What is the difference between contingent and pending sale

As you drive by “for sale” signs during your search for your next home, you may spot one that says “contingent” or “pending.” These are sort of limbo states for homes that happen when the seller has accepted an offer but the transaction is not yet finished. In these cases, the home could become available again should something go wrong before the sale is finalized.

After all, the process of buying and selling a home doesn’t happen overnight. When you factor in tasks like securing financing, getting a home appraisal and conducting the title search, it can take weeks for a buyer’s needs — called “contingencies” — to be met. After these contingencies are settled, the sale is considered pending until it’s officially completed.

Contingencies protect the buyer

Contingencies are conditions that the buyer needs to be met before they can finalize the transaction on their end, and either party can still back away from the table. When a sale is contingent, it also may be labeled “under contract,” as the seller has accepted the buyer’s offer but the deal hasn't been finalized. These contingencies can include requests such as:

• An inspection contingency, which allows the buyer to back out if something problematic is uncovered during the home inspection. It can also stipulate that the seller has to cover the costs of repairs that are recommended as a result of the inspection.

• An appraisal contingency. Once an appraiser determines the fair value of the home, the buyer can choose to walk away if they’re overpaying or if the lender won’t finance it.

• A financing contingency, which means that the home can go back on the market if the buyer isn’t approved for a large enough mortgage.

• A home sale contingency, which means that the sale is conditional on the buyer selling their current home.

• A title contingency. If any liens or judgments are discovered during the title search, the owner has to address them before the sale proceeds.

In a strong seller’s market, where available homes are scarce, it can be difficult for buyers to get sellers to agree to contingencies. For example, if other buyers will agree to cover the cost of any problems uncovered by the home inspection, the seller has little incentive to agree to an offer that’s attached to an inspection contingency.

Sellers are bound once the sale is pending

Once all contingencies are settled (or if there are no contingencies in the first place), the home sale is pending. The seller can't back out of the sale, unless the buyer fails to meet a contractual obligation (such as if their deposit fails to clear). However, they could still receive other offers so that they have a backup plan in case the deal falls through.

The buyer, meanwhile, can still change their mind until the moment the deal is officially closed. So if your dream home is labeled as pending, don’t give up hope just yet — it could still become available again for a myriad of reasons. You can reach out to the seller with your own offer so they’ve got your information ready in case the current buyer backs out.

How often do these homes go back on the market?

According to the National Association of Realtors’ May 2022 confidence index survey, contracts typically close within 30 days. From March 2022 to May 2022, 7% of contracts were terminated, while 21% of contracts didn’t close as planned because of appraisal issues.

While the majority of deals don’t fall through, that makes it all the more urgent for you to make your interest known to the seller if you fall in love with a home that’s under contract. It also underscores the importance of having your financial ducks in a row before you start shopping: Get preapproved for a mortgage, know what you are and aren’t willing to sacrifice, and have a realistic picture of what you can afford to invest in a home in terms of repairs. This way, if the home does become available, you’ll be an ideal backup option for the seller.

When you’re searching for a home online, you’ll probably notice that not every listing simply says, “For sale.” Some may say, “Pending,” while others may say, “Contingent.” Still others may give more detail, like “contingent, continue to show” or “pending, taking backups.” These phrases indicate that the home is in some stage of the sale process.

Knowing the differences between contingent and pending offers can help you spot properties that you might still be able to buy. It can tell you the best way to move forward if you’re interested in bidding on one of them.

What's the Difference Between Contingent and Pending Offers?

Contingent means the seller of the home has accepted an offer—one that comes with one or more contingencies or conditions that must be met before the sale can go through. The listing is still technically active until the contingency has been met. The status switches to pending when the offer has been accepted, and all that’s left is the final paperwork and closing.

Note

There are different types of contingent and pending statuses. Each one indicates a different level of opportunity for hopeful buyers. 

Types of Contingent Offers

You might see a few types of contingent statuses.

• Contingent, Continue to Show: The seller has accepted an offer that hinges on one or several contingencies. Other buyers can continue to view the property and submit offers while the buyer is working to settle those contingencies.
• Contingent, No Show/Without Kick-Out: The seller has accepted an offer with contingencies, but will no longer be showing the home or accepting offers.
• Contingent, Release/Kick-Out: There’s a deadline by which the buyer must satisfy their contingencies. The seller is still showing the home and accepting additional bids until that time.

Types of Pending Sales

You might see a few kinds of pending statuses, as well.

• Pending, Taking Backups: The seller is still taking backup offers for the first offer.
• Pending, Release/Continue to Show: An offer has been accepted, and contingencies have been met, but there is still some release or "kick-out clause" for one of the parties. The seller will still show and accept offers in this case.
• Pending, Do Not Show: The sale is essentially a done deal. The seller isn’t showing the home or accepting new bids.
• Pending, Over Four Months: The home has been in the sales process for four months or longer. The listing should also include a tentative closing date if this is the status.

Many of these phrases overlap, and different real estate groups and multiple listing services (MLS) vary as to the exact phrasing they use. But anything that says “continue to show,” “release,” or “taking backups” usually means that there's still some hope if you’d like to purchase the home.

How to Make a Backup Offer

Neither pending nor contingent offers are carved in stone. They can and sometimes do fall through.

You can take several steps to potentially buy the home if you find a listing that's in a pending or contingent stage. The seller may be able to accept a better offer if the home is still in an early contingency stage (the buyer is waiting on their financing or for their previous home to sell). You might try to tempt the seller in this case, offering more money, waiving your own contingencies, or by including an offer letter.

You can also put in a backup offer in most cases. Here are some steps to take to do that:

• Speak to the listing agent (or have your agent do it). Find out how long the contingency period is or when the release date is up. 
• Make a strong offer. Waiving contingencies and making an offer at or above asking price can increase your odds of winning the bid.
• Write an offer letter.Make a personal, direct appeal to the seller and state your case.

Note

A backup offer gives the seller an option to revert to if the current deal falls through. You’ll have to pay an earnest money deposit and option fee, as with any other offer, but you’ll get this money back if the contract never goes into effect.

At the very least, you can have your agent contact the listing agent and let them know of your interest if you’re not willing to pay earnest money and option fees on an official backup contract. You’re still leaving the door open if the first deal falls through.

The Bottom Line

Contingent and pending offers are common in real estate, and buyers and sellers should know what they mean and how to deal with them. In both cases, the sale has not been completely finalized and there is still a chance that it could fall through. Whether you're making an offer or trying to sell your home, be sure to discuss contingencies and pending statuses with your agent.

Frequently Asked Questions (FAQs)

Why do most contingent offers fall through?

The contingency that's most often not met is that of a satisfactory inspection, according to the National Association of Exclusive Buyer Agents. It's followed by appraisal issues.

What's the worst that could happen if I waive a home-inspection contingency?

You might be tempted to waive one or more contingencies to increase the chances that the seller will accept your offer for your dream home, but waiving the home-inspection contingency can end up costing you 3% to 5% of the home price to repair major issues that may become apparent later, after you've closed the deal and moved in. It could be even more with an older home. This cost might otherwise have been negotiated and accommodated in the sale if a home inspection turned up problems.