What if the perfect home was waiting? – Royal Examiner
This happens a lot – you see a big house, but there’s a big “Pending” sign on it, or maybe the house is labeled “Contingent”. You are unlucky ?
Most likely. But there is hope, especially on contingent property.
A pending transaction means that the sale of the house is far from complete. The house is under contract, the offer has been accepted, all contingencies have been met and the parties are ready.
Your real estate agent might still know if the seller would still accept offers, but chances are both the seller and the buyer are ready to close the deal.
Contingent sales have more possibilities.
There are all sorts of possibilities.
The main one is funding. If for any reason the buyer cannot obtain financing, the transaction may be cancelled. This can happen if the buyer has been pre-approved for a loan but something happens. Perhaps the buyer suddenly loses his job or the lender discovers an undeclared debt when underwriting. In this case, the deal may well fail and the house will be for sale again.
Selling a home also depends on an appraisal. The lender cannot grant a loan above fair market value. So if the valuation is low, the deal could fail. To keep the deal, the buyer would have to make up the difference between the loan (say $125,000) and the appraisal (say $100,000). The buyer would need to find $25,000 to fill the gap.
Buyers generally want a sale contingent on inspection. If the inspection reveals any problems, the buyer can withdraw from the transaction or renegotiate the price.
Some buyers must sell their own home before buying the new one. This possibility of selling a house is often rejected by sellers in a tight market.
An opt-out clause benefits home sellers because during the contingency period sellers can continue to show the house and accept offers. If sellers receive a better offer, they can ask the original buyer to remove the contingencies or lose the sale of the home.