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When viewing real estate listings, you may come across homes described as “on hold” or “contingent” instead of “for sale” or “active”. If you are wondering if you should consider these listings in your home search, you need to understand the difference between the two terms.
Here’s what contingent and pending mean in real estate, and if you can place a bid on homes with any of these statuses:
What is the difference between on hold and contingent?
The difference between on hold and contingent is how many things still need to happen before the house sale can be completed. Both terms mean that the seller has already accepted an offer, but the difference is in advancing the process of selling the house:
- Waiting: A pending home indicates that all eventualities have been met by the potential buyer.
- Quota: A house listed as contingent still has certain contingencies open.
The seller of a pending or contingent home may or may not be open to receiving additional offers. It depends on how likely they are to think the deal is done.
What does contingent mean in real estate?
Quota means that certain conditions – aka contingencies – must be met before the deal can be closed. A homebuyer will often include contingencies in their offer to ensure they can get their deposit back if the home’s valuation isn’t high enough, their mortgage isn’t approved, or some other condition is specified. cannot be fulfilled.
A contingent ad is less likely to be sold than a pending ad because of these conditions. If the contingencies of the purchase contract cannot be met, the buyer or seller may terminate the contract without penalty.
What does pending in real estate mean?
Pending means the house has not yet been sold, but the deal is likely to be closed. Either the contract did not provide for any eventuality or all contingencies have been fulfilled and the sale is in progress.
Common contingent clauses
Here are five common emergency clauses that buyers and sellers often include in purchase contracts.
An appraisal contingency allows you to opt out of the deal if your lender determines that the home is worth less than the purchase price.
For a home purchase, a professional appraiser usually appraises the home inside and out to determine its fair market value.
A financing contingency, also known as a mortgage contingency, allows you to terminate the contract if you cannot get a mortgage.
Ideally, you will get pre-approved for a mortgage before you make an offer on a home. However, even with pre-approval, the lender may discover additional information during underwriting, your financial situation may deteriorate, or mortgage rates may rise and make it more difficult for you to qualify.
In situations like these, you might be unable to get a mortgage and therefore unable to purchase the home.
With Credible, you can find prequalified rates and generate a streamlined pre-approval letter in minutes. Our online tools make it easy for you to compare the loan options of all of our partner lenders to find the mortgage that’s right for you.
An inspection contingency involves you – the buyer – hiring a professional home inspector to look for major issues that could affect the value, safety, or livability of the home.
If the home inspection reveals significant issues, you and the seller can negotiate a solution to keep the deal intact. For example, the seller may make the necessary repairs or reduce the purchase price by the estimated cost of the repairs so that you can have the work done after closing.
Contingency with kick-out clause
A referral clause in a home purchase contract means that the seller and the buyer have agreed that the seller will continue to accept replacement offers because the buyer’s offer is contingent on the sale of the home. their property.
A kick-out clause goes hand in hand with a possible sale, described below. The ad may include a “48 hour return clause” or a “72 hour return clause,” indicating how long the currently contracted buyer must forgo their possibility of sale and provide proof of financing before the seller can accept a contract. backup offer.
A title search is an important part of any real estate transaction. You will pay a title company to make sure that the seller is the only one with a legal claim on the house.
A title contingency allows you to opt out if the title search reveals title flaws that cannot be resolved. For example, if the house has a contractor’s lien on work that the seller has not paid for, a title contingency would require the seller to pay that lien if he wants to sell the house to you.
A sale contingency allows you to get out of the contract if you can’t sell your current home. Suppose you are moving from New Orleans to Nashville and you only want to move your belongings once. But to get the money to buy a new home in Tennessee, you’ll first need to sell your current home in Louisiana.
You would want to put a contingency of sale in your purchase agreement for the Nashville home so that you don’t lose your money if your New Orleans home does not sell within the time frame stated in the purchase agreement.
Let’s say you’ve found a buyer for your home in New Orleans, but the deal isn’t final. A closing contingency, also known as a settlement contingency, would allow you to exit your Nashville contract without penalty if your buyer cannot close within a specified time.
Current outstanding clauses
If you see a house on hold, it may be accompanied by one of these additional descriptions.
Pending – perform backups
“Pending – take backups” means the seller is not sure that the deal with their current buyer will be made. The buyer may have difficulty obtaining financing, for example. Either way, this status indicates that the seller is willing and able to contractually accept replacement offers if the current deal fails.
Pending – short sale
This listing status describes a situation where the owner wants to sell but must first get approval from their mortgage lender. This is because in a short sale, the market value of the property is lower than the mortgage balance and the lender will incur a loss.
âPendingâ in this case does not mean that the transaction is about to close. This means the seller has accepted an offer and is waiting for their lender to approve it. You are more likely to see these types of ads during a recession or after a significant downturn in the housing market.
Pending – more than 4 months
This is an explicit status which means that a property is listed as pending for more than four months. The property may still be under contract but is experiencing delays, or it may have been sold and the listing status is incorrect. A public record search can determine if the home has recently been sold if the listing agent cannot be reached.
Can you bid on a house that is contingent?
Sometimes it is possible to place a bid on a house that is contingent. One way for sellers to indicate that they are open to additional offers is to ask their agent to change the status of the property listing from “active” to “active under contract.” Active under contract means that the seller has accepted an offer, but that offer has contingencies, and the seller may consider additional offers.
Have your real estate agent contact the seller’s agent for more information. Then your agent can walk you through the process of submitting an offer to a quota list if that sounds appealing.
Can you bid on a pending house?
You probably won’t be able to bid on a pending home, as this status means the home has a scheduled closing date and everything is on the way to closing. In addition, the seller’s contract with his current buyer may prevent him from accepting additional offers.
If the seller does not accept replacement offers and it is your dream home, you can contact the listing agent. You can always express your interest and ask them to contact you if the house ends up on the market.