3 Key Real Estate Contract Terms Defined: Accepting Backup Offers vs. Contingent vs. Pending
If you've been searching for homes, chances are you saw terms that you may or may not have fully understood. This can be frustrating, especially if you've found a home that you love that has been marked "contingent."
Similarly, if you're thinking about selling your home, you may be wondering what the different stages of the process are once you've accepted an offer but before you've handed over the keys.
This blog post will peel back the curtain on 3 key real estate terms so that you know exactly what you're looking at while buying or selling.
Accepting Backup Offers
If a home is listed as "Accepting Backup Offers," that means a buyer has submitted an offer on a property and the seller has accepted the offer. Both parties have committed themselves to proceed with the transaction, but there are still many unmet contingencies to work through, particularly the inspection contingency, which usually is the first step in the contract.
At this stage, because there are still several unknowns, there is a chance that the deal can fall through for a variety of reasons. If the deal doesn't work out, the seller would then consider any other offers. So if a property has this status you may still be able to still make an offer, but it will only be considered if the original offer doesn't proceed.
There can be different kinds of contingencies in a contract. Common ones are inspection and mortgage contingencies , but there are many other contingencies that can be written in depending on the circumstances. A contingent contract means that some condition hasn't yet been met and the buyer and seller are not in agreement on how to proceed. This could be because of financing, inspection report concerns, or if the offer depends on the buyer selling their home or the seller buying a new one. Once those contingencies are addressed, the deal can continue as planned. A contingency is anything that needs to happen before the deal can actually take place.
If you're selling your home, setting contingencies protects you if something comes up with either buying another property or finding an acceptable offer from someone who wants to buy yours. Setting these conditions makes sure everything goes as planned before entering escrow.
When the seller and the buyer have agreed to each other's terms and the inspection contingency has passed, the home is marked as pending and taken off the market. The deal hasn't closed yet, but being in the pending stage means both parties are committed to the transaction.
While there is a chance that a property with the pending status can return to the market due to unforeseen issues, the chances are lower at this stage.