Sale pending means that the seller has already received an offer and accepted it, but the deal has not closed. The sale is considered pending as soon as the purchase contract is signed. But it often takes at least 30 days or more for the buyer to conduct their due diligence and secure financing.
So, while this process is underway, the sale is considered pending. Sale pending essentially means the property is in limbo – while it’s not entirely available, it isn’t officially off the market yet either.
Think of it like an engagement – a pending means the home has a fiancé, but they have yet to officially tie the knot. A pending sale signals to other buyers that while there is still a chance that the deal will not go through, they may want to look at alternatives.
Yes, pending sales fall through all the time. Until the deal is closed and the deed is transferred, there is always the possibility that circumstances can change, and one or both parties may decide to back out.
The closing period gives the buyer and seller time to negotiate and determine whether or not they actually want to go through with the purchase. If there was no chance that either party would need to back out, they would just close the deal on the day they agreed on an offer. So, there is always a chance that a pending sale can fall through.
While pending sales can fall through, it’s relatively unlikely. On average, only about 1.9% of pending sales don’t end up closing.
There can be severe consequences for backing out of a pending sale without a valid reason. This means buyers who have made it that far typically go through with it unless something unexpected happens that causes them to reconsider. It’s relatively rare for something totally unexpected to happen during the due diligence process, so the sale will only fall through in a small percentage of transactions.
1. The Buyer’s Financing Falls Through
You can’t buy a home if you suddenly don’t have the money. So, if, for whatever reason, the buyer goes to finalize their mortgage and ends up getting denied, the purchase contract typically allows them to back out of the sale. Financing can fall through for various reasons, for example, if the buyer suddenly takes on new debt or lies on their initial application.
2. Home Inspection Reveals Unexpected Damage
Another common reason a pending sale may fall through is if the inspection reveals something unexpected. The point of an inspection is to verify the property’s condition before you make a purchase. The buyer can back out of the sale if the inspector discovers something serious like a termite infestation or a crack in the foundation. Most of the time, if the inspection reveals only minor damage, the buyer and seller will work it out. But if the damage is serious enough, the buyer may decide to walk away.
3. The Buyer Can’t Sell Their Old Home
Sometimes, the sale will be contingent on the buyer selling their old home so they don’t get stuck paying two mortgages. If they can’t find a buyer for their exiting residence, they may delay the closing or even back out of the sale if it seems unlikely they will sell within a reasonable period.
4. The Appraisal Comes in Low
A low appraisal is another reason a pending sale may fall through. Lenders typically require an appraisal to verify that the amount they’re lending is roughly in line with the home’s value. So, suppose the appraisal reveals that the buyer’s offer is significantly greater than the home’s true value. In that case, they may decide to revoke the loan unless the seller is willing to renegotiate.
5. Issues With the Title
Title issues could potentially lead a pending sale to fall through. Perhaps it’s revealed that the seller isn’t the one whose name is on the title, or there’s an undisclosed tax lien associated with the property. These red flags may lead the buyer to back out of the sale.
Yes, real estate agents are allowed to continue showing pending homes. There is always the possibility that the sale will fall through, so most agents continue to show the property as long as possible to secure a backup in case anything goes wrong.
Some sellers will stop showings once they get an offer if they feel confident it will go through. But if they believe it may not work out, they may continue showing it up until the closing.
Yes, you can make an offer on a pending house but be aware that it’s a long shot. You can submit a backup offer for the seller to keep on hand if the sale falls through. They may be enticed if you offer more money and fewer contingencies. But in most cases, the seller can’t back out of the sale just because they get a better offer. So, you’ll have to hope that the buyer gets cold feet or discovers something concerning – although if that happens, you might want to consider your own offer.
While a pending sale doesn’t mean the property is officially off the market, in most instances, the transaction will go through as planned. So, if you happen to stumble across your dream home and the sale is pending, you can always submit a backup offer and hope that the buyer is secretly broke. But in most cases, it’s better to move on and continue looking for homes that are still open to offers.