What Does Pending Mean in Real Estate? Everything You Should Know About Selling Your First Home

Olivia Elsher

Oct 26, 2022

What Does Pending Mean in Real Estate

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There are many reasons why homeowners have to part ways with their first house. You might need to move for a job or get more space to expand your family. No matter your reasoning, selling your first home can feel confusing. There’s tons of real estate terminology you may not have encountered before, such as “Pending.” As a result, you’re probably wondering, “What does pending mean in real estate?”

Read this guide to learn the most common phrasing you’ll need to know when selling your home. The process will feel much easier when the terminology isn’t shrouded in mystery.

When Should You Start Looking for a House?

Selling your house may seem much longer than you expected. Many steps are involved, which complicate what you have to do before you move. Experts estimate that you should start searching home listings immediately when you know you need to relocate.

You should start right away so you can take your time browsing properties in your estimated price range based on the estimated value of your current home. How long it will take to sell will depend on the current market.

If there are few homes available, your house will sell faster because buyers have less of a selection. If many people are selling simultaneously, it may take longer to move because potential buyers can take their time negotiating.

How Much Should You Save for a Down Payment?

Your down payment will depend on the price of your selected property, the type of loan you use, and if you partner with a realtor. Realtors can negotiate down payments based on their legal access to things like disclosure laws, regulations and property history. 

It’s best to sign with a realtor and determine which loans you qualify for before setting your down payment savings goal. You may only have to put down a small amount with help from a federal home loan or you could have to pay a more significant upfront sum if your credit score isn’t good enough for better loans.

Types of Home Loans

There are numerous types of home loans everyone should consider before selling their house. Check out the various types that will decide how much you’ll need to put down on a property, how long you’ll pay off the loan and what the interest rate will be.

1. Fixed-Rate Mortgages

People like fixed-rate mortgages because they receive a locked interest rate and principal monthly payment for the duration of the loan. You won’t have to worry about price hikes until your property taxes increase or home insurance rates change.

2. Conventional Mortgages

When you apply for a conventional mortgage, the lender will consider your debt-to-income (DTI) ratio. If you have little debt and a significant income, you may only need to put down three percent on your future house. You can also avoid paying monthly private mortgage insurance fees if you put more than 20% down with a conventional mortgage.

3. Adjustable-Rate Mortgages

If you need to move, you may want to consider an adjustable-rate mortgage if interest rates are high in your desired home city. You would only have to lock in your introductory rate for five, seven or 10 years before your interest rate would change to existing market conditions later. It could save you money or cost more in the long run if the housing market increases interest rates when it’s time to adjust your mortgage payments.

4. USDA Loans

The United States Department of Agriculture (USDA) provides home loans for individuals who want to buy a house with no money down. Recipients tend to have the lowest incomes and can only move to rural or some select suburban areas. If you have enough money to save for a cash down payment with a high-yield savings account or investments, you likely make too much money to qualify for a USDA loan.

5. FHA Loans

The Federal Housing Administration (FHA) accepts home loan applicants with a minimum 500 FICO credit score because the loans help first-time homeowners. They’re also great for sellers. You’ll get a 15 to 30-year fixed rate and skip the mandatory mortgage insurance if your down payment exceeds 20%. If you can sell your home and have money left over for your down payment, getting out of mortgage insurance could save you hundreds of dollars each month.

6. Jumbo Loans

Anyone dreaming of moving into a massive house, historic property or mansion can think about applying for a jumbo loan when they put their current home on the market. Jumbo loans give up to $2 million to applicants with a FICO credit score of over 700 points. You’ll get comparable interest rates to surrounding houses, but you’ll also need a down payment between 10 to 20% to qualify.

7. VA Loans

Veterans can apply for a VA Loan with the Department of Veterans Affairs (VA). If you qualify, you can buy your home without a down payment and have lower interest rates than the housing market offers. However, there are specific criteria for applicants to meet and you will have to pay insurance premiums upfront to borrow money. If you served in the military, it’s worth investigating.

What’s the Difference Between Pending and Contingent?

If the seller of your dream home receives your offer and lists their home as contingent, it means they’re considering your offer. You’ve met some of their requirements, but not all of them. They’ll need time to see if they want to compromise.

You can breathe a sigh of relief, but don’t open the champagne yet. Sellers still have the right to keep their property as an active listing to see if they can get more competitive offers that meet all of their requirements.

What Does Pending Mean in Real Estate?

When sellers approve of your offer, they will list their property as pending. It signals to other potential buyers that they’ve received an offer and accepted it. However, other buyers can still pitch a competitive proposal if the house is popular or in a great location.

Do Pending Offers Fall Through?

Unfortunately, there’s no guarantee that you’ll get your dream home after putting in an offer. Other buyers could offer more money or a faster move-in date for a pending property. The sellers could go with the second offer if it’s more important for them to move out sooner, pay for fewer repairs or make more money to purchase a more costly future property.

What Happens After Going Under Contract?

The sellers of your future house will list their property under contract when you’ve negotiated an offer or presented them with the offer they initially wanted. Your real estate agent will help you schedule your inspection, appraisal, final walkthrough and closing date. This is when you can open your champagne or make that celebratory reservation at your favorite restaurant.

Can Sellers Accept Another Offer While Under Contract?

Sellers can’t accept any new offers on their property after going under contract with you. However, they can accept something called a backup offer. If you needed to back out of the agreement, the sellers would have a second buyer in line to move forward with the sale as quickly as possible.

Prepare to Buy Your Dream Home

It’s much easier to sell your home and move somewhere new after learning how the process works. Now that you know what the most fundamental terminology means, you can feel confident about the many changes coming in your near future.

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