When your real estate agent puts your home in the multiple listing service, it will have an “Active” status. This indicates that it’s available for showings. However, this is just the start with many things to do before the status changes to “Closed.”
There are other statuses in the MLS listings like “Pending,” “Contingent,” “Coming Soon” and “Expired.” What do they mean and how will they affect your home sale? One of the most confusing things for buyers and sellers to understand is what contingent means vs. pending.
To help you understand the process, we look at some of the lingo used in real estate listings.
Contingent vs. Pending?
Two important statuses in the MLS are “Contingent” and “Pending.” They show that you have a buyer who has signed a contract with you. It means that both parties have accepted the terms within the contract, now legally binding. Despite this, there can still be room to negotiate the conditions of the sale.
The contingent label in a listing indicates that the seller has accepted the offer; however, certain things need to happen before things can move on. It shows that the contract has been agreed upon, but some work still needs to be done before closing.
The contingent status typically allows the home to be shown to other possible buyers, allowing backup offers to be made. This protects the seller should something go wrong, giving them the option to move on to another buyer quickly, if necessary.
Not all sales will have contingencies with them, but most will. Common real estate contingencies include the following:
The most common contingency is the home inspection contingency. Around 60% of sales have this contingency, and it ensures that the buyer isn’t buying a property with serious faults.
If the home inspection finds severe problems, or the seller doesn’t agree to repair or provide credits, the buyer can walk away. The home inspection can lead to some delays in the process, too, for around 10% of cases.
Financing or Mortgage Contingencies
The majority of homebuyers use a mortgage to finance their purchases. The financing contingency makes sure that the buyer can secure the amount of finance they need for the purchase. This type of contingency is found in around half of the purchase contracts. Financing problems delay closing in around a third of all real estate transactions.
Buyers need to keep track of their mortgage contingency to make sure it doesn’t lapse. Doing so could mean the forfeiture of their earnest money deposit.
Lenders aren’t going to provide money for a property that the buyer’s offer has overvalued. To ensure that they aren’t lending more than the home is really worth, they will use a home appraiser to find the fair market value.
If the appraisal comes in lower than the amount the buyer has offered, it could stop the purchase in its tracks—problems like this account for nearly 20% of delayed contracts.
A title company is used to make sure the home isn’t claimed by someone else. If the home has a clear title, there won’t be any debts or liens on the property, and there shouldn’t be any possible disputes over ownership later on. Title contingencies can be responsible for around 10% of delayed sales.
Home Sale Contingencies
Sometimes a buyer needs to make sure they have sold their current home before they can purchase another. The home sale contingency isn’t that common but can slow down the process.
When a home is listed as pending, it means that there aren’t any contingencies to deal with or that they have already been dealt with. This shows that the house has gone through the contingent stage, and the buyer is expected to close on the home.
What Other MLS Statuses Are There?
There are hundreds of different MLSs in operation across the country, so you can see some slightly different terms used. For example, “Active Contingent” and “Active Under Contract” can be used instead of “Contingent.”
Other Common Statuses You Might Find Can Include:
– Coming Soon: When there is a contract or listing agreement with a broker or listing agent, but things aren’t quite ready yet. Perhaps the seller needs some time to fix up the home before it is ready for the market or it is new construction. Sometimes these “Coming Soon” statuses are limited in the MLS to a few weeks.
– Withdrawn: This can happen if the seller has decided to pause showings and offers on the home.
– Canceled: The listing contract for this home has been canceled in writing.
– Expired: Listings contracts only run for a certain amount of time, and when they expire, the home will no longer be on the market.
– Closed: The home has been sold.
As well as these statuses, real estate agents can leave other comments to clarify the situation.
Status updates need to be made fairly quickly within the MLS. Most MLSs will have rules that real estate agents have to follow to ensure the statuses are as accurate as they can be.
The Differences Between Pending and Contingent
The meaning of contingent puts more potential roadblocks in the way of a completed sale. On the other hand, a pending status means that the selling process is nearly completed, and things are about to close.
With a contingent status, the seller is still open to accepting offers on their property. This gives the seller a backup, should their first buyer back out of the deal for whatever reason.
Though it is fairly rare for sales to fall through, perhaps happening less than 10% of the time, it is good to have a backup. For this reason, it helps the seller if their agent is proactively lining up alternatives, should their current buyer back out. And if their buyer does back out, the seller could find that they’ve got another buyer ready to go who has an even better offer.
Having a better understanding of the real estate lingo used in the MLS allows you to follow the progress of listings better. Changes in the statuses of a listing show the sale is progressing toward closing step-by-step.
Bill Gassett is a nationally recognized real estate leader who has been helping people buy and sell MetroWest Massachusetts real estate for the past 33 years. He has been one of the top RE/MAX REALTORS® in New England for the past decade. In 2018, he was the No. 1 RE/MAX real estate agent in Massachusetts.