Contingent Vs. Pending Real Estate Listings: What’s The Difference?

Whether you’re a first-time homebuyer or an old pro, home-buying lingo can be confusing. Many potential home buyers get caught up on what an active contingent versus pending status is when they’re looking at homes online. So, if you’re unsure of what the difference is, here’s a little insight.

The basic definition of the word “contingent” means that something is dependent on certain circumstances. In real estate terms, if a home is listed as contingent, it means a potential home buyer has made an offer that has been accepted, but additional criteria (contingencies) need to be met on the property before closing. Before finalizing the deal, the homeowner must resolve the issues or problems.

Is a contingent property still attainable? Definitely. Is it as easy as buying a home that has not yet accepted an offer? Definitely not. Understanding contingencies is key if you are considering making an offer on a contingent home.

It’s important to note that making an offer on a contingent house is not the same as making a contingent offer on a home, but they are essentially two sides of the same coin. Knowing the intricacies can help you understand the nature of contingencies regardless of which side you are on.

Common Home Buying Contingencies

Contingencies allow the buyer to get out of the contract with no repercussions and help protect them against any risk when purchasing a new home. The most common contingencies are that the property must pass a home inspection, the buyer must receive a mortgage approval and, in some cases, the buyer must be able to sell their home. While some contingencies may vary from state to state, there are some that are common throughout the country. Below are a few contingencies that may be included when submitting an offer. For more details, check out this article on contingent offers.

• Mortgage Financial Contingency
• Home Inspection Contingency
• Home Appraisal Contingency
• Home Sale Contingency

When you see a property listed as contingent, it’s not a one-size-fits-all situation. There are a number of different designations that can provide clues as to whether or not making an offer is a useful endeavor. Here are a few you may see:

Contingent – Continue To Show (CCS)

If a home's status is Contingent – Continue to Show, the seller has accepted an offer, but there are multiple contingencies that must be addressed. For the seller, this means they are eager to see if other “less contingent” offers come in. For the current buyer, this means their offer is “shaky” and has the potential to fall through. For someone considering making an offer this means it’s likely worth submitting one, as long as it has less contingencies than the current offer.

Contingent – No Show

This designation essentially means that there is a solid offer on the property that is likely to make it to the closing table. As a result, the seller no longer wants to show the property to other prospective buyers. From the current buyer and seller perspective, it's about as good as it gets. For someone looking to make an offer, not so much.

Contingent – With Kick-Out

This means that the seller can accept a different offer from a new buyer. If this happened, they would essentially “kick out” the first buyer. Good for the seller and potential new buyer, bad for the current buyer with an accepted offer in.

Contingent – With No Kick-Out

This means the seller cannot accept another buyer's offer unless certain requirements are not satisfied with the current accepted offer. This is good for the current buyer, because they can't be “kicked out” unless they don't meet their contingencies. Not so good for the seller if they are interested in moving on to another offer and not good for anyone bringing that second offer to the table.

Short Sale Contingent

A short sale is the sale of property where the lender is willing to accept less than the amount still owed on the mortgage. It belies its name though, as it can be a lengthy process. Short sale contingent means that the home for sale is a short sale and has at least one offer on it, but the agent is still listing it to get back up offers in case the one they have falls through. For the seller, it's a good insurance policy if the current deal falls through. For the current buyer, it doesn’t affect them much unless they don't meet their contingencies (usually financing) and for the potential new buyer it means a lot of waiting, often for nothing.

Contingent Probate

A home is sold in probate court when someone dies without leaving their property to a specific person or people. When that happens, the state takes over and administers the property's sale. This process is similar to short sale in terms of length and possible futility when it comes to making another offer.

Active Contingent

This means an offer has been accepted and the contingencies have not yet been met. This usually entails the inspection and financing contingencies and once those have been lifted, the status changes to pending.

Pending

The house will remain in pending status until all of the documentation is completed and processed and the sale closes. There are a few details that can vary under the pending designation. Here are a few of the most common types:

• Pending – taking backup offers: If a seller has accepted an offer but some issues have come up in the final stages of the sale, they may accept backup offers.
• Pending – short sale: When an accepted offer is a short sale, lenders or other financial institutions may have to approve the deal. A short sale is outside of the buyer’s or seller’s control.
• Pending – more than 4 months: This is when an accepted offer is pending for more than 4 months. This can be due to delayed construction, negotiations or longer-than-usual processing times.

To be clear, you can make an offer at any stage of the home buying process. Until the house is listed as “sold,” you are able to put an offer in on a contingent home. Making this offer doesn’t guarantee that you will be the one to close on the home, but it can position you as a solid backup option for the seller if the current contract falls through. The process of making an offer on a contingent home is relatively the same as that of any other offer on an active listing.

It’s important to have the most up-to-date information available and have the assistance of a real estate agent who understands how to manage complex home sale agreements. If you’ve fallen in love with a home that is either active contingent or pending, it’s important you get in touch with a real estate agent as soon as possible to explore your options.

Pros Of Making An Offer

If a home is listed as active contingent, it means the house is already under contract. However, your real estate agent can do some research and determine what the contingencies are. This will help you decide whether you want to submit a backup offer in case something were to go wrong. If you feel as though this is your dream home, submitting a backup offer may be beneficial. But remember, if the home is pending, the seller may not be able to accept unless the deal falls through with the first buyer.

Cons Of Making An Offer

If you do decide to submit an offer on an active contingent or pending home, be prepared for disappointment if your offer isn’t accepted. While the home buying process can come with many surprises, things may not work out in your favor. On the other hand, if the first offer does fall through and your offer is accepted, you want to be sure you understand the background on the property. For example, if the offer fell through due to issues with the inspection, then you should be prepared for that. Having contingencies in place may be beneficial to ensure you aren’t committed to a contract that won’t work out in your favor.

Even though it may be better to submit an offer on a property without an active contingent or pending status, you may feel like you’ll miss out if you don’t try. So if you decide to move forward, here are a few tips to help you submit the best offer:

Enlist The Expertise Of Your Real Estate Agent

First and foremost, you’ll want to connect with an experienced real estate agent who can help you gain insight into the property. They can give you their expert opinion about the property and the best way to go about submitting an offer. They can then contact the listing agent to give you insight into areas in the contract that may be contingent. You can use this information to your advantage when submitting an offer. Additionally, you may want to do your own research. Drive around the neighborhood and learn about the community. You may never need this information, but you never know if it will come in handy.

Write A Personal Letter

If you’re 100% sure this property is the home of your dreams, you may want to contact the seller. Try sending a handwritten letter explaining why you want the house and what you have in store for the property. Sometimes a human connection can be a significant factor when the seller is contemplating their decision.

Don’t Be Overly Aggressive

If a buyer is too pushy, it can deter the seller from moving forward with their offer even if the first offer falls through. However, you do want to respond to calls and emails promptly. Staying on top of your offer can work to your advantage. Persistence and patience are the only way to go in this situation.

Unless you’re absolutely in love with a property, you may want to only look at homes without an active contingent or pending status. Doing so will save you the time and frustration of waiting for the other offer to fall through. But if you have found your dream home and it’s listed as pending, don’t worry – you may still have a chance.

Ready to find your dream home without any contingencies? If so, contact a verified Rocket Homes^® agent today to get started in your home search.