What Does Pending Mean in Real Estate in Massachusetts

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What Does Pending Mean in Real Estate in Massachusetts

In real estate, ‘pending’ is a term that means a property sale has begun but isn’t quite finished. It’s much like baking a cake that’s still in the oven.

Yes, you’ve mixed the batter, and it’s cooking, but you can’t call it a cake until it’s fully baked and taken out of the oven.

Similarly, under ‘pending,’ all parties have agreed on terms and are moving forward. The buyer and seller have signed a contract.

However, the keys haven’t yet changed hands. Unexpected twists like failed inspections or financing hiccups could jeopardize the deal. Similar to how an oven breakdown might stifle your cake.

In real estate, “pending” typically means that the seller has accepted an offer on the property and the sale is in progress but not yet finalized. This status indicates that the property is no longer actively available for showings. The owner is unlikely to accept more offers, as the sale will likely move toward closing.

Let’s examine everything you should know as a Massachusetts buyer or seller.

When scrolling through real estate listings, you might notice the term “pending” next to some properties. But what does this mean?

As mentioned, when a property is marked as “pending,” it signifies that a seller has accepted an offer from a buyer. The parties are now in the process of finalizing the sale.

However, it’s important to note that a pending status does not indicate that the property has been officially sold. It simply means that the deal is in progress, and the sale has not yet been completed.

So, if you come across a Massachusetts property with a pending status, it’s essential to recognize that it can still return to the market. This could happen if there are issues with financing, unfavorable home inspection results, or even if the buyer cancels the purchase.

A pending sale does represent significant progress toward finalizing the transaction. However, it’s crucial to remember that it’s not a done deal until all the necessary steps are completed.

In essence, purchasing a pending home might not be as straightforward as buying one with an active “for sale” status.

A Backup Offer Could Be Possible

Sellers who have accepted an offer on their home may still consider backup offers from interested buyers if the current deal falls through.

So, suppose you’re contemplating making an offer on a property with a pending status. In that case, working closely with your real estate agent and clearly understanding the potential risks involved is essential.

For instance, let’s say you are interested in a house that is currently marked as a pending house. You can submit a backup offer if your heart is set on this property.

However, remember that sellers typically maintain contractual obligations to honor the existing offer unless it fails to materialize. This makes it essential for buyers to proceed cautiously. They must know the potential complexities of purchasing a house in a pending status.

Moreover, while we often associate pending sales with residential properties, it’s worth noting that this concept extends beyond just homes.

It’s Not Just Residential Properties

In commercial and industrial real estate transactions, “pending” signifies similar stages of negotiation and the impending closure of deals.

The specifics may vary slightly based on local regulations and practices. The fundamental meaning remains consistent across different types of Massachusetts real estate transactions.

It’s crucial to grasp the underlying intricacies and potential implications of pending status to better navigate this aspect of real estate dealings.

By thoroughly understanding what “pending” entails, buyers and sellers can approach these situations with greater confidence and clarity.

The Difference Between Pending and Contingent Sales

When navigating the real estate market, differentiating between “pending” and “contingent” status in property listings is crucial. The distinctions between these terms are vital for buyers and sellers to comprehend as they venture through the complexities of real estate transactions.

A property labeled as “contingent” indicates that there are still unresolved contingencies. It means that certain conditions outlined by the buyer have yet to be met.

These may include obtaining financing approval, satisfactory results from a home inspection, or the sale of the buyer’s current home.

Homes typically remain contingent from 3-6 weeks before changing to pending and closing.

Sellers may continue to entertain offers when their property is listed as contingent. A pending status signifies that all contingencies have been satisfied. The sale is anticipated to conclude shortly.

To illustrate, if you stumble upon a listing marked as contingent, you might anticipate that buyers are still meeting specific requirements before the deal can be finalized.

Contingencies Have Been Satisfied

Conversely, a pending status represents a point where all necessary conditions have been addressed and met. This procedural divergence highlights each term’s distinctive states of readiness in the transaction’s progression toward closure.

Consulting with a knowledgeable real estate agent is beneficial for potential buyers seeking insight into the possible availability of a property marked as pending or contingent.

Such professionals can help elucidate the implications of these designations within the context of specific local MLS rules and practices.

Understanding pending versus contingent sales can be likened to distinguishing between preparing a dish in the cooking process versus one that has completed its time in the oven and is ready for serving.

Both statuses denote distinct stages of readiness and signal valuable information for all parties involved in real estate endeavors.

Understanding these distinctions can yield significant advantages in this high-stakes real estate game.

Making Offers on Pending Properties: Pros and Cons

Making an offer on a house that is already pending might seem like a straightforward decision. Unfortunately, it’s not without its complexities.

Let’s weigh the ups and downs of snagging a property while it’s still in limbo.

The Pros

One significant advantage of offering a pending property is the chance to position yourself as the next in line if the current deal falls through.

Something could go wrong with the current buyer’s financing, home inspection, or other reasons. A backup offer can put you in an excellent place to secure the property you’re interested in.

It shows the seller that the property still has interest, which could work in your favor.

When a pending sale looks uncertain, the seller may become more receptive to considering backup offers from other potential buyers.

They might be worried about the deal going south, so they could be very open to entertaining alternate offers. This situation can be advantageous if you are ready and willing to make a firm bid.

Imagine this: The buyer initially seemed committed, but suddenly they need more time securing their loan. To avoid uncertainty, the seller may entertain offers from other potential buyers who are ready to move forward immediately.

The Cons

One drawback of offering a pending property is that sellers are usually contractually obligated to honor the existing offer. It means that your chances of successfully landing the property are limited.

While it doesn’t hurt to try, it’s important to keep realistic expectations given the binding nature of the current agreement.

There’s no denying that waiting for a pending sale to fall through can be unpredictable. It might take weeks or even months before you get clarity on whether or not your potential dream home will be available again.

There’s no guarantee that all the waiting will result in success.

For instance, imagine putting in an offer on a house already under contract. There’s no telling when or if you’ll get your shot at buying it. You may only invest time and energy into negotiations to solidify the current deal. It could leave you back at square one.

It’s essential to understand both sides of the coin. From the opportunity of securing a backup offer to the challenges posed by uncertain timelines. This is crucial for anyone considering making an offer on a pending property.

By carefully evaluating these factors, you can make an informed decision that aligns with your goals and priorities.

The potential pitfalls and advantages of pursuing a property caught in the flux of a pending sale highlight the delicate dance of real estate transactions.

Kevin Vitali, a Massachusetts Realtor, weighed and shared his expertise.

Buyers need to be careful when considering a backup offer. Unless the property is your ultimate dream house, you don’t want to lock yourself into a purchase when other suitable properties hit the market.

Kevin makes a good point: you never know when another home could fit your needs and wants.

Now, let’s explore why pending sales can unexpectedly fall through.

Reasons Pending Sales Fall Through in Massachusetts

Angry Man Sale Pending

An angry man finds out his pending sale is falling through.

The excitement of a pending sale can quickly turn to disappointment if the deal unexpectedly collapses.

While pending status might seem like a definitive step toward a sale, it’s crucial to acknowledge that several factors could still lead to the unexpected breakdown of the transaction.

Let’s explore some common reasons why pending sales fall through.

Financing Issues

Financing issues account for a significant percentage of failed pending sales. Besides a home inspection, they are one of the leading causes of sales falling through.

Buyers who face difficulties securing a mortgage, encounter appraisal problems or experience sudden changes in their financial situation may be unable to proceed with the purchase.

Lenders typically require the borrower’s financial situation to remain stable throughout the home-buying process. Any adverse changes could jeopardize the financing approval.

Unfavorable Home Inspection Results

Home inspections are a critical component of the due diligence process for buyers. Pending sales falling apart often stem from unfavorable home inspection results.

A thorough home inspection may reveal undisclosed or unforeseen issues with the property. For example, structural defects, electrical problems, or plumbing issues.

Major problems could cause buyers to reconsider their purchasing decision or negotiate repairs with the seller.

The Appraisal Comes up Short

Lenders generally require a home appraisal when the buyer needs to finance the property and isn’t paying cash. The sale can be canceled if the real estate appraisal is lower than the purchase price.

For this to happen, the borrower would exercise their right under an appraisal contingency clause. The appraiser will determine the value by utilizing local comps that match the subject property.

Sometimes, buyers overpay for homes.

Short Sale Arrangements

In certain instances, pending sales may be subject to short sale arrangements initiated by sellers who owe more on their mortgage than the property’s current market value.

This complex process involves lender approval and can be protracted. If a buyer cannot wait for extended periods or secure agreement from all involved parties, including lenders and lien holders, the pending sale may ultimately collapse.

Bearing these potential challenges in mind empowers both buyers and sellers to proceed with comprehensive preparation and careful consideration at every stage of the transaction.

Title Problems

Occasionally, a significant title defect is discovered on a Massachusetts home. A real estate attorney conducts a title search, revealing problems.

Sometimes, title problems can take an extended amount of time to correct. If a buyer has a tight window in which they need to close, they may decide to bail from the transaction.

Buyer Cancellation

Buyer cancellation accounts for a small percentage of failed pending sales. It reflects different factors, such as changing life circumstances or reevaluating priorities, that lead to withdrawing from the agreement.

Sometimes, it is just a case of buyer’s remorse.

Remaining vigilant and understanding of each other’s concerns throughout the real estate process is fundamental for all parties involved.

Distinguishing Between Pending and Sold

The contrast between a “pending” status and a “sold” one holds critical significance in real estate. It’s essential to discern this disparity when considering property transactions.

Sold vs. Pending: What’s the Difference?

A property labeled as “sold” has undergone the entire process. The buyer has made an offer, it has been accepted, and the deal is closed. This means the property ownership has transferred from the seller to the buyer.

All contingencies have been met or waived.

Conversely, a “pending” property signifies that a seller has received and accepted an offer, but the deal isn’t yet finalized.

Factors like financing issues, unfavorable home inspection results, short sale arrangements, or buyer cancellation could influence the outcome.

Conclusion

Real estate agents play a crucial role in guiding buyers and sellers through the intricate process of a pending sale. From the agent’s viewpoint, a “pending” status represents significant progress in the selling process.

The seller has accepted an offer, and all contingencies have been met or expired. The transaction is moving towards closing. However, buyers and sellers must exercise caution even with this promising stage.

Despite the seemingly positive nature of the pending status, potential risks and uncertainties could lead to the property returning to the market. This is why agents continually emphasize the importance of thorough due diligence and staying informed throughout the pending process.