Real Estate Terms: Contingent vs. Under Contract

Many people find it confusing when buying or selling real estate contracts. Understanding real estate contract terminology can help you to navigate the home buying or selling process confidently. Speak with your legal counsel and real estate agent to make sure you understand the terms and their application to your situation. This article will examine three important real estate contract words: Under Contract, Pending, and Contingent.

What Does “Under Contract Mean”?

If a seller accepts an offer from a buyer to buy a property, then the property is “under contract.” Both parties are agreeing to move forward with the purchase, once all contingencies have been met or waived.

Even though a contract is in place, the sale can fall through for unforeseen reasons. In some cases, it may be possible to still make an offer for a property that is listed as being under contract.

What Does “Contingent Mean”?

It is a contingency when a contract is signed, but certain conditions must be met before the transaction can take place. It could be a matter of financing, inspections, or any other factor that needs to be resolved before a deal can be completed.

Setting contingencies when selling your house protects you in case you have to make a decision about buying another home or finding a buyer. These conditions ensure that everything will go according to plan before you enter escrow.

What does “Pending” mean?

The property will be marked “pending” when both buyer and seller agree on the terms and have met all conditions. A property that has a “pending” status may still be re-listed due to an appraisal, inspection or financing issue. However, this is less likely to happen.

You may also come across other real estate terms and status codes when you browse home listings or work with a realty agent. These terms include:

Active:

If a property has the “active” designation, it means it is available for sale at this time and no offer has been accepted. This is an excellent opportunity for homebuyers to see the property in person and submit an offer. You can use the status as a seller to generate interest and attract buyers to your property.

Coming soon:

The “coming soon” status indicates that the property has not been made available yet for viewings but will soon be. Real estate agents use this marketing tool to build excitement and generate interest for new listings. Sellers can use this status to generate buzz about their property prior to its release. Keep an eye out for “coming soon” properties as a buyer so that you are the first to view the property when it is available.

Withdrawn:

The seller may have decided to temporarily remove the property from the market. It could be for a variety of reasons. For example, the seller may have decided to wait until there is a better market. Or their personal circumstances might change. It’s worth asking the seller or agent if the property will be listed again in the future if you are interested.

Expired:

The property will be marked “expired”, if the listing agreement has expired between the seller and his agent. It is not listed anymore. It could be that the property didn’t sell during the listing period or that the seller decided not to relist it after the agreement expired. If your property agreement has expired, you may want to consider relisting your property with a different agent or changing your pricing strategy.

Canceled:

If a property has the “canceled” mark, it means the seller and his agent decided to cancel the agreement prior to its expiration. It could be for a variety of reasons. For example, the seller may have decided to remove the property from the market or both the agent and the seller may have agreed to part ways. It’s worthwhile to check with the seller and their agent if the property will be listed again in the future if you are interested as a buyer.

Active under Contract:

If a property is marked “active under contracts”, it means that the contract is in place, but the seller will still accept backup offers if the current contract falls through. It is common in real estate markets where there are multiple buyers interested in the same house. It’s worth submitting a second offer if you are interested in a home marked “active under contract” in the event that the first one falls through.

Contingent No Kick-Out:

The seller will not accept a backup offer if the buyer submits an offer that includes contingencies. The buyer is given a set amount of time in which to complete the contingencies. For example, securing financing or passing a home inspection.

Contingent Kick-Out:

The seller may accept backup offers if the buyer submits an offer that includes contingencies. The buyer is given a set amount of time in which to meet the conditions. If a backup offer comes along and the buyer can’t meet the conditions, the seller may accept it.

Hold:

The property will be marked “hold” if the seller plans to relist the property at a future date. This status is usually used by sellers who want to remove the property from the market but do not wish to cancel their listing agreement. It’s worth watching a property that is marked “hold” to see if it becomes available. The seller may also use this status if they want to renovate or improve the property prior to re-listing it.

Both buyers and sellers should be familiar with these listing terms and real estate status codes. Buyers can use it to find out which properties are currently available and those that may be coming up soon. You can also use it to understand how likely your offer is to be accepted depending on contingencies, backup offers and other options. Knowing these terms will help sellers market their property more effectively and make better decisions regarding relisting, or cancelling your listing.

You can ask your real estate agent to explain these terms in detail and how they relate to you. Do not be afraid to seek clarification or ask questions if you have any doubts about a certain listing or status code. Working together will help you navigate the real estate industry with confidence, and make informed decisions when buying or selling your home.