Buyers often ask me “What is the difference between a listing that is “under contract” and one that’s “pending?” They’re both not available anymore, right?
Not exactly. The local multiple listing service, MRED (Midwest Real Estate Data, affectionately known as Mr. Ed.) has two designations for properties that are no longer actively for sale.
UNDER CONTRACT – indicates a property where an offer has been written and accepted by both parties. Generally, a check for $1000-$5000 has been delivered with the contract but there are still contingencies that have to be met. These contingencies could include a home inspection, attorney approval of the contract, mortgage financing, appraising, a home sale, and any number of personal needs that a buyer may have.
The most standard contingencies are home inspection and attorney approval – very rarely does anyone purchase a property without these two. Most contracts are also contingent on the buyer securing financing within a set period of time.
A home sale contingency is generally only accepted by sellers who have been on the market for a while and are more open to this. It means that the buyer must sell his own home in order to buy a new one. Often, the sellers have a “kick out” clause which allows another buyer to come forward with an offer, but the original buyers have, say, 24-72 hours to either remove the contingency or void the contract.
Many things can go awry during the under contract period and a fair number of homes will come back on the market.
PENDING – means that all of the above have been satisfied. The inspection has occurred and any issues have been resolved. The mortgage has been approved. The attorneys for both seller and buyer have signed off on the contract. It is at this point, that the buyers now put more money down on the house, normally 5% of the sale price. It’s during this time that both parties start to pack up their homes and prepare for a move.
Not much changes at this point and the homes almost always go to closing.
If you have any other questions about the home buying process in the North Shore, please give me a call!
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Filed under: Real Estate