Navigating the real estate market can be challenging, especially with all the industry-specific terms that get tossed around. Two phrases you’re likely to encounter are “pending” and “under contract.” While they might seem similar at first glance, they represent different stages of the home-buying process. Let’s break down what each term means and how they impact your home-buying or selling journey.
What Does “Under Contract” Mean?
When a home is listed as “under contract,” it means that the seller has accepted an offer from a buyer. However, the sale is not yet final. There are still several steps that need to be completed before the deal can close. For instance, the buyer might need to secure financing, complete a home inspection, or fulfill other contingencies specified in the contract.
Key Points About “Under Contract”:
- Offer Accepted: The seller has agreed to the buyer’s offer.
- Contingencies: The sale depends on certain conditions being met.
- Still Active: The property might still be shown to other potential buyers as a backup.
What Does “Pending” Mean?
Once a home is labeled as “pending,” it indicates that all the contingencies have been satisfied, and the sale is moving toward closing. This stage signifies a higher level of certainty that the transaction will be completed, as most of the potential hurdles have been cleared.
Key Points About “Pending”:
- Contingencies Met: All conditions in the contract have been fulfilled.
- Final Steps: The sale is nearing completion, typically awaiting final paperwork.
- Less Active: The property is usually taken off the market and no longer shown to potential buyers.
Transitioning from “Under Contract” to “Pending”
The transition from “under contract” to “pending” involves fulfilling all the conditions laid out in the contract. For example, if the contract requires a home inspection, the sale can only move to pending status once the inspection is completed and any necessary repairs are agreed upon or resolved.
Moreover, the buyer must secure their mortgage financing during this phase. Any issues with financing can revert the status back to active, putting the home back on the market.
Why These Terms Matter to Buyers and Sellers
Understanding these terms can help both buyers and sellers manage their expectations. For buyers, knowing that a home is “under contract” means there’s still a chance to put in a backup offer. For sellers, moving from “under contract” to “pending” is a significant milestone, indicating that they are closer to finalizing the sale.
In summary, “under contract” means an offer has been accepted but there are still hurdles to clear, while “pending” signifies that all contingencies have been met and the sale is nearing completion. By understanding these terms, you can better navigate the real estate market and make informed decisions.