07.31.2023 PropStream
When browsing for your next investment property, you’ve likely come across real estate listings marked as “Contingent” or “Pending.” Perhaps you simply assume the homes are no longer available and move on to the next property. But in doing so, you may miss out on valuable opportunities to grow your investment portfolio.
For example, a 2021 National Association of Realtors survey found that roughly 5% of contingent or pending contracts are terminated. When those homes are relisted, investors can make a competitive offer of their own.
But sometimes, investors don’t need to wait for a contract to fall through. Depending on a listing’s exact contingent or pending status, the seller may be open to additional offers. The key is understanding what each status means. In this article, you’ll learn the most critical distinctions between a contingent and a pending listing and their various subcategories.
Contingent vs. Pending: Similarities and Differences
Contingent and pending listings are similar because they both mean the seller has accepted an offer on their home. That’s why there’s often some overlap between the two descriptions.
That said, pending status is usually more definitive than a contingent status and can mean the closing is further along in the process. But that’s not the only difference between the two. There are other vital nuances to consider, especially if you’re wondering whether or not you can still make an offer.
So how do you know when a contingent or pending home is still available? Let's look at contingent vs. pending and each of their specific subcategories more closely.
What Does Contingent Mean on a Real Estate Listing?
When a real estate listing is labeled “Contingent,” the seller has accepted a buyer’s offer with contingencies. In other words, the buyer or seller (or both) must meet specific qualifications for the sale to go through.
There are various types of contingencies a contract can include. Here are some of the most common ones:
Appraisal contingency: The buyer can back out without penalty if the appraisal comes in below the agreed-upon sale price. Appraisal issues make up 10% of failed home sale contracts, according to the NAR survey mentioned above.
Home sale contingency: If the buyer can’t sell their current home within a certain period, they or the seller can cancel the contract.
Financing contingency: The buyer can walk away if they can’t successfully obtain a mortgage loan to buy the property. Financing problems account for 8% of failed contracts.
Home inspection contingency: If a property inspection reveals significant issues, the buyer can back out of the contract. Around 9% of failed contracts result from home inspection and environmental issues.
Title contingency: If unresolved ownership problems such as liens or judgments exist, the buyer can retract their offer. Title and deed issues are responsible for 3% of failed contracts in a home sale.
Different Types of Contingent Statuses
Just because a home is listed as “Contingent” doesn’t necessarily mean it’s completely unavailable. The seller may still be open to other bids if their current contract falls through.
How do you know if a contingent listing is still available? You can always contact the listing agent for clarification, but sometimes the exact status is enough to answer the question. Below are some of the most common contingent statuses.
Contingent: No Show
As the name implies, an owner with a home listed as “Contingent: No Show” has already accepted an offer and is no longer showing the house to prospective buyers or accepting bids. This status indicates the sale will likely go through despite the contingencies in the contract.
Contingent: Continue to Show
On the other hand, a “Contingent: Continue to Show” home is the seller’s way of inviting additional bids even though they’ve already accepted an offer. In this case, they may accept your bid as a backup if their current contract falls through.
Contingent: Kick Out
In this case, the seller has accepted a bid contingent on the buyer selling their current home. In the meantime, the seller can continue advertising the property and even accept another offer. If the seller receives a more attractive bid, they may give the first buyer a certain amount of time to remove the contingency from the contract. After that, the seller can “kick out” the first buyer and accept the second offer.
Contingent Probate
In real estate, “Contingent Probate” means that the home is for sale because the owner died and the seller (usually the owner’s beneficiary) has accepted a contingent offer.
Short Sale Contingent
With a short sale, the owner sells the home for less than the debt they have on the property. Contrary to its name, this type of sale can take a while to process and close because the seller’s lender has to approve it first. That’s why you may see homes listed as “Short Sale Contingent” for months at a time. It simply means that even though the owner has accepted a contingent offer, the short sale hasn’t officially closed yet.
What Does Pending Mean in Real Estate?
When a home listing moves from “Active” to “Pending,” the seller has accepted a bid, signed the contract, and sees no major reason the sale won’t close. A listing is marked as “Pending” from the time the seller accepts an offer until the official closing. This process takes an average of 50 days, according to a September 2021 Origination Insight Report by Ellie Mae.
Pending status is stronger than contingent status, so sellers are less likely to accept additional bids. Keep in mind, though, that homes that go back on the market after a pending sale fails may present a good opportunity for real estate investors.
When a contract falls through, the owner may become more anxious to sell, giving you more bargaining power as a buyer. Because of that, it’s a good idea to note pending homes to see if they become available again soon.
Different Types of Pending Statuses
Whether or not you can still make an offer on a pending listing depends on its specific status. Below are some of the most common pending subcategories on the MLS.
Pending: Do Not Show
This type of listing status means the seller is no longer accepting bids. You can consider the home sold.
Pending: Continue to Show
In this case, the seller has accepted an offer, and the buyer has met the contingencies. Typically, though, there’s still some sort of kick-out clause in place, allowing the seller to accept another offer if a better one comes along.
Pending: Short Sale
This status usually indicates that the short sale is far along in the process and likely to close. Typically, sellers aren’t taking additional bids at this point.
Pending: Taking Backups
When a home is listed as “Pending: Taking Backups,” the seller is interested in backup offers just in case their current contract falls through. If you’re interested, it’s a good idea to talk to the listing agent to find out how to make your bid as attractive as possible.
Pending: More Than 4 Months
You’ll often see this status when a home has been listed as “Pending” for longer than four months. Sometimes this is because the sale takes a long time to close, but it could also happen if the real estate agent forgets to update the listing as “Sold.”
Use an Accurate Data Tool to See Which Homes Are Contingent or Pending
Knowing whether a home is active, contingent, or pending (and what specific type of contingent or pending) can help you determine which homes to bid on as a real estate investor. That’s why it’s essential to have access to accurate, up-to-date real estate listing data.
With PropStream, you can easily filter a search using pending or contingent listing statuses as a guide.
Want to see this data in action without spending a dime? Sign up for a PropStream free 7-day trial and enjoy 50 leads on us!
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