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The Difference Between Pending and Contingent Deals

Susan Kelly

Oct 06, 2023

In the ever-evolving real estate landscape, two terms that often perplex novice and experienced buyers and sellers alike are "pending" and "contingent" deals. These terms play a significant role in shaping the trajectory of property transactions, yet they hold distinct meanings and implications.

In this comprehensive guide, we'll embark on a journey to untangle the intricate threads of real estate deals, understanding what sets pending and contingent deals apart and exploring the advantages, disadvantages, and strategies associated with each.

The Contingent Conundrum

A contingent deal in real estate is akin to a puzzle waiting to be solved. It signifies that a buyer and seller have entered into a contract, but certain conditions or contingencies must be met for the deal to proceed to the next stage. Essentially, an agreement hangs in the balance as various contingencies remain unresolved.

Types of Common Contingencies

Inspection Contingency: This empowers the buyer to inspect the property and request repairs or negotiate the sale price based on the inspection results.

Appraisal Contingency: It mandates that the property must appraise for a specific value to secure the buyer's financing.

Financing Contingency: This ensures the buyer can secure a mortgage loan within a specified timeframe.

Title Contingency: This necessitates a clear and marketable title to the property, ensuring no legal issues.

Home Sale Contingency: In cases where a buyer must sell their current home to purchase a new one, this contingency is invoked.

Advantages and Disadvantages of Contingent Deals

Learning about the pros and cons of contingent deals will help you decide!

Advantages for Buyers

  • Contingencies provide a safety net, allowing buyers to back out if the conditions aren't met.
  • Buyers can negotiate repairs or adjustments based on inspection results.
  • Contingencies reduce the risk of buying a property with unforeseen issues.

Disadvantages for Buyers

  • Contingencies can extend the closing timeline, potentially leading to competition from other buyers.
  • Until contingencies are resolved, the deal remains uncertain.
  • Sellers may opt to entertain backup offers while contingencies are pending.

Advantages for Sellers

  • The contract is less likely to fall through once contingencies are removed.
  • Sellers can negotiate the terms of contingencies to some extent.
  • Some contingencies, like home sale contingencies, may allow sellers to continue marketing their property.

Disadvantages for Sellers

  • Sellers must wait for contingencies to be resolved without guaranteeing success.
  • Contingencies can lead to delays in closing.
  • Buyers may submit backup offers, complicating the transaction.

Dealing with Contingent Deals

Negotiation: Buyers and sellers can negotiate the terms of contingencies to find common ground, fostering a mutually beneficial agreement.

Removing Contingencies: Buyers typically have a specified timeframe to remove contingencies once satisfied, ensuring a smooth and well-regulated transaction process.

Waiving Contingencies: In certain situations, buyers may choose to waive specific contingencies to enhance the competitiveness of their offer, demonstrating their commitment to the transaction.

Making Backup Offers: Sellers may consider backup offers while contingencies are pending to mitigate the risk of the deal falling through. These backup offers provide a safety net if the primary offer doesn't proceed as planned.

Deciphering Pending Deals

If you want to learn about Pending deals, then this is it! Uncovering the details of pending transactions is crucial for making informed investment decisions.

The Pending Paradox

A pending deal, in contrast to a contingent one, signifies that the property is under contract, and both buyer and seller are moving forward with the intention of completing the sale. It's a critical stage in the transaction process, where significant steps have been taken towards closing the deal.

Differentiating Active Pending and Pending Show Statuses

Active Pending: The property is under contract in this status, but the seller may still entertain backup offers. It's a crucial phase in real estate, ensuring all options are considered.

Pending Show: In this status, the property is under contract, and the seller no longer accepts backup offers, ensuring a smooth and secure transaction process for both parties involved.

Advantages and Disadvantages of Pending Deals

Let's dive into the pros and cons of the pending deals!

Advantages for Buyers

  • A pending deal signifies a commitment from both parties.
  • Buyers can confidently make plans for their new home.

Disadvantages for Buyers

  • The deal may still fall through if issues arise before closing.
  • Buyers may face competition from other buyers if the property is still active pending.

Advantages for Sellers

  • The property is no longer actively marketed.
  • Sellers can plan their next move with confidence.

Disadvantages for Sellers

  • Until the deal officially closes, there's always a risk of complications.
  • Sellers may sometimes miss out on potentially better offers if they no longer accept backup offers.

Dealing with Pending Deals

Due Diligence: Buyers should conduct thorough due diligence during the pending period, such as inspections and finalizing financing.

Preparing for Closing: Both buyers and sellers should prepare for the closing process, ensuring all necessary documents and funds are in order.

Handling Unexpected Issues: In case unexpected issues arise during the pending period, both parties must be prepared to address them swiftly.

Conclusion

In the complex world of real estate transactions, understanding the difference between pending and contingent deals is paramount. Contingent deals involve conditions and uncertainties, while pending deals signify commitment and assurance. Both stages are essential, from an offer to a closed deal.

Consider your unique circumstances and priorities as you embark on your real estate journey. Whether you're a buyer or seller, knowing when to negotiate, remove, or waive contingencies and how to navigate the pending period will be critical to a well and satisfying real estate transaction.


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