In real estate, pending means, there is a contract, and the buyer and/or seller met or removed the contingencies. During this time the mortgage company finalizes its paperwork, and the title company prepares the closing documents. Usually, this period only lasts a few days. Then, the property will close and will be off the market.
- Generally, houses don’t stay in this status long
- A deal can fall through up until the day of closing
- You may put a back-up contract on the house
After buyers and sellers meet or remove contingencies to the contract then they finalize the transaction unless there is some dire unforeseen event that happens. If you put a contract on a house that during this period it is unlikely that you will be able to purchase the property.
From Pending to Sold
Usually, it takes about a week for a house to go from pending to sold. However, property transactions are complicated and sometimes may take longer. Also, agents may mark a house pending when there are still contingencies.
- Under contract means there is a deal, but it may have contingencies
- A house may stay in this status for several reasons
While most pending contracts close within a week, there may be reasons it takes longer to close.1
Option Pending and continue to Show
When an agent marks a pending listing in real estate continues to show, the seller wants back up offers. The seller may have several reasons why they want more offers.
- They may feel uneasy about some aspect of the current offer
- Their personality may be that they just want a backup just in case something goes wrong
- The agent may advise them to hold other contracts
Whatever the reason the seller entertains other offers, the fact is that the contract they have will most likely close. If you like the house put in an offer but remember that in almost all cases these contracts will close.
Pending in Real Estate and Under Contract
In real estate, the difference between pending and under contract is how far along the deal is in the process. For most agents, there is a significant dividing line between the two.
- Under contract means the seller accepted a deal, but it has contingences
- Pending means, the parties addressed all contingencies and are ready to close
These are common distinctions, but agents in different areas may not use the same distinctions. If you are unclear you should ask the agent you work with. They can explain your local market.2
Why would a house be pending for so long?
A house can be pending for a long time for several reasons. Some reasons are clerical with the Multiple Listing Service (MLS) in the area, while others have to do with financing or structural issues. Still, other issues stem from foreclosure issues.
- Some MLS systems define it as the processing period after meeting all contingencies; others define it as the entire under contract period.
- A structural issue, such as a leaking underground oil or septic tank can take years for remediation. A buyer sometimes will wait.
- If a buyer’s rate lock expires it delays the closing.
- If you are buying a foreclosure the bank can take a very long time, sometimes months, to process the paperwork to close.
These are just some common examples of why a property may stay in this category for a long time. The more complicated the contract the longer it can take to close on a house.
Can a pending sale fall through?
In real estate, a pending sale can fall through. For the same reasons listed above, and others, some sales do fall apart.
- If the MLS considers all under contract listings as pending then any of the common contingencies can kill the contract.
- Underground tanks notoriously kill contracts, because the government gets involved if there is an environmental concern. It sometimes takes take years to resolve.
- In a foreclosure situation, the bank selling the property is not motivated like an individual would be.
Since these transactions are complicated and emotional, almost anything can happen right up until closing. However, the vast majority of sales close.3
What is pending to active status?
Pending to active status means that a sale fell through. While most listings close after the parties clear the contingencies a few still fall through. If the seller does not have a backup contract, they will put the house back as active.
What percentage of pending sales fall through?
A low percentage of pending sales fall through. Most estimates that I have seen over the years are less than 5% for houses under contract. The number drops to less than 2% for pending transactions. This fluctuates from year to year but does not rise or fall too significantly.
Final Thoughts on Pending in Real Estate
Pending may have one of two definitions depending on where you live. The more general is that the house has a contract. The more specific is that not only is there a contract but the parties met all contingencies. The lawyers, title companies, and/or banks only need to finalize the paperwork.
In either case, if you like the house you may want to make an offer as a backup. Even though a low percentage of sales fall through, it still happens.