If you’ve been searching for homes online you have undoubtedly seen homes listed as “pending” or “contingent.” What does this mean?
These terms are not used everywhere and this can cause some confusion, especially if you are looking for a home in a new city or state.
When a property is listed for sale with an agent, it is considered “Active” which means that it is actively for sale. According to REALTOR guidelines, and MLS rules (which are completely separate), an active listing must be available to show to prospective buyers. A listing cannot be Active and also not available to see.
The next level up from Active is Contingent. This was a new term to me when I moved from New York to Virginia. In some places like New York, once an offer on a home has been accepted, all of the information goes to an attorney, who will write up a legal contract of sale. The time between agreement and signed contract can be as long as a week. During this period, the home is still Active, and can be shown to buyers, BUT there is a handshake agreement already in place. The prospective buyers are conducting due diligence, and engineering inspections, and working on contingencies of the sales contract.
In other states, such as Virginia, an attorney does not draw up most residential sales contracts. Once an offer is accepted, all parties immediately sign a legally binding sales contract. It does not take a week or more, like New York. This poses some issues. What about engineering inspections? What about termite inspections? What about agreed upon repairs? These are all Contingencies which must be met before the sale can go through. In this situation, where a legal sales contract has been signed, which means the home is no longer available to show, but the sale is not solid yet, it will be publicly shown as “CONTINGENT.” It means that the home has a buyer, terms have been agreed to, but there are still some contingencies which must be met.
As a prospective buyer, what does this mean to you? It means that you should keep looking, BUT, also keep this property on your radar and check daily. Sometimes those contingencies are not met in time, and the home will go back on the market as Active.
That leads us to “PENDING.” What does Pending mean? Pending means that all contingencies have been met, and the transaction is moving forward as planned. If you really like a home that is Pending, you can keep it on your radar, but at this point it is very likely that the sale will eventually proceed. All contingencies have been met, and it is likely that only an appraisal or title search is waiting to be completed in order for the sale to consummate.