When you're looking online for a new home, you'll often see that some listings are marked as "Pending" or "Contingent." There are differences between the two, and understanding those differences can help you know if a house is worth trying to pursue.
Contingent
"Contingent" means that a seller has accepted an offer. These listings are still active, so you may see them when you're searching online. They could fall out of contract if all the provisions aren't met.
The closing on a contingent house doesn't happen until all contingencies listed in a purchase agreement are met.
Common contingencies include:
A Home Inspection Contingency: When a buyer's offer has been accepted in North Carolina, the buyer offers the seller Due Diligence money and often times Earnest Money. An inspection will follow after going under contact, and if the inspection reveals a significant issue – for instance, a sewer line needs replacing - the repairs may be negotiated. If the buyer and seller can't agree on a solution to the problem, the buyer, in North Carolina, may terminate the contract during the Due Diligence (DD) Period but will lose their DD money. If a buyer terminates after the Due DD period ends, the buyer will lose their DD Money and any Earnest Money.
Mortgage Contingency: This happens when a buyer isn't pre-qualified for a loan, and so there's a contingency depending on the buyer being able to get financing. If the buyer can't, the home goes back on the market. North Carolina's Offer to Purchase and Contract does not recognized buyer's financing as a contingency to the offer. That is why getting your financing solidified before the end of the Due Diligence Period is important. You can still terminate during the DD period but will lose your DD money. If you do not terminate until after the DD period, for any reason, you lose both your DD money and your Earnest Money.
Appraisal Contingency: With this situation, the mortgage lender for the buyer hires an independent appraiser to determine the home's fair market value. That then shows the lender that it makes sense for the loan to go through, based on that value. An appraisal addendum can also be included with a buyer's offer.
Home Sale Contingency: This once common scenario happened when a home buyer owned a home and they made an offer that was contingent on them being able to sell the home they currently owned. This has not been used for most home sales for several years due to the extreme lack of inventory and competitiveness of the real estate market.
It's not unusual for deals to fall apart because of contingencies. If you're selling a home, you can accept a backup offer in case your first offer and deal don't go through.
What Does Pending Mean?
When a home is marked as "Pending," it means that there is an agreement, and all the contingencies have been met. In this case, the home is much closer to actually being sold.
The deal could potentially fall through still at this stage because of something with financing or the inspection, but it's a lot less likely than it is at the contingency phase.
Most real estate agents won't accept additional offers when a home is pending, but there's not a legal reason for that. It's more preferential.
What About Under Contract?
Finally, you might also see that a house is under contract. That means the terms are agreed upon, but the deal is new and could break down. A house under contract can go back on the market pretty easily, and a new offer for the property can be made.
Essentially what this all means is that you shouldn't let "Contingent" or "Under Contract" scare you away from making contact with your Buyer's Agent. There are myriad reasons why a deal can fall apart. Just keep in mind that if a home is "Pending," there's a much lower likelihood the transaction will terminate.
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