Real Estate Pending Vs. Contingent: MLS Lingo Explained for Sellers

With nearly 95% of home buyers using the Internet to search for a new home — and 74% of buyers looking to buy using a mobile phone — your home’s future owner might be just a few keystrokes or taps away. That’s why it’s important for your real estate agent to keep your property’s status up to date, both in the multiple listing service (MLS) that agents cooperatively use, as well as in online marketplaces, which pull data from the MLS.

When your home first hits the market, your listing agent will note that it’s “Active,” as in ready and available for showings — but there’s a lot of ground to cover before your agent lists the status as “Closed,” when you have a done deal and you’re ready to hand over the keys.

Let’s sort through how potential buyers and their agents view statuses such as “real estate pending” vs. “contingent,” so you can present your home accurately and still meet your selling goals.

Contingent or pending, you’re under contract!

Whether your home is “contingent” or “pending,” you have an interested buyer and a ratified contract — meaning one to which all parties agree.

In a nutshell, that means that all parties accept the contract’s terms, making it legally binding. However, there’s still some wiggle room as far as conditions that must be met. Enter the difference between “contingent” and “pending.”

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Contingent: The deal hinges on certain conditions

“Contingent” usually means that you, the seller, have accepted an offer, but the offer is contingent on fulfilling certain criteria. Now, keep in mind that there are approximately 600 MLSs across the United States, all which have slightly varying rules on listing statuses. In lieu of the label “Contingent,” you may also see “Active Contingent” and “Active Under Contract.”

These labels essentially mean that although a listing is under contract with a buyer, a lot still must come together for this deal to close. In the meantime, with a “Contingent” status, the seller is typically allowed to continue showing the home and accept backup offers in the event something goes awry.

So what are the contract stipulations that put a listing into that “Contingent” stage, and how common is it for a property to hang in closing limbo?

According to the National Association of Realtors’ (NAR) May 2020 Confidence Index Survey, 76% of offers included contingencies. Here are 5 common contingencies in real estate contracts:

  • Inspection contingency
    This is the most prevalent contingency, according to the NAR, involving 59% of contract contingencies in May 2020. A buyer and their lender understandably want a home inspection to make sure they’re not investing in a lemon. Buyers also can use the findings of an inspection to negotiate for repairs or credits. Home inspection or environmental issues delayed 12% of contracts in June 2020.
  • Financing contingency
    Sometimes called a mortgage contingency, this specifies that the deal hinges on the buyer securing their loan. Considering that 86% of buyers financed their home purchase in 2019, this contingency also is fairly standard, with obtaining financing accounting for 47% of contract contingencies in May 2020. Financing proves to be the biggest snag in a real estate transaction, with issues related to financing delaying 33% of contracts in June 2020.
  • Appraisal contingency
    To ensure they aren’t lending more than a property’s fair market value, lenders typically require a home appraisal. About 46% of recent contract contingencies involved an appraisal contingency stating that a home must appraise for a value that’s equal or higher than the buyer’s offer. Appraisal issues delayed 18% of contracts in June 2020.
  • Title contingency
    Before closing, a title company pulls public records and other details to guarantee that no one else can stake a claim on the property you’re trying to sell. “Having clear title,” meaning no “clouds,” debts, or other encumbrances, was a condition of 12% of recent contract contingencies; about 10% of delayed contracts in June 2020 had titling or deed issues.
  • Home sale contingency
    While not as frequent, this contingency can arise when a buyer must sell their current home before buying yours: a condition behind 6% of recent contract contingencies.

Pending: Your deal is almost done

If a property is “pending,” it’s either because there were no contingencies ever inked into the contract, or that all the contingencies have been satisfied, says real estate agent Jim Griffin, a single-family home expert serving Greeneville and Johnson City, Tennessee.

In other words, “pending” is the next step after “contingent.” An offer has been accepted, and the sale “is expected to close.”

Source: (1000Photography / Shutterstock)

What other MLS statuses do agents use?

In addition to “Active,” “Contingent,” and “Pending,” other statuses you may notice include:

  • “Coming Soon”—This means there is a valid contract or listing agreement to list the property between the seller and the listing broker or listing agent; the listing is in the MLS but not active on the market just yet, perhaps to give the seller time to finish certain repairs while still marketing the property. Some MLSs limit “coming soon” status to 21 days unless the property is new construction or undergoing major renovations without occupancy.
  • “Closed”—Consider these listings sold.
  • “Expired”—The listing is not on the market because the listing contract has expired.
  • “Canceled”—Another reason the listing is not on the market; the listing contract has been terminated in writing.
  • “Withdrawn”—This can indicate a temporary situation where the seller has requested no showings or offers. A valid listing contract exists and the listing remains in the MLS, but it’s not active at the moment.

In addition to these statuses, agents can leave public comments, which syndicate to all viewers, or private comments for other agents about anything relevant to the seller’s situation, Griffin says.

Agents also indicate in the MLS what he called “checkbox items,” or coded features, such as if a property has hardwood floors, if it’s a condo, or if it’s a foreclosure or a short sale.

How does a listing status get changed?

Guidelines from the NAR state that any change to a listing must be made in a timely manner. Most MLSs dictate that the representing agent update the status of a listing within a day or two, with a grace period for weekends and holidays.

For Griffin’s market, if a property goes under contract, it generally needs to be marked “contingent” within 24 hours,” he says. “I can do that from my phone.”

A door outside a pending real estate listing.
Source: (Annie Spratt / Unsplash)

Pending vs. contingent: Is one better than the other?

Unless your agent has noted otherwise in the MLS, “contingent” means that as a seller, you’re still open to additional offers. “If a property’s ‘pending,’ you don’t want to go out and look at it as a buyer,” Griffin says. The current parties have satisfied all contingencies, so “there’s no sense in [the seller] taking a backup offer.”

Why have a backup offer on hand? Quite simply, life happens. A real estate contract has anywhere from a 1%-10% chance of falling through. (Terminated contracts represented only 2% to 5% of deals prior to the impact of the COVID-19 pandemic, which caused an uptick to about 9%, statistics show.)

You reduce your stress by working with an agent who is proactive by thinking of “just in case” scenarios, such as issues with the home inspection or their financing falling apart because of a change in income.

“If you’re selling your home and the buyer loses their job or something happens that disrupts the process of that transaction, that doesn’t mean that your goals change or that your family’s goals change,” Griffin says.

“You can’t help if something happens to that buyer, but if you have a backup offer because your agent was proactive and fought for you, then you have the peace of mind: ‘OK, we don’t have to start all over again.’”

Fielding offers while your property is “contingent” also allows you to remain competitive. Griffin recalled one instance where a sale was contingent upon the buyer selling his current home in Daytona Beach, Florida. Although the Florida house went under contract, something prohibited that buyer from closing the sale, which meant that Griffin’s client in Tennessee couldn’t close.

However, because the Tennessee home was listed as “contingent,” the agent was able to get a backup offer for $15,000 more than what the Florida buyer had offered. “The backup offer came in knowing there was another offer on the table, and they wanted to make their offer very advantageous,” he said.

Understanding the differences between “contingent” and “pending” gives you more insight into why some real estate agents liken transactions to dominoes, one hinging on another to fall into place. Consider each status another step in the process of selling your home and a day when you truly can celebrate your success.

Header Image Source: (Kaspars Grinvalds / Shutterstock)

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