Under Contract Vs. Pending: What’s The Difference?
Aspiring homeowners will find there are many steps to buying a home. When browsing listings, you may find homes listed as under contract or pending. Both indicate homes with accepted offers, so what is the difference between pending and under contract? The distinction is subtle but important, especially if you like a home enough to consider making a backup offer in case the current deal falls through.
Key Takeaways:
- A home is under contract after a seller has accepted a buyer’s offer and the two parties have signed a purchase and sale agreement.
- If a home sale is pending, the purchase and sale agreement has been signed, and all contingencies have been met.
- A real estate deal can still fall through at any stage before closing, but it’s less likely once a home purchase is pending.
What Does Under Contract Mean?
If a home is under contract, the seller has accepted an offer, and the parties have signed a purchase and sale agreement. This binding contract defines the terms of the sale, including the price, expected closing date, and contingencies that must be met. Once the seller and buyer sign the purchase and sale agreement, the home is under contract. However, the sale is not final until the contingencies are met and documents are signed at closing to fund the buyer’s mortgage, pay the seller and transfer legal ownership. If any contingencies are not met, the deal can be canceled.
How Long Can A Home Be Under Contract?
A home typically is under contract for 30 to 60days, but this varies significantly depending on the specifics of the deal and market conditions. Contracts usually close in 30 days.
What’s Your Goal?
Home Purchase
Home Refinance
Tap Into Equity
What Does Pending Mean?
If a home sale is pending, the sale is further along in the process. The contingencies listed in the purchase and sale agreement have been met, and the transaction is ready to close. Even though the seller has already accepted an offer, other buyers can still place a bid on the home as an unlikely backup.
Comparing Under Contract Vs. Pending
While both terms indicate that an offer’s been accepted, under contract and pending don’t mean the same thing. The primary difference is whether the contingencies have been met.
Seller’s agents often update listings to show a sale’s progress. A home will be listed as under contract after the purchase and sale agreement is signed and as pending once the contingencies have been met.
“Being under contract is like being engaged,” says Jeff Lichtenstein, a real estate broker and owner of Echo Fine Properties in Palm Beach Gardens, Florida. “You still have some contingency outs. Pending means you’ve tied the knot and have to go to the in-laws for Thanksgiving dinner – forever! Which can also be a great thing.”
Under Contract Vs. Pending
| Under Contract | Pending | |
|---|---|---|
| Meaning | The seller has accepted an offer, and both parties have signed a purchase and sale agreement. | Both parties have signed a purchase and sale agreement, and all contingencies have been met. |
| Conditions | The buyer can walk away if any contingencies aren’t met. | The buyer may breach the contract if they back out of the deal. |
| Status | The listing agent may still accept backup offers. | The property is off the market. |
| Timeline | Occurs after the seller has accepted an offer. | Occurs just before closing. |
| Contract | The contract has been signed but may include outstanding contingencies | The contract has been signed, and all contingencies have been met. |
Ready To Become A Homeowner?
Get matched with a lender that can help you find the right mortgage.
What Are the Odds of a Home Sale Falling Through?
It’s unlikely for a home sale to fall through after the purchase and sale agreement has been signed – but it still happens. According to 2024 research from the National Association of Realtors, 5% of home sales fall through after being under contract. Some of the reasons a home purchase might get canceled include:
- The buyer is unable to get financing.
- The home inspection reveals the need for significant repairs.
- The appraisal is lower than the purchase price.
- The buyer is unable to sell their current home.
- The title search reveals liens against the property.
- The buyer changes their mind.
“Right now, deals have about an 85% sticking ratio,” Lichtenstein says. “In the pandemic market – an extreme seller’s market – it was close to 99%. And sometimes it was the sellers looking for outs.”
Understanding Contingencies
A contingency is a condition that must be met for the deal to go through. If a buyer makes a contingent offer and the conditions are unmet, then the buyer can walk away from the deal without penalty and keep their earnest money deposit. The seller will have to shoulder the costs of re-listing the property on the market.
Contingencies are written into the purchase and sale agreement to protect the buyer against unforeseen issues with the property that may arise between signing the purchase and sale agreement and closing. Common contingencies include:
- Home inspection contingency. If the home inspection reveals significant problems with the home’s condition, the buyer can cancel the deal and keep their earnest money deposit.
- Appraisal contingency. If the appraisal finds the home’s fair market value is lower than the purchase price, the buyer won’t be on the line to pay the difference out of pocket.
- Financing contingency or mortgage contingency. If the buyer is unable to get a mortgage, they may walk away from the purchase without losing their earnest deposit.
- Home sale contingency. If the buyer is unable to sell their current home within a specified period, they can cancel the deal.
- Title Contingency. If the title search reveals any claims or liens against the property, the buyer is not obligated to continue with the purchase.
Take The First Step To Buying A Home
Find a lender that will work with your unique financial situation.
How To Make An Offer When A Home Is Under Contract
If a home is listed as under contract, you can make a backup offer. You might see homes listed as “active under contract,” which means the seller has accepted an offer, but the deal is still in its early stages. The sale still could fall through if the buyer gets cold feet or certain contingencies are not met.
Keep in mind that even if you offer more money, the seller can’t break a contract unless there are unmet contingencies. However, it’s always possible that the deal may not close, and you’d be next in line. You can work with your real estate agent to submit a backup offer.
How to Make An Offer When A Home Sale Is Pending
A pending sale is less likely to fall through because the contingencies have been met. However, there still are cases where a sale can fall apart at the last minute. For example, the buyer could change their mind, or their circumstances may change. If the buyer loses their job after signing the purchase and sale agreement, they may be unable to get the financing they expected and have to cancel.
You can make a backup offer on a pending home, though some sellers and listing agents won’t accept them so late in the game. If a pending sale falls apart, find out why before signing a purchase and sale agreement. If the deal fell through because the buyer backed out, that can be a good opportunity. However, if the contract was canceled because the inspection revealed the home needs significant repairs, you’ll want to know about it.
FAQ
Here are answers to common questions about the difference between pending and under contract in real estate.
The Bottom Line
If a house is under contract or pending, a seller has accepted an offer and signed a purchase and sale agreement with a buyer. If the deal is pending, the contingencies in the purchase and sale agreement have been met, and the home purchase is on the verge of closing. It’s always possible to put in an offer on a house that’s under contract or pending – if the deal falls through, you’re next in line. However, few home purchases are canceled after they’ve been under contract.
