When a home listing in the multiple listing service (MLS) or on an online listing portal like Zillow (NASDAQ: Z) (NASDAQ: ZG) shows as "pending" or "sale pending," it means that the seller has accepted an offer on the home from a buyer.
It's also worth noting that MLS and other home listings aren't always updated right away, so if the sale has indeed been finalized, it might not be reflected in the listing for a few days or even weeks afterward. As a personal example, when I closed on an investment property last year, it still showed up as a pending status for over a week after we had formally closed on the purchase. So if you're interested in a home that's listed as pending, it's a good idea to call the seller's agent (or have your real estate agent call) to find out its most up-to-date status.
Can you still make an offer on a home that's pending sale?
One key point to know is that there's a big difference between a pending sale and a home that's sold. While pending certainly means that the seller has accepted an offer on the home, formal ownership has not yet been transferred to the buyer and no money has been transferred to the seller. In other words, a real estate transaction is yet to take place.
It can be difficult to make an offer on a home that's pending sale. For obvious reasons, most real estate purchase contracts have language that specifically prohibits the seller from canceling the agreement with the buyer if they get a higher or more desirable offer.
Having said that, contracts fall through for a variety of reasons, even at the last minute. For example, the buyer could lose their job and no longer qualify for financing. Or, the buyer could simply get cold feet and back out of the deal at the last minute.
If you find a home pending a sale that you like, it's a smart idea to make your interest in the property known. In fact, the investment property I referred to in the last section was actually listed as pending when I found it, but I let the listing agent know that I was interested in submitting a full-price offer if the deal fell through.
I was already pre-approved for a mortgage, had the necessary funds to close in my account, and by doing a detailed visual check of the property during my showing, I was mostly aware of all of the property's issues that would need to be addressed. When the original buyer ran into last-minute trouble getting financing, the deal was canceled shortly before the expected closing date. The seller's real estate agent called my agent, and I was able to make an offer on the property before it was ever re-listed on the MLS.
Also, it's important to realize that while a seller generally cannot accept another offer while a home is pending sale to a buyer, the listing agent will typically still allow you to see the property. Until the sale closes, showings can certainly continue unless the seller doesn't want them to.
Similar real estate terms to know
There are a few other terms you might encounter when browsing real estate listings. The obvious two are "active" and "sold." On the other hand, there are a couple of other terms that you might see during the in-between time:
This is typically the first status you'll see after a seller has accepted a buyer's offer. It is listed this way before any contingencies are met. Sales are usually dependent on several common contingencies, such as a buyer's inspection period, financing being secured, and an acceptable appraisal being completed. During the "under contract" period, sellers are often willing to accept backup offers, because if a sale falls through due to one of these contingencies, it is most likely to happen during this stage.
This is another term for the early stages of a sale process and may also be listed as "active contingent." It means that an offer has been accepted from a buyer, but there are some conditions (such as financing) that still need to be met. During the contingent period, the buyer has the ability to cancel the contract without sacrificing their earnest money deposit. The contingent and under-contract statuses are often used interchangeably, and once all of the necessary conditions have been met, the status will be changed to pending.
The Millionacres bottom line
A home that is listed as pending is on the verge of its sale being finalized, but it isn't there yet. While a home sale is more likely to fall through in the earlier stages after an offer has been accepted by the seller, pending sales are canceled from time to time, and for a variety of reasons. If you're interested in a home that's pending sale, it's still a good idea to let the listing agent know you'd be interested in submitting a backup offer in the event the original contract is canceled.