Contingent vs. Pending Offer: Know the Difference
When you’re in the process of buying or selling a home, there are several terms you’ll encounter. Two of the most commonly used terms are “contingent offer” and “pending offer.” Both these terms sound similar, but they are different, and it’s vital for buyers and sellers to understand the difference.
What is a Contingent Offer?
A contingent offer is an offer on a house that is made with conditions, which must be met before the deal is finalized. Typically, a contingent offer is made when the buyer needs an escape clause or an out in case something goes wrong, such as not getting approved for a mortgage, a failed home inspection, or the seller must first purchase another home.
When an offer is contingent, the seller is still allowed to accept other offers since the deal is not yet finalized. If the conditions are not met, the buyer can back out of the deal without penalty or losing their deposit.
What is a Pending Offer?
A pending offer is an offer made by a buyer after all of the contingencies have been met, and the deal has been approved with no objections. A property with a pending offer means that a contract has been signed by both the buyer and seller, and the transaction is proceeding toward closing.
In other words, a pending offer means that the sale is almost a done deal. However, it’s important to note that pending offers can have stipulations that require the buyer to do something before the deal is closed, such as finalizing the mortgage and paying for home insurance.
What’s the Difference between Contingent and Pending Offer?
The key difference between contingent and pending offers is the conditions that must be met for the deal to proceed. A contingent offer means that certain conditions must be met by the buyer, otherwise, the deal will not proceed. Meanwhile, a pending offer means that all contingencies have been met, and the transaction is waiting on final approval.
Another critical difference is the implications for the seller. When a seller accepts a contingent offer, they are still allowed to consider other offers, as the deal is not yet finalized. Meanwhile, when a seller accepts a pending offer, the deal is almost finalized, and the buyer will be closing on the property soon.
Final Thoughts
Understanding the differences between contingent and pending offers can help you navigate the home buying or selling process better. If you’re a buyer, you should be prepared to make a contingent offer to have an out in case something goes wrong. Meanwhile, a seller should consider whether they need to accept a contingent offer or wait for pending offers to come in. In both cases, the goal is to ensure that the deal goes through as smoothly and seamlessly as possible.
Table difference between contingent and pending offer
| Contingent Offer | Pending Offer |
|---|---|
| A contingent offer is an offer that is placed on a property that has certain conditions that must be met before the sale can be finalized. | A pending offer is an offer that has been accepted, but the sale has not yet been finalized. |
| The conditions can include a home inspection, the buyer securing financing, or the sale of the buyer’s current home. | Once the pending offer is accepted, the buyer and seller enter into a purchase agreement and work through any contingencies until the sale is finalized. |
| Contingent offers can fall through if the conditions are not met, and the sale will not be finalized. | Pending offers can still fall through if any contingencies are not met, but the sale is closer to being finalized than a contingent offer. |