If you're diving into the world of real estate, you may have come across terms like "Pending" or "Active Under Contract" when looking at property listings. But what do these terms really mean? Both terms indicate that a home is no longer available for sale in the traditional sense, but they come with some important differences. Whether you're working with a trusted realtor like Silvia Mozer or exploring listings on your own, understanding these statuses is essential. Let's break down these two statuses to clarify their meaning and how they affect buyers and sellers.
Understanding the Statuses: Active Under Contract vs. Pending
1. Active Under Contract
When a property is labeled as "Active Under Contract," it indicates that the seller has accepted an offer from a buyer, but the transaction isn't complete yet. At this stage, the seller might still entertain other offers. When a property is marked as "Pending" or "Active Under Contract," it means the home has entered into an agreement, but the seller is still keeping the listing active for various reasons. The property remains visible to other buyers, and if the current deal falls through for any reason, backup offers can be considered.
This status is often used when there are certain risks or contingencies involved in the deal that might cause the sale to fail before closing. Here are the key factors that typically make an Active Under Contract status appropriate:
1.1 Inspection Period
One important stage in many real estate deals is the home inspection period. During this time, the buyer has the opportunity to have the property inspected for any issues, from structural problems to plumbing or electrical concerns. If the inspection reveals serious issues, the buyer may choose to back out of the deal or request repairs, which could lead to the contract being canceled. An Active Under Contract status allows the seller to keep showing the property during the inspection period. If the current deal falls apart due to inspection issues, the seller is still able to entertain backup offers without losing valuable time or market exposure.
1.2 Financing Contingency
A common reason for deals to fall through is the buyer’s financing. If the buyer encounters difficulties securing financing, the contract could be canceled. This often happens during the mortgage approval process, where the lender may decide that the buyer is too high a risk, or the home does not appraise for the necessary value. With an Active Under Contract status, the seller is aware that financing could potentially be an issue. By leaving the property listed, they have the opportunity to accept backup offers in case the buyer’s financing falls through.
1.3 Other Contingencies (e.g., Sale of Another Property)
In many cases, a buyer’s offer is contingent on certain conditions being met, such as the sale of their current home. If the buyer is unable to sell their property within a specified timeframe, the deal could collapse. In these instances, the Active Under Contract status allows the seller to keep the property on the market and accept backup offers. The seller might prefer to have backup offers in place as a safety net, knowing that the deal could fall through if the buyer's sale doesn't go as planned.
1.4 The Seller’s Desire for Security
The Active Under Contract status offers the seller a safety net. Even though a contract has been accepted, the seller still has the option to secure another offer should something go wrong with the current deal. This is particularly useful in situations where the seller is not entirely confident that all contingencies will be met or if the home is in a highly competitive market. By keeping the listing "active," the seller minimizes the risk of the property being off the market for too long and potentially losing other interested buyers.
1.5 How It Benefits the Seller
Market Visibility: The property remains active in the market, ensuring that potential buyers are aware that the home is still in play, even if there is an existing offer.
Backup Offers: Should the current contract fall through, the seller can quickly switch to one of the backup offers, reducing the chance of the property sitting vacant for an extended period.
Time Efficiency: It saves time by keeping the home visible to buyers, especially in markets where demand is high. This allows the seller to avoid delays in getting the home sold in the event the initial offer falls apart.
1.6 How It Benefits the Buyer
For buyers, seeing that a property is marked as Active Under Contract means that the seller is still open to other offers. While it may seem like a long shot, it's possible to make a backup offer in case the current deal fails. If a buyer is highly interested in the property, submitting a backup offer might allow them to step in quickly if the first deal doesn't close. Additionally, Active Under Contract status allows buyers to continue looking at the property until the contingencies of the original deal are met.
2. Pending
When a property is marked as Pending, it signifies that the seller has accepted an offer, and the property is no longer available for showing. At this stage, the transaction is in the final steps, but it is not yet closed. The property is essentially off the market, and the seller will not be entertaining backup offers or continuing showings.
The Pending status is an important indicator for both buyers and sellers that the deal is nearing completion, but there are still a few necessary steps before the transaction is finalized. Here’s a more in-depth look at what this status means:
2.1 All Contingencies Are Met or in Progress
The key difference between Pending and Active Under Contract is that when a property is listed as Pending, the major contingencies of the sale have either been resolved or are actively in progress. Contingencies are conditions that must be met for the deal to proceed, and they can include the following:
Home Inspection: If the buyer’s inspection has already been completed and any issues found have been resolved or negotiated, the deal moves closer to being finalized.
Appraisal: Lenders usually require an appraisal to confirm that the property's value is at least equal to or greater than the agreed-upon purchase price. If the appraisal has been conducted and valued the property appropriately, the deal can continue moving forward.
Financing: The buyer must secure financing to complete the purchase. Once the buyer’s lender has approved the loan and the financing has been confirmed, the deal proceeds to the final stages.
Other Contingencies: Sometimes, there are additional contingencies, such as the buyer needing to sell their current home before closing. These must be met or waived before the deal can be considered fully Pending.
Once these contingencies are either met or in progress, and there are no significant issues to resolve, the seller can move the property into Pending status. This means that the deal is essentially moving toward the closing table, barring any unforeseen complications.
2.2 No More Showings or Backup Offers
A Pending status means that the seller no longer wants to show the property or accept any backup offers. This is an important distinction from the Active Under Contract status, where the seller is still willing to consider other potential offers in case the current deal falls through. Once a property is Pending, the seller has effectively made the decision to stop marketing the home and is preparing to close the deal with the current buyer.
From a buyer’s perspective, if a property is listed as Pending, it is no longer available for purchase unless something goes wrong with the transaction. Buyers who are still interested in the property can check back after the closing to see if it has been sold, but the property is off the market for now.
2.3 What Happens During the Pending Phase
During the Pending phase, the following steps generally take place before the deal reaches the closing table:
Finalizing Loan Approval: The buyer’s lender will finalize the loan approval process, ensuring all documentation is complete and that funds are available for closing.
Title Search: A title company will perform a search to verify that the title is clear, ensuring there are no unresolved issues like liens or ownership conflicts. If any issues are found, they must be resolved before closing.
Final Walkthrough: The buyer typically conducts a final walkthrough of the property to ensure that it is in the same condition as when they made their offer. If the buyer finds any issues during this walkthrough, it could delay or derail the closing.
Closing Preparations: The seller and buyer will work with their respective agents and attorneys (if applicable) to finalize all necessary paperwork, including the closing documents and transfer of ownership.
2.4 How Pending Status Benefits Sellers
Reduced Market Exposure: Once a property is Pending, the seller can stop holding showings and focusing on marketing the home, as they’ve already secured an offer and are in the process of completing the transaction.
Clear Path to Closing: The seller can be confident that the deal is moving forward as long as no significant issues arise. This gives the seller a clear timeline for when the property will officially close and when they can move forward with their next steps, whether that’s moving out, purchasing another property, or handling other personal matters.
2.5 How Pending Status Benefits Buyers
For buyers, Pending status means that the property is no longer actively available for purchase. It is a signal that they should check in with their agent to see if there is any possibility of the deal falling through. While it is unlikely, deals do sometimes fall apart during the pending phase due to issues with financing, inspections, or other contingencies, leaving the property open to backup offers.
If a buyer is deeply interested in a Pending property, they can ask their agent to keep in touch with the listing agent to monitor the status and alert them if the deal falls through. However, it’s important for buyers to keep looking at other properties as well, as the chances of the deal falling through are relatively low once a property is Pending.
2.6 Conclusion: The Final Stage Before Closing
The Pending status indicates that the seller and buyer are in the final stages of the transaction process. All major contingencies have been dealt with, and the parties are now awaiting the completion of any final steps required to close the deal. Unless something unexpected happens, the sale is expected to close soon. For both sellers and buyers, this stage represents the near-certainty that the property will be sold, and the transaction will be finalized.
Pending status is a critical indicator that the transaction is progressing smoothly toward the closing phase, and for sellers, it offers peace of mind that the deal is close to completion.
Key Differences Between Active Under Contract and Pending
The main difference between Active Under Contract and Pending is the level of certainty and the seller’s willingness to continue showing the property.
Active Under Contract: The seller is still open to backup offers, and the property remains available for showing in case the current deal falls through.
Pending: The seller is no longer accepting showings, and the transaction is much closer to closing, with all contingencies likely to be satisfied.
Both terms signify that the property is under contract, but Active Under Contract offers buyers a chance to submit a backup offer, while Pending indicates the deal is almost complete, and no more offers are being considered.
What These Statuses Mean for Buyers
For buyers, understanding these statuses can help you decide your next steps. If you come across a property listed as Active Under Contract, there may still be an opportunity to submit an offer in case the current buyer backs out during the inspection or financing phase. However, if a home is Pending, it’s likely too late to make an offer, as the seller has already committed to a buyer and is just waiting for the final steps to close the sale.
What These Statuses Mean for Sellers
For sellers, both Active Under Contract and Pending statuses help manage expectations and communicate with other potential buyers and real estate professionals. If you are still open to backup offers, marking your listing as Active Under Contract keeps the property visible to interested buyers. If you’re confident that the deal will close without issue, marking the listing as Pending signals to others that no more offers will be accepted, and the transaction is near completion.
Common Reasons a Pending or Active Under Contract Deal May Fall Through
While many deals close successfully, there are common reasons why a pending sale or an active under contract deal might fall apart:
Financing Issues: The buyer may fail to secure the necessary loan, preventing the sale from going through.
Inspection Problems: Significant problems uncovered during the home inspection might cause the buyer to back out.
Appraisal Issues: If the home’s appraisal comes in lower than the agreed-upon sale price, it can cause complications in financing.
Contingency Failures: If the buyer’s sale is contingent on selling their current home, delays or issues with that sale could cause the deal to fall apart.
How a Skilled Realtor Can Help
Navigating the complexities of pending or active under contract sales requires a knowledgeable real estate professional. Whether you're a buyer or a seller, having a trusted agent can help you understand these statuses and how to take the next best step.
Silvia Mozer of RE/MAX Elite is one of Melbourne, Florida's top realtors, specializing in helping clients navigate these stages of real estate. With her extensive knowledge of the local market, Silvia provides expert guidance to ensure smooth transactions whether you’re buying or selling a home. She’s proficient in handling the intricacies of contracts, contingencies, and negotiations, ensuring that your best interests are always the top priority.
Take Action Today
If you’re seeking expert advice on navigating the real estate market or need assistance with buying or selling a home, contact Silvia Mozer:
Visit: silviamozer.com to explore her listings and read insightful blogs.
Call: Reach Silvia directly at (321) 720-2038.
Meet: Stop by her office at 6022 Farcenda Place, Suite 101, Melbourne, FL 32940.
Follow: Connect with Silvia on social media (Facebook, Instagram, Linkedin) for real estate tips and updates!
