It’s a home buyer’s worst nightmare. You’re driving by your dream home you’ve been eyeing for some time. Only now, there’s a big red sign on the yard sign that reads “Pending” or “Sale Pending” underneath it. You feel heartbroken, angry and…confused?
It’s true. Real estate terminology really is a language of its own. However, learning the jargon related to property listings will help you know when or when not to make an offer on your dream home. Read on to learn everything you need to know as a home buyer about pending sales in real estate.
What does sale pending mean in real estate?
The term ‘sale pending’ means a buyer has submitted an offer on a home, and the seller has accepted it. Once a contract is signed between parties, that property is in pending status.
A house listing that reads ‘pending’ is no longer active and prevents other buyers from making an offer. This conditional period usually lasts between 7-14 days. During this period, the buyer submits their offer to their lending institute to get the final approval for the loan.
Additionally, the buyer will need to get an appraisal of the house done and an inspection. During this time, the seller can still show their home if the buyer backs out last minute. However, they cannot accept any other offers—except a backup offer. A backup offer is usually only considered when the initial buyer’s offer falls through.
Can a home listed as pending fall through?
It’s rare, but it does happen. If a pending sale does fall through, the home will usually go back on the market. There are several reasons why this may occur:
- The buyer’s mortgage application is declined: Even if a buyer is pre-approved for a loan, losing/ quitting a job or taking on additional debt can change a lender’s mind.
- The buyer got cold feet: Homebuyers may have second thoughts about the home or the property’s condition and back out of the sale.
- The home is appraised for lower than the sales price: This often happens when bidding wars raise a home price above market level. Lenders usually won’t approve the loan if the appraisal is far lower than expected.
- The home inspections reveal critical issues: Sometimes, problems come up in a home inspection that is more daunting than the buyer is financially equipped to handle.
Can you put an offer on a home that’s pending?
When a buyer submits an official offer letter on a home, a clause will stipulate the homeowner cannot void the sale if another offer comes in – especially if it’s a better one. However, you can still submit an offer and serve as a backup to the accepted offer. Keep in mind, the buyer cannot consider your offer unless the current sale falls through. Typically, your agent will discourage you from wasting your time and emotions on going this route.
Some agreements between seller and buyer limit the seller from showing their house once pending. In this case, if you make a backup offer, you might not get to see the house. You’ll want to ensure your finances are in order if you make a backup offer, as it is still a legally binding contract.
If you’re interested in a home that’s pending, reach out to your local team of qualified RE/MAX real estate professionals today! We’ll be happy to answer your questions, put together a backup offer, or find another home that’s an even better match for your needs!