Difference between Under Contract and Pending Contract

The terms ‘Under contract’ and ‘Pending contract’ are often used interchangeably, but they represent different stages in the process. Understanding the distinction between the two can be crucial for both buyers and sellers. Under contract indicates that all the conditions of the sale, such as inspections and financing, have been agreed upon and the transaction is moving toward closing while a Pending contract typically refers to a property that has an accepted offer but hasn’t closed yet.

What is Under Contract?

A property that has the listing status ‘Under contract’ signifies that the seller has already accepted an offer from a buyer, and it can be classified as either contingent or non-contingent. The first status, contingent status, indicates that before the transaction can be completed, either the buyer, the seller, or both must satisfy the terms of the agreement, or there will be contingencies. The contract may still go through even if the requirements are not fully achieved (i.e., the contingencies are not met), maybe with the parties agreeing on re-negotiated terms. If not, the agreement is likely to collapse, and the property will be put back up for sale. When a property’s state is specified in a contract as non-contingent, that is the second situation. In this case, the buyer agrees to acquire the property at the agreed-upon price and in its existing state, with no special conditions included in their offer.

Key Features of Under Contract:

• Under contract indicates that although the seller has accepted an offer, certain requirements still needs to be met before closing.
• There is still a risk that the deal won’t go through at this point. A buyer has the option to back out of the deal during the due diligence period in most states, receiving a refund of their deposit.
• The seller may continue to promote the property and take backup bids while the agreement is in effect. They will occasionally still have showings.

What is Pending Contract?

Pending contract is a stage of the process where all of the contract’s contingencies—such as those pertaining to inspections, ordering appraisals, and securing financing—have been satisfied or waived. Usually, the pending phase comes before the contract closes. In order to complete the sale, both parties must complete the financing, prepare any necessary supplemental paperwork, and coordinate the transaction with all relevant parties (lenders, escrow agents, and title firms). The likelihood of the transaction falling through is much reduced, although it is still possible (for instance, if the buyer is unable to obtain financing).

Key Features of Pending Contract:

• Pending denotes that there is a contract on the house and that all requirements have been satisfied for the transaction to conclude. Backup bids are usually not accepted for pending properties.
• A sale is moving closer to completion when a listing enters the pending phase. Usually, all contingencies have been eliminated, leaving only a few minor tasks to complete before closing, such as completing the financing or ensuring a clear title.
• There is often no marketing, advertising, or property showings when a property is in pending status.

Difference between Under Contract and Pending Contract

Basis	Under Contract	Pending Contract
Meaning	An offer that has been accepted by the seller is termed as under contract.	Pending contract is one in which property is covered by a contract, and all conditions have either been met or removed.
Sale Status	The property is no longer promoted, it is still accept bids as long as it is listed as “active under contract.”	The property is not for sale under pending contracts.
Contract	In under contracts, contract is signed by both parties.	Contractual contingencies have either been met or waived under pending contracts.
Buyer’s Right	If all requirements are satisfied, the buyer has the contractual right to acquire the property.	When all requirements are satisfied, the buyer must acquire the property as stipulated in the contract.
Obligation for Both Parties	Both the parties observe the conditions of the agreement.	Both the parties get ready for the process of closure.
Contingencies	There can be awaiting complications (like finance and inspections).	Every possibility has been met or rejected.
Potential Risk	Buyers or sellers may violate the terms of the agreement by failing to get financing or fulfilling extra requirements.	There is still a chance of last-minute issues during the last preparations before closing, but the danger is reduced.
Market Availability	Property is often not accessible to other prospective purchasers unless otherwise specified.	The property is not offered to other purchasers.
Time Period	Following the seller’s acceptance of an offer, this phase occurs.	This phase starts once every eventuality has been handled.
Progress	Early phase of the sales cycle.	Closer to the transaction’s completion.

Conclusion

The primary distinction between postings that are under contract and those that are pending is the degree of closeness with which the buyer and seller have completed the transaction. A listing will change to under contract when a deal is originally approved and due diligence has to be finished. The listing will go pending when the deal gets closer to closing. It is advised to get in touch with the agent mentioned for the property if you are unclear about the listing’s status.

Difference Between Under Contract and Pending Contract- FAQs

What is the average length of time a property is under contract?

The duration of a property’s contractual period may differ depending on the terms and circumstances agreed upon, although it usually lasts for 30 days. This step may take longer if both parties agree, for instance, if the buyer requires more time to get financing or if the seller has to do repairs.

Is it possible for a property to have a contract and still take backup offers?

It is true that even when a property is under contract, the owner may still consider backup bids. If the main contract falls through, interested purchasers might submit an offer to be evaluated as a backup plan.

When purchasing a house, is it possible for the buyer to back out of the agreement?

When a property is under contract, a buyer typically has the option to back out if certain conditions, including those for financing or inspection, aren’t met. This could give them the chance to withdraw without going against the terms of the agreement and get their earnest money deposit refunded.

Can an agreed-upon sale fail?

A pending house sale may not go through, even though it is uncommon. This might happen if the present buyer can’t get financing or sell their existing property. If a last-minute issue arises that deters the sale, the agreement will be canceled and the home will be relisted.

What is a contingent sale?

A “contingent” residence is one that is contractually bound. Contingent refers to the situation when both parties are waiting on the fulfillment of every single criterion stated by the buyer.

Note: The information provided is sourced from various websites and collected data; if discrepancies are identified, kindly reach out to us through comments for prompt correction.