When it comes to buying or selling a home, there are certain real estate contract terms that can be confusing for many people. Understanding these real estate contract terms can help you navigate the buying or selling process with confidence. Make sure to speak with your real estate agent and legal counsel to ensure that you fully understand these terms and how they apply to your specific situation. In this article, we will take a closer look at three key real estate contract terms: Contingent, Under Contract, and Pending.
What Does “Under Contract” Mean?
When a buyer submits an offer to purchase a property, and the seller accepts that offer, the property is considered “under contract.” This means that both parties have agreed to proceed with the transaction, and it will proceed once any contingencies are met or waived.
It's important to note that even though a property is under contract, the deal can still fall through due to unforeseen circumstances. However, in some cases, you may still be able to make an offer on a property listed as under contract.
What Does “Contingent” Mean?
Once a property is under contract, but some contingencies need to be met, it is considered “contingent.” A contingency is anything that needs to happen before the deal can actually take place. This could be related to financing, inspection reports, or other factors that need to be addressed before the deal can proceed.
If you're selling your home, setting contingencies protects you if something comes up with either buying another property or finding an acceptable offer from someone who wants to buy yours. Setting these conditions makes sure everything goes as planned before entering escrow.
What Does “Pending” Mean?
When both the buyer and seller have agreed to each other's terms, and all contingencies have been met, the property is marked as “pending” and taken off the market. While there is still a chance that a property with a pending status can return to the market due to an inspection, appraisal, or financing issue, the chances are lower at this stage.
In addition to the three key real estate contract terms (under contract, contingent, and pending), there are several other common real estate status codes and listing terms that you may come across when browsing home listings or working with a real estate agent. Some of these terms include:
When a property is marked as “active,” it means that the listing is currently available for sale and there is no accepted offer on it yet. If you are a homebuyer, this is a great opportunity to view the property and make an offer. As a seller, you can use this status to attract potential buyers to your property and generate interest in your listing.
A “coming soon” status means that the property is not yet available for showings, but will be soon. This is a marketing tool used by real estate agents to generate interest and build anticipation for a new listing. This status can be useful for sellers who want to create buzz around their property before it hits the market. As a buyer, keep an eye out for properties marked as “coming soon” so you can be one of the first to see the home when it becomes available.
A property that is marked as “withdrawn” means that it was previously listed for sale, but the seller has decided to remove it from the market temporarily. This could be due to a number of reasons, such as the seller deciding to wait until a more favorable market or personal circumstances changing. If you are interested in a withdrawn property, it's worth checking with the seller or their agent to see if it will be relisted in the future.
A property that is marked as “expired” means that the listing agreement between the seller and their agent has ended, and the property is no longer listed for sale. This could be because the property did not sell during the listing period, or the seller chose not to relist the property after the agreement expired. As a seller, if your property has expired, it may be worth considering relisting with a new agent or reevaluating your pricing strategy.
When a property is marked as “canceled,” it means that the seller and their agent have decided to cancel the listing agreement before it expired. This could be due to a number of reasons, such as the seller deciding to take the property off the market, or the agent and seller mutually agree to part ways. If you are a buyer interested in a canceled property, it's worth checking with the seller or their agent to see if it will be relisted in the future.
Active Under Contract:
A property marked as “active under contract” means that the property is under contract, but the seller is still accepting backup offers in case the current deal falls through. This is a common status in competitive real estate markets, where multiple buyers may be interested in the same property. If you are a buyer interested in a property marked as “active under contract,” it's worth considering submitting a backup offer in case the first offer falls through.
Contingent No Kick-Out:
A “contingent no kick-out” status means that the buyer has submitted an offer with contingencies, but the seller cannot accept backup offers. This means that the buyer has a certain amount of time to meet the contingencies, such as obtaining financing or completing a home inspection before the sale can be finalized.
A “contingent kick-out” status means that the buyer has submitted an offer with contingencies, and the seller can accept backup offers. This means that the buyer has a certain amount of time to meet the contingencies, but if a backup offer is submitted and the buyer cannot meet the contingencies, the seller has the option to accept the backup offer instead.
A property marked as “hold” means that the property is temporarily off the market, but the seller intends to relist it at a later date. This status is typically used when a seller wants to take the property off the market temporarily but does not want to cancel the listing agreement. If you are interested in a property marked as “hold,” it's worth keeping an eye on it to see when it becomes available again. This status can also be used if the seller wants to make improvements or renovations to the property before relisting it for sale.
Understanding these real estate status codes and listing terms is important for both buyers and sellers. For buyers, it can help you know which properties are available and which ones may be coming soon. It can also help you understand the likelihood of your offer being accepted, depending on the contingencies and backup offer options. For sellers, knowing these terms can help you market your property effectively and make informed decisions about relisting or canceling your listing.
If you are working with a real estate agent, they can help guide you through these terms and explain how they apply to your specific situation. Don't be afraid to ask questions or seek clarification if you are unsure about a particular status code or listing term. By working together, you can navigate the real estate market with confidence and make informed decisions about buying or selling a home.