Real estate Multiple Listing Services (MLSs) can be valuable resources for sellers and buyers alike. Unfortunately, they can also be a little intimidating, especially for first-timers. MLS technical terms are especially confusing, particularly listing states. Most people expect to find “For Sale” against every listing. However, that’s not always the case. While the majority of listings are listed “For Sale,” others are usually listed as “Cancelled,” “Closed,” “Expired,” or “Withdrawn.”
The two most confusing statuses are “Contingent” and “Pending” listings. What’s the difference between the two?
The difference is in the state of the contingencies. Are the contingencies outstanding, or have they been resolved?
Contingent home listings are properties for which the seller has accepted an offer. However, the agreement between the seller and buyer isn’t final until the parties thrash out specific issues. If all goes well, the contingent deal will advance and may eventually be completed. However, the contract may also fail if the outstanding contingencies aren’t resolved.
Contingent listings are active listings. Indeed, sometimes you’ll find them listed as “Active Contingent.”
Pending listings are also listings for which the seller has accepted an offer. However, the main difference from contingent listings is that for pending properties, all contingencies have been satisfactorily addressed or waived. The only thing left is legal work.
Pending listings are no longer active listings. However, the properties typically remain in a “Pending” state until the legal work is completed.
More About “Contingent” Listings
Real estate properties up for sale can be listed as “contingent” for different reasons. Sometimes it’s because the buyer cannot buy the property until they sell a different property they already own. Other times it’s a complex title issue that may drag the sale for weeks.
It’s critical that you know the main contingencies as they can protect you from losing your money. Contingencies can also serve as leverage to help you get a better deal when buying. The five main contingencies in real estate are;
- Financial: This often happens when the buyer cannot readily get the home loan or mortgage they anticipated.
- Appraisal: Appraisal contingencies allow the buyer to back out of the deal if the home appraises for less than the sale price.
- Inspection: Inspection contingencies allow the buyer to walk away if the seller cannot make certain repairs or provide buyer compensation.
- Title: Title contingencies protect the buyer if a title search reveals doubts about the ownership of the property.
- Kick-out: Kick-out contingencies mean that buyer needs to sell their current home to make an offer for the new property.
Another common contingency is “first-right,” which means that the seller has a prior agreement with a specific buyer who has a first-right to the property. If the “first-right” buyer matches other bids, the property is theirs. However, the seller can back out if the first-right buyer can’t match the other bids.
More About “Pending” Listings
“Pending” listings are less complicated. For one, you know that the house is no longer an active listing. In fact, sometimes, you may not even be allowed to bid on the property.
Nevertheless, it’s still beneficial to know the different reasons a listing would be “pending,” as this can help you navigate MLS listings faster. You may also find a few worthwhile deals among pending listings if you have a savvy agent. An MLS property can be listed as pending for three main reasons;
- The seller is taking backups: Pending listings marked as “Taking Backup” means that the seller has an offer for the home but isn’t confident about the deal going through. Therefore, they’re accepting additional offers in case the initial deal falls through.
- There is some release: Pending homes marked as “Release/Continue to Show” mean that an offer has been accepted for the property and most contingencies resolved. However, there’s still some release or kick-out clause for one of the parties. Thus, the seller is still showing the property and accepting offers just in case.
- It’s been over four months: If the pending property is marked “Over 4 Months,” it means it’s been in the sale process for over four months. This can happen for different reasons, such as delayed construction and issues in negotiations. You may or may not be allowed to make an offer for deals pending “Over 4 Months.”
What to Do
The key takeaway here is that, although you shouldn’t get your hopes up, you can still make an offer for most contingent and pending property listings. If one catches your eye, you’re at liberty to get in touch with the seller to find out if you can make a backup offer.
You never know. Contingent and pending real estate deals fall through all the time. That backup offer may just get you your dream home!
About Transition Realty
Transition Realty owner Steve Lehmeyer specializes in helping people manage real estate transactions in the Minneapolis/St. Paul area. His experience in the Minnesota real estate market spans 20 years. Steve and his team work with clients to buy & sell single-family homes, townhouses, condos, lake homes, and investment property. Download a free home search app for your smartphone or search the MLS at TransitionRealty.com.