Learning More About Real Estate: Contingent, Pending & Under Contract
When you are looking to buy a home in Montecito, you may see terms next to listed houses such as "pending" or "contingent". What do these mean? Let's explore them further.
The Montecito real estate market could be frustrating for buyers. Currently, inventory is at an all-time low, and competition for homes is still very high. Even rises in mortgage rates haven't slowed buyer demand much. So when you're shopping for a home, seeing that it is "pending" or "contingent" might frustrate you. But it might not be the end of your journey to your new home.
What Does Under Contract Mean?
A home is considered under contract when the buyer submitted an offer to buy the property and the seller has accepted the offer. This means that both parties have committed themselves to proceed with the transaction, and it will proceed once any contingencies are met or waived by either party.
If a property is under contract, there is a chance that the deal can fall through due to unforeseen circumstances. In some cases, you may still be able to still make an offer on a property listed as under contract.
What Does Contingent Mean?
Once your home is under contract, but some contingencies need to be met, your property is considered contingent.
Most real estate sales have the 3 boilerplate contingencies of the 1) General Home Inspection, the 2) Appraisal, and the 3) Loan. But, those are pretty typical, and the property typically falls into the PENDING category if those are the only contingencies of the home sale.
If you see the CONTINGENT status on a home, it probably means that the property is contingent on the BUYER selling THEIR home. Usually, if the seller accepts this type of offer, they'll have some sort of "first right of refusal" clause, meaning that they can continue marketing the property as "contingent" (which is technically an ACTIVE status) and accept back-up offers. Once a back up offer comes in, the seller can then give their contingent buyer the "first right of refusal", and either move forward with the original buyer, or move on to the back up offer.
Less likely in this day and age, a CONTINGENT status can also be seen on a property that is a short sale. The buyer and seller may have come to an agreement, but the sale is contingent on the bank approving the short sale.
A skilled and dedicated Montecito Realtor will keep an eye on these properties for you and help you get your offer accepted should the deal fall through.
What Does It Mean if A Home is Pending?
Now that the seller and the buyer have agreed to each other's terms and all contingencies have been met, the home is marked as pending and taken off the market. The deal hasn't closed yet, but being in the pending stage is the finish line of the deal.
While there is a chance that a property with the pending status can return to the market due to an inspection, appraisal, or financing issue, the chances are lower at this stage.