Contingency versus Pending Transactions

It can be a bit confusing when the subject of contingent versus pending comes up during a real estate transaction. A contingency is a condition that has to be met for contract to move forward, while a pending contract is one in which all the contingencies have been met.

A contingency in its simplest terms is when you receive an offer on your home that is dependent on certain conditions being met. In other words, you have an agreement with a seller that your home sale will be finalized only if certain written conditions are met.

If you receive an offer to buy your home with contingencies it may or may not end up being an issue for you. The contingency could be simple and easy for you to agree with, there are other types of contingencies that may be harder to meet or could be a deal breaker.

Contingency Scenarios

• Appraisal Contingency – An appraisal contingency is not too uncommon. Almost half of home purchases made in 2021 included an appraisal contingency in the contract. With this type of contingency the offer will only go to closing if the lender approves the appraisal value. The lender will create their own comparables from houses in the area and determine if they will accept your appraised value of the home.
• Home Inspection Contingency- A home inspection is even more common than an appraisal contingency with more than half of home sales in 2021 including this type of contingency. With a home inspection contingency the offer will go to closing if there are no big surprises or problems in the home inspection report. If the report comes back with major issues that were not clear when the offer was made on the home such as an issue with mold, the foundation or the roof, then the buyer can back out of the offer. This type of contingency can also lead to negotiation and asking for you, the seller, to solve the problems so that the home sale can go forward.
• Title Contingency- With a title contingency the offer will go through if there are no issues with the title. If your title comes back clean, meaning there are no issues such as liens and unpaid taxes then you don’t need to worry about this contingency.
• Financing Contingency- If you receive an offer from a buyer who has not been pre-approved by a lender then there may be a financing contingency written into the offer. This contingency protects the potential buyer and gives them an out from the contract without penalty if they are unable to obtain financing from a lender.
• Home Sale Contingency- This contingency is a way of the seller protecting themselves in case they cannot sell their current home. A home sale contingency means that the offer will only go through once the new buyer is able to sell their current home.

What is Pending

Once any contingencies have been met than the home sale can move towards closing. At this point the listing is no longer considered active and is moved to pending status. In pending status the only two steps left to sell your home are for the buyer to complete all the paperwork and close with their lender.

Different Types of Pending Scenarios

• Pending and Accepting Backup Offers- If an offer has reached pending status but unforeseen issues have come up during the final stages then the house could be listed as pending and accepting backup offers. The backup offers will only be accepted on the slim chance that the deal falls through during the pending phase.
• Pending Short Sale- A pending short sale scenario takes place when the home you are selling is a short sale. If the seller has accepted an offer on a short sale home but is waiting for the bank to approve the deal it will be listed as pending short sale. Backup offers can be accepted in this status.
• Pending More than 4 Months- If a home has been in pending status for more than 4 months then it reaches this status. This type of status is not as common on a traditional home sale, you may see it on a new-build purchase where the home is taking longer than planned to be completed so it is sitting in pending status while it is in construction.

Main Difference Between Pending and Contingent

One difference between contingent and pending is that when a house is in pending status you may be able to make a backup offer BUT you may not be allowed to tour or see the inside of the house. Sometimes an agreement between seller and buyer don’t allow a home to be shown once it has reached pending status.

According to Trulia, 3.9% of homes in pending status fell through. This is a very small percentage and though the MLS doesn’t provide statistics on how many contingent offers fall through each year the odds are good that more sales fail at the contingent stage than the pending stage of a home sale.

Tired of Contingencies and Failed Pending Status?

If you’ve been burned by contingencies and you don’t want to deal with the hassle of drawn-out contracts and closing times, showing your house and staging your home then consider selling to a non-traditional buyer. Gary is a trusted real estate investor who has been working in Utah for more than 10 years. He has a track record of creating win-win solutions for sellers who need to sell houses that just don’t do well in the traditional market. He will buy your house in any condition, no contingencies, and pay you cash.

If you’re looking for a speedy and less stressful home selling process than reach out to Gary today to receive an offer on your home.