The Big Picture on The Difference Between Contingent vs Pending Real Estate:
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- A “contingent” property sale depends on specific conditions, like financing or inspections, being met before the sale can proceed.
- A “pending” property means the offer is accepted, and the deal is moving toward closing, with fewer opportunities for other buyers to intervene.
- Contingencies can protect both buyers and sellers, and common types include financing, home inspection, and appraisal contingencies, each providing an exit if conditions aren’t met.
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When you buy or sell an asset worth hundreds of thousands—or millions—of dollars, the legal contracts become complex quickly.
While “pending” and “contingent” may sound similar to laypeople, they mean slightly different things in real estate legalese. Given the huge dollar amounts involved, you need to understand that difference as a real estate investor.
What Does Contingent in Real Estate Mean?
In real estate contracts, “contingent” generally refers to a property under contract, but the sale is contingent upon completing specific tasks or actions. These actions may require buyers to secure financing for the property, complete a home inspection, or investigate the property for lien or title issues.
Contingent offers usually involve some negotiation between the buyer and seller. The process includes the buyer making an initial offer with contingencies and deadlines and the seller either accepting, rejecting, or making a counteroffer. If the buyer and seller agree on the contract contingencies and follow through, the offer will become firm, and the sale will proceed.
Remember that contingent offers are more complicated than other offers and that buyers should have an experienced real estate agent to help them navigate the process. Additionally, buyers should read all terms and conditions carefully before signing anything and prepare to leave a contingent offer if it doesn’t meet their expectations.
It happens in real estate. All. The Time.
Types of Contingencies in Real Estate
A contingency in real estate is an event that must occur for the sale to go through. Contingencies come in many forms and exist to protect either the buyer or the seller in a real estate transaction. Contingencies typically allow a way out of the agreement if certain conditions aren’t met.
You can divide the types of contingencies in real estate into two main categories — buyer and seller contingencies. They include:
Financing Contingency
A financing contingency is a type of contingency specific to the buyer. It states that the sale of the home is contingent on the buyer’s being able to secure financing for the purchase.
Home Inspection Contingency
A home inspection contingency allows the buyer to have a professional home inspector inspect the property and reveal any issues that may need to be addressed before the sale is final.
Appraisal Contingency
An appraisal contingency requires the buyer to have the home appraised for a certain value. The sale will not go through if the property does not appraise for at least the purchase price.
Sale Contingency
You use a sale contingency when the seller doesn’t wish to move unless they have a place to move to. This contingency allows them to accept an offer on the current home, but the sale is contingent on the seller finding a new home to purchase.
Loan Contingency
A loan contingency protects the seller if the buyer cannot get financing. This contingency is often used when the seller is still paying off their loan to secure funds for sale.
Title Contingency
This contingency involves the buyer verifying that the seller has the legal right to sell the property and entails a clear title history. Additionally, it also serves to protect buyers from potential issues, such as existing liens against the property.
Active-First Right Contingency
These contingencies provide an agreement between the buyer and seller that if the seller receives a higher offer, they must first offer the property to the buyer with the contingency offer, with the right to accept or decline.
Active-Kick Out Contingency
Unlike first right contingencies, these require the buyer to remove their contingencies by a certain date or give the seller the right to go back on the market for other offers.
How Does Contingency Affect Home Purchase?
Understanding the different types of contingencies in real estate helps both buyers and sellers ensure their transactions are secure and all parties are protected. Contingencies essentially provide an escape clause for either party if certain conditions aren’t met. Plus, they help to address any issues that may arise before the sale is complete.
Other potential effects include:
Contingency Type | Impact on Home Purchase |
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Financing Contingency | If the buyer can’t secure a loan, the sale may fall through, protecting the buyer from committing without financial backing. |
Home Inspection | If major issues are found, buyers can renegotiate or cancel the purchase, ensuring they aren’t stuck with significant repairs. |
Appraisal Contingency | If the home appraises for less than the purchase price, the deal can be renegotiated or canceled to prevent overpaying. |
Sale Contingency | Delays the transaction until the seller finds another home, possibly slowing down the process or ending the deal. |
Title Contingency | Ensures the buyer is protected from unresolved legal claims (like liens) that could affect ownership rights. |
Types of Contingency Statuses
Certain real estate showing contingent labels may have statuses in the listing. The most common ones are:
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- Contingent – Continue to Show (CTS): The property is under contract, but the seller is still accepting backup offers.
- Contingent – No Show: The property is under contract, and the seller is no longer showing the home to other potential buyers.
- Contingent – Kick-Out: The seller has set a deadline for the buyer to meet the contingencies, or the seller can cancel and accept other offers.
What Does Pending Mean?
Pending in real estate means that a home or property is under contract. The buyer has offered to pay a certain amount of money, and the seller has accepted the offer. Pending in real estate is a period between when a contract is agreed upon by both parties and the close of the sale when the deed is transferred.
The biggest difference between contingent and pending real estate is that pending means the buyer has already reached an agreement with the seller and can proceed with the detailed closing process. Contingent means the sale is uncertain since one or more conditions must be met before the sale can move forward.
Pending Types in Real Estate
Pending is an important term in the real estate industry that denotes a transitional stage in the sale of a home. Properties are listed as pending for a number of reasons, each with its own implications and drawbacks.
There are three main categories of pending types in real estate. These are:
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- Pending — taking backups: This means that the buyer and seller have come to an agreement and the contract has been accepted, however, the seller is still taking other offers just in case the buyer backs out of the agreement.
- Pending — short sale: A short sale pending transaction means that the property is listed for less than the seller owes on the mortgage. The original mortgage lender must approve the deal and agree on the price before the sale is completed. In this type of transaction, the sales price must match the approval amount of the loan balance.
- Pending — more than four months: This status is almost always a red flag for buyers since it indicates that an offer has been accepted on the property, but the home has been in sale limbo for more than four months. This could result from any number of issues, but the most common are issues with the title or the sale falling through due to financing problems.
Why Knowing Pending Types is Important
Pending statuses can give buyers a good idea about the property they’re eyeing. For example, a seller taking backup might mean that the original contract is not as airtight as either party wants. Another example is seeing a property that has been on pending status for an extended period.
Each situation requires different strategies, but knowing the pending status at least allows you to check your real estate buying playbook to see which approach might work. For example, offering more to the seller (if the property is worth it) might end in a sale.
Lastly and more importantly, knowing the pending status can help set buyer expectation.
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Can You Make an Offer on Contingent or Pending Properties?
When you’re shopping for a property, you may see some listings marked contingent or pending. Knowing the difference between contingent and pending is important before making an offer, as each of these terms has different implications.
Generally, when a property is pending it has an accepted offer from a buyer that must be fulfilled before any other offers can be submitted. In most cases, you should assume a pending property is not available for viewing or offers from other buyers.
Contingent properties, however, may be available for viewing and offers. When a property is contingent, it means the current buyers have an accepted offer, but the sale is dependent on certain conditions being fulfilled. For example, if you make an offer contingent on passing a home inspection, that means the offer will only move forward if it passes the inspection.
Final Thoughts On Contingent vs Pending in Real Estate
While the terms “contingent” and “pending” may appear similar on the surface, they’re actually quite distinct in meaning and purpose.
Still have questions about what contingent means in real estate? Ask in the comments below!
You need contingencies in your real estate contracts, given the huge amount of money involved. Be complacent at your own risk.
Amen Ann!
Should there be a penalty if the other party failed to complete the contingencies for the time wasted and loss opportunity to sell/buy to others?
Hi Mark, sometimes there is, written into the contract. But normally no, that’s the purpose of the contingency is to let one party out if a condition isn’t met as expected.
Title contingency is an excellent tool against fraudsters at online off-market platforms.
Interesting point Sharon! But fraudsters aren’t likely to return your earnest money deposit regardless of the real estate contingency.
If you want to buy and sell assets worth six or seven figures, you should know the terminology. If you don’t, you’re setting yourself up to lose money.
I hear you Jake!
This falls under “things I didn’t know that I didn’t know.” Good stuff as always.
Thanks Greg!