Low Inventory? Buyers Make Offers on Contingent Properties
Contingency and Pending Status Occur Different Ways
People who find a home that they would love to purchase and who submit an offer with that intent are often disappointed to learn that an offer is already contingent or pending. When properties are viewed online, an “active” status indicates a property is available for sale. A “pending” classification means that an offer to buy has been accepted. The property is in escrow, and both parties, buyer and seller, are taking the necessary steps for the transaction to close. This generally involves among other things a buyer’s inspection and completion of required repairs. appraisals, and loan underwriting. Pending may also be applied to short sales that are awaiting a green light from the mortgage holder of the seller.
Contingent status may also occur if the seller has accepted a buy offer, but the sale depends or is contingent on the buyer being able to sell their current home. If the buyer is unable to sell the home, he can back out of the contract.
Most pending listings will also place buyer contingencies in their contracts. These would include such things as appraisal and inspection contingencies. Contingent status can also indicate the specific contract contingency for the buyer’s sale of his house.
Differences Exist Between Contingent and Pending
Pending listings will generally either close escrow as soon as both parties get their inspections, appraisals, and green light from lenders. If this step fails, they go back on the market. Contracts which are contingent on the buyer selling his house however do not go into escrow until the buyer’s home is sold. There is a similar hold off on inspections, appraisals, and loan underwriting.
It is common in contingency listings for there to be a specification in the contract that if another offer is received on the house, that the seller will then be able to demand that the buyer move forward with the escrow and remove the contingency clause from the offer. In other words, the buy offer will not be subject to the buyer first selling their current home. This allows the seller to cancel the contract and proceed with the other offer if the buyer refuses to remove the contingency for the sale of his current home.
What this all indicates is that if you find a home you like and it has a contingency listing, you should go ahead and make an offer. If the seller likes the offer, they may force the first place buyer to either proceed into escrow or free up the property for you.
Homes Moving More Quickly from Active to Pending and Contingent
The housing market has shown renewed vigor in recent months. Good homes no longer languish for months in active status. Rather they are advancing more quickly to the pending and contingency phase of the transaction. This is a welcome indication that conditions are finally stabilizing in the housing market, and the long slump in real estate is at long last coming to a close.