Have you fallen in love with a home but think all hope is lost because it shows as sale pending? Although “sale pending” usually means all contingencies have been taken care of and the property is moving toward closing, this isn’t always the case.
In order to know if a home marked as “sale pending” is still worth pursuing you’ll need to understand something about how real estate deals work.
Let’s look at the lingo
First, a buyer makes an offer. Usually, that offer is “subject to” – dependent on – a property inspection and/or bank appraisal. The buyer will need to get full loan approval and sometimes the deal will hinge – be contingent on – the sale of the buyer’s home.
So, there are several steps that have to be successfully negotiated in order for a sale to be completed.
While “sale pending” normally points to all contingencies having been removed and the transaction heading toward closing, there is no guarantee that it’s a done deal.
A property with an offer may still be for sale
In most markets, buyer and seller will sign a contract before the appraisal and inspection process goes forward. However, there are some places where signing the contract only comes after the formalities of inspection, appraisal and investigation. What this means, is the buyer and the seller are simply bound by a “verbal agreement” until a contract is signed.
In this interim period, the seller can’t make any agreement with another buyer but the home is still considered available and can be subject to a back-up offer.
This reserve offer will attempt to outmaneuver the first-place offer during the days and weeks when the first buyer is tying up loose ends. Should the buyer’s financing fall through or their current home fail to sell or some unresolvable issue arise with the seller, the buyer can withdraw from the contract.
Do some detective work
You can get your agent to ask the listing agent some questions to learn about the property’s status.
Did the buyer have the inspections done and what were the results? Was anything unexpected discovered? This will give a clearer picture of the existing deal and help you understand if there’s a possible opening here.
Assurance for the seller
Should the first offer fall through, a back-up offer on the property allows the seller to move straight to this reserve offer. Otherwise, the only other option would be to start the whole process over again and put the property back on the market.
Most homes are not marked as pending by the agent until all contingencies have been removed by the buyer and they are committed to purchasing the property.
This is the last step before closing and takes anywhere from a few days to a few weeks.
This doesn’t mean that a buyer can’t walk away but it would be very unlikely. Occasionally, a buyer will have some sort of an emergency and need to quit the contract. Given that a buyer would most likely lose the earnest money deposit, such a scenario is improbable.
It’s best to follow the progress of the sale without getting too excited. Deals can and do fall apart, buyers get cold feet, banks pull out. Your agent should make your interest known and if the deal collapses for any reason, you are there, ready to step up to the plate.