingent statuses, and what do they mean?
In the Pittsburgh and Western PA markets, there is only one public contingent status: contingent. Status types can vary per market. It is up to the seller if they wish to continue to allow showings on the property. Properties can be contingent and allow showings or contingent and not allow showings. Properties are typically in a contingent status due to buyer concerns. Contingent status can also arise through seller-side situations such as short sales or probate.
Can you make an offer on a contingent or pending home? Why or why not?
You can make an offer on a contingent or pending home. This offer would be a backup offer if the existing contract fell through. The terms of the existing agreement still bind a home seller. The seller can only accept a new offer after the termination of their current contract.
What is better, contingent or pending?
From the seller's side, pending status is better than contingent. After settling all contingencies, a contract is more secure. Often contingencies exist to protect the buyer side. For buyer-side contingencies, contingent and pending are neither better nor worse. These statuses serve different purposes. Contingent status is good because it allows for due diligence, like inspections. Pending is also good because it signals the clearing of all significant obstacles. The buyer can proceed with buying the house they have selected. In general, both sides are trying to close a deal. Thus pending is the preferred stage in the process.
How often do contingent offers fall through?
According to the National Association of Realtors, about 6% of contracts face termination. Most terminated contracts happen in the contingent state. Contracts are rarely terminated in the pending state. Thus, less than 6% of contingent contracts fall through.
How do I make a backup offer to a seller?
A backup offer is just a standard offer. The process of submitting a backup offer varies by legal jurisdiction. In Pennsylvania, a legal offer is a written contract signed by the buyer. The contract is delivered to the seller's agent by the buyer's agent. The seller's agent presents the backup offer once received. However, the seller must adhere to the existing agreement they have signed. Buyers who write backup offers have little control over the timeframe because a seller still has that existing contractual obligation. However, a backup offer gives a seller negotiating strength against the current buyer trying to negotiate the sales price or repairs due to contingencies that still need to be closed.