When it comes to real estate, many people are familiar with the concept of a home being either active or under contract but may not be aware of the differences between “Active Under Contract” and “Pending.”
In either case, when purchasing a home, potential buyers need to understand these distinctions. Knowing whether a home is active or under contract can help buyers determine how competitive their offer should be and whether they should pursue another property instead.
Defining Active Under Contract
When a buyer makes an offer on a property and the seller accepts it, the listing status changes to Active Under Contract. This means that the property is no longer available for viewings or offers from other buyers.
It creates a legally binding agreement between both parties, in which the seller agrees not to accept another offer, while the buyer agrees to purchase the home upon completion of all stipulated contingencies outlined in the contract.
These contingencies are put in place to ensure that both parties are entering into an agreement with reasonable expectations and requirements set forth in good faith. If one party fails to hold up their end of the agreement, then the contract is void and the property might be put back on the market for viewing and new offers.
Defining Pending
When a property is in a ‘pending’ status, the sale will likely be completed soon. All contingencies have been satisfied, allowing for a smooth transaction between the buyer and seller.
A contingency is an agreement between both parties outlining specific conditions that must be met for the sale to go through; once all of these are cleared, the property is marked as pending and no longer available for showings.
This ensures that all parties involved can move forward with confidence and security, knowing that the sale has been approved by all those involved.
Key Differences between Active Under Contract and Pending
Below, we will go over some key differences between these terms.
- Under Contract typically means there are still contingencies left to clear before the deal is finalized, whereas Pending status usually indicates all contingencies have been met and the deal is on its way to closing.
- When a home is listed as Under Contract, it may accept backup offers since it is not yet finalized; Pending listings, however, are less likely to accept backup offers as they appear closer to being completed.
- The terms “Under Contract” and “Pending” can sometimes be used interchangeably, depending on the specific situation, but typically they would mean different levels of progress in the home sale process.
- Generally speaking, Under Contract implies that more paperwork or negotiations must be done to complete the transaction, while Pending implies that fewer steps remain until closing day.
How to Navigate Active Under Contract and Pending Listings as a Buyer
In order to identify and evaluate properties that are in this status, buyers should be aware of their local market conditions and understand the current landscape of available properties. It’s important to research recent comparables within the same area so they can make an accurate assessment of value.
Buyers should also check to see if any contingencies in place, such as inspections or financing, could impact the deal. It’s also essential to get all information related to the property from the listing agent so you can make sure you’re making an informed decision.
Ultimately, by researching local market conditions, analyzing comparable properties, and gathering all relevant information about the property, buyers can make an informed evaluation when considering a property that is Active Under Contract, or Pending.
For instance, in a seller’s market, there will be more competition for reasonably priced homes and attractive to buyers. Likewise, in a buyer’s market, sellers may find it easier to sell their homes off market or on the market due to less competition.
Familiarizing oneself with local market trends is key to staying ahead of the game when purchasing or investing in a property. Additionally, keeping track of changes in prices over time can reveal any potential opportunities that may arise depending on the current market conditions.
How to Navigate Active Under Contract and Pending Listings as a Seller
Having a property listed as Active Under Contract or Pending can be both beneficial and challenging for sellers. On the plus side, it helps attract more buyers, as having the status of pending signifies that someone has already expressed interest in the home. This often encourages other potential buyers to enter into bidding wars and is a strong incentive to increase the chances of closing the sale at a higher price.
Additionally, the seller’s listing is given priority over other listings that may not have been marked pending yet. On the downside, sellers face added complexities associated with signing contracts and dealing with various contingencies that come up during negotiations.
Furthermore, depending on local regulations and market dynamics, they may have to wait longer than expected before their home is officially sold. In any case, it is important for sellers to understand all of the options available to them when it comes to selling their property quickly and for top dollar.
Communication and transparency are essential to facilitating a smooth transaction for all parties involved from the seller’s perspective. Clear communication allows the seller to effectively set expectations, address any questions or concerns, and negotiate the terms of the sale.
Clear communication also allows buyers to feel confident in their purchase, reducing their chances of buyer’s remorse. When both sides are open and honest about their needs and expectations from the start, it sets up a foundation for successful transactions where everyone involved is satisfied with the outcome.
Real-Life Examples and Scenarios
Active Under Contract real estate listings signify a situation in which a buyer has made an offer on the property that the seller has accepted. This means that both parties have agreed to the sale and the house is no longer available for purchase.
The buyer and seller have entered into a contract and now the transaction will move onto the next steps of closing on the sale. In this situation, there may still be contingencies and negotiations between the two parties, but ultimately if all goes according to plan, then it should result in a successful closing of the sale.
For Pending listings, this signifies that both parties made and accepted an offer and is currently awaiting final approval from someone else before it can close. This could mean that an appraisal needs to be done, or other requirements must be met before it can go through. It is important for buyers to note that until these requirements are met, they are not guaranteed to get the home; depending on their agreement, they may lose out if someone else makes a better offer or if something unexpected arises that prevents them from getting approved for financing.
For sellers, a pending status often indicate that they will soon receive payment for their property; however, they must remain patient as anything can happen at any moment until everything is finalized.
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