Contract vs. Pending vs. Contingent in Real Estate: What’s the Difference?

The phrases ‘under contract’, ‘pending’ and ‘contingent’ in real estate are often used interchangeably, but they have slightly different meanings in some areas. All of these terms signify that a home has an accepted offer and there is a fully executed contract in place between buyer and seller.

In some jurisdictions, pending status signifies that the deal is in a slightly more advanced stage compared to ‘in contract’ or ‘contingent.’ While a pending home is under contract, pending status may further indicate that any contract contingencies have been satisfied and the closing date is imminent. In other words, pending status refers to the period after the contract contingencies have been satisfied and prior to closing.

To add to the confusion, the term ‘contingent’ is often used in place of ‘under contract’ or ‘pending.’ Contingent simply means that there is a signed contract with a contingency, such as a financing contingency or a hubbard contingency.

However, use of the status terminology ‘contingent’ vs. ‘under contract’ is superfluous because the majority of properties which are under contract have a contingency (most commonly a mortgage contingency). Therefore, homes which are in contract are almost always contingent.

In short, ‘under contract’, ‘pending’ and ‘contingent’ usually mean the same thing, but in some regions the words may have slightly different implications. Therefore, we recommend inquiring on the exact status with the listing agent instead of generalizing based on the specific terminology used.

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What does an accepted offer mean in real estate?

An accepted offer in real estate means that buyer and seller have reached a preliminary agreement on the substantive terms of a proposed transaction such as price, consideration (amount of financing), contingencies and a closing date.

In jurisdictions where real estate attorneys are required (such as NYC), the next step after an accepted offer is the circulation of a deal sheet. This is typically sent out by the listing agent.

The terms ‘under contract’, ‘pending’ and ‘contingent’ in real estate are often used interchangeably, but they have slightly different meanings in some areas.

The deal sheet contains the proposed terms of the transaction as well as the contact information of the buyer, seller, brokers and lawyers

In jurisdictions where real estate lawyers are not required (such as Florida), offers are often submitted in the form of a partially signed contract. The buyer’s agent essentially fills out a standard contract with the offer terms, has the buyer sign it, and then submits it to the listing agent.

A seller who wishes to accept an offer simply countersigns the contract presented by the purchaser as part of the offer.

Therefore, accepted offer and ‘under contract’ often mean the same thing.

Keep in mind that an accepted offer is not legally binding unless there is a signed contract. In the absence of a fully executed purchase contract, another buyer can still submit an offer for consideration and a seller may continue to field offers from buyers.

What does under contract mean in real estate?

Under contract in real estate means that a buyer and seller have a fully-executed contract in place which formalizes the terms of the proposed transaction. Being under contract is often referred to as being in escrow, since most contracts stipulate that the buyer is required to make an earnest money contract deposit on or shortly after the date the contract is signed.

Most contracts are subject to one or more contingencies, such as an inspection contingency (often referred to as a cancellation period), financing contingency or a sale contingency. In the event a contingency is triggered, the transaction is canceled and the buyer is entitled to a refund of the contract deposit (i.e. escrow).

While a seller may not formally accept another offer while under contract, there is generally no prohibition against another buyer submitting an offer. However, buyers rarely submit offers on homes which are under contract since the seller can’t seriously consider it.

What does pending mean in real estate?

Pending status in real estate means that a property is under contract and all contingencies have been satisfied, meaning that a closing is imminent. However, ‘pending’ and ‘in contract’ are often used interchangeably in some jurisdictions such as NYC.

This means that the same property may show up as ‘in contract’ on some websites but ‘pending’ on other sites.

For example, it’s common for NYC listings to show up as ‘in contract’ on StreetEasy while appearing as ‘pending’ on Zillow.

Therefore, we advise against making assumptions about the status of a property based on whether the status is listed as pending or under contract.

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What does contingent mean in real estate?

A contingent property means that there is a signed contract in place between buyer and seller which is subject to one or more contingencies.

Common contingencies include an inspection contingency (often referred to as a cancellation period), financing contingency or a sale contingency.

Contingent is a rather superfluous term in our opinion because the majority of properties which are under contract have a contingency (most commonly a mortgage contingency). Therefore, homes which are in contract are almost always contingent on something.

What does in escrow mean in real estate?

The status ‘in escrow’ is effectively the same thing as ‘under contract’, ‘pending’ or ‘contingent.’ All of these terms signify that the buyer and seller have signed a contract and the buyer has made an earnest money deposit which is being held in escrow.

The transaction will close as soon as the contract contingencies are satisfied and both parties are ready to close, which occurs on or about the tentative closing date listed in the contract.

How can a pending or under contract sale fall through?

A pending or in contract transaction can fall through for several reasons including adverse inspection findings, a low appraisal, a lender denial, the triggering of a sale contingency or title issues.

Standard contracts in many jurisdictions such as Florida have an inspection period during which a buyer may cancel for any reason.

This cancellation period is commonly 15 days, however this is negotiable. Once the cancellation period elapses, a deal can still fall through since it may still be subject to other contingencies such as a financing contingency.

Can you still buy a home if it’s under contract?

Generally speaking you cannot buy a home if it’s already under contract since the seller is legally obligated to transact with the purchaser listed in the contract. However, a home which is under contract can become available again if a contingency triggers the cancellation of the contract.

A home which is under contract may also become available again if the buyer defaults under the contract and fails to close.

If you’re in love with a property which is under contract, it may still be a good idea to submit an offer so that the seller becomes acutely aware of your interest. However, don’t expect your offer to be accepted or for the seller to engage in a negotiation unless the original deal falls through.

Can you submit an offer on a pending home?

You can still submit an offer on a pending home, but it’s unlikely to be considered since the seller is contractually bound to the purchaser named in the contract and the closing is likely imminent.

If you missed out on your dream property, the best way to prevent it from happening again is to set up plenty of saved search alerts on various real estate websites. A good buyer’s agent can also keep you informed of suitable listings which are new to the market.

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Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided.

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