You've been trawling the sales listings for properties in your dream hometown for months now, and you've finally spotted the perfect place -- except it's listed as being pending a sale already. While there's a good chance the home is already beyond your reach, you still have a few options for possibly snagging the property despite the other interested buyer. Understanding the pending process inside and out increases your chances of snagging a hot property for sale in your area that already has a potential buyer.
Understanding the Terminology
The regulations on terminology in real estate vary from state to state, but most areas use the same general meanings for the terms "sale pending" and "under contract". When the For Sale sign is marked as pending, this usually means there is a contract in place with a buyer and all the various contingencies have been met. Some areas allow agents to use these term to describe a listing before contingencies are met, so check with a real estate agent to find out the exact definition in your area. In most case, "sale pending" homes are on the fast track to closing, but this may not be true depending on how the real estate agent is using the term.
In contrast, "under contract" indicates a signed agreement that hinges on some big contingencies. You generally have a better chance at buying a home listed as under contract than one that has moved into the pending sale stage due to the limitations written into the contract.
Discovering the Contingencies
Your real estate agent can contact the representative of the seller and see what kind of contingencies are involved in either a pending sale or an under contract arrangement. Some of the contingencies most likely to cause the sale to fall through include:
- Mortgage and home loan approvals from lenders
- Home inspections that reveal problems the buyer doesn't want to deal with
- Differences between the appraised price and the asking price, which results in the mortgage lender only covering the appraisal value
- Sales agreements in which the buyer gets to sell their current home before committing to buy the new one
- Negotiations over repairs and furnishing arrangements between the seller and buyer.
If your agent discovers there are a few big contingencies standing between the signed contract and closing, you've got a better chance at making the purchase. You'll just need your real estate agent to stay in touch with the seller's agent so you get the news immediately when a contingency fails and causes the current contract to close.
Putting in Your Backup Offer
Make an immediate backup offer on the property when your agent reports that the sale is still hinging on a big issue. Even if the buyer and their agent aren't openly accepting offers, making some indication of your interest helps you gain a foothold in case the current buyer backs out. In most states, buyers can back out without penalty all the way up to the day of signing. Ask your agent to stay in constant contact with the sellers until the date of closing so you can make immediate arrangements when it goes back on the market. If you make a backup offer and it's accepted by the buyer while the sale is pending, you'll be the first in line to sign a new contract.
While it's worth keeping an eye on the perfect property that's almost sold, don't stop searching for alternatives in the process. Hedging all your bets on a sale contract falling through could cause you to miss half a dozen great alternatives that go up for sale during the time you're waiting on a pending contract. Let your original agent focus on placing backup bids and tracking the progress of the pending sale property while their assistant or team member tracks down lists of new and non-contracted properties for you to consider at the same time.