Different real estate transactions have different conditions based on the status of the listing. The following information is meant to clarify some common real estate terms that describe a home for sale and its position in the closing process.
For sellers, understanding this terminology will inform your conversations with your agent when it comes time to sell. And for buyers, it helps to be familiar with these terms when searching for your next home and how they factor into making an offer.
What is the difference between pending and under contract?
Pending: When a home is listed as “pending” it means the seller has accepted the buyer’s offer and the sale will most likely be finalized after a successful final inspection and the buyer securing financing. For sellers, reaching the pending stage means the finish line is within reach, but your home is still not officially off the market.
Buyers who notice homes listed as pending should know that an agreement between the seller and another buyer has already been reached and that they are headed for closing. However, even though the chances are unlikely, it is still possible that the buyer backs out and the deal falls through.
Under Contract: A home that’s listed as “under contract” is not as far along in the selling process as a home that’s pending. It means the seller has accepted a buyer’s offer, but there are certain contingencies that must be met before the deal goes final.
Buyers who see a home listed as “under contract” may still reach out to the seller’s listing agent to make a backup offer, unless the contract that’s already in place contains a clause preventing it.
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What does contingent mean in real estate?
- Selling – Common Real Estate Contingencies
- Buying – Making a Contingent Offer: Common Real Estate Contingencies
Contingencies dictate what must happen in a real estate transaction for the contract to become legally binding, giving the buyer or seller the right to back out of the contract if their conditions aren’t met. A property listed as “contingent” means that the seller has accepted an offer, but the deal still hinges on the buyer satisfying certain contingencies to continue. And once those contingencies have been met, the sale can go through as planned.
There are a variety of contingencies that protect buyers and sellers against the bumps in the road along their journey of buying or selling a home. A home sale contingency, for example, allows a buyer to tie their offer on a new home to the successful sale of their existing one. This contingency is beneficial to those who are buying and selling a home at the same time. It’s important for buyers to work with their agent to determine the strongest offer considering the market conditions in the area.
What is closing in real estate?
Closing refers to the homestretch of a real estate agreement between a buyer and seller, leading to the transfer of ownership. Both parties agree on a closing date and see the deal through to its completion. During closing, the buyer will deposit their earnest money in an escrow account, a home inspection is performed, the buyer secures financing to purchase the home, and both parties pay their respective closing costs.
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