Under contract vs. pending: Understanding the difference in real estate

“Under contract” means a seller has accepted a buyer’s offer, but contingencies like inspection, appraisal, and financing are still open. “Pending” means those contingencies have been met or waived and the sale is in its final stage before closing. 

In this article, we will cover everything you need to know about these two terms, including how they relate to different phases of the home selling process.

If it’s your first time buying or selling a home (especially if you inherited the property and know little about real estate transactions), you’re no doubt eager to find answers to questions like:

• Can a deal that’s under contract fall through? What about a pending sale?

• How long does a property typically stay under contract?

• Can a buyer back out of a contract while the property is under contract?

• Can the seller still accept formal offers if a property is under contract? What if it’s pending?

If you’re a realtor, you’re probably very familiar with all the different terms and can explain what they mean even in your sleep — but we have important information to share with you, too, so don’t close the page just yet!

For all parties, undertaking a real estate transaction means that you’ll soon be swimming in paperwork.

However, by going digital, you’ll barely even have to get your feet wet.

With a contract management solution — and especially one that’s built with real estate in mind – you’ll be able to significantly simplify and speed up the entire process.

Which is what everyone wants, right?

So, let’s see what “under contract” and “pending” mean — and go over how to streamline everything involved.

Key takeaways

• “Under contract” and “pending” describe two different stages of the home buying process. Under contract comes right after a buyer’s offer is accepted, while pending sale is the last stage before finalizing a deal.

• While contracts can fall through during either stage, its occurrence is far more likely when a deal is under contract.

• If you’re a buyer, you can still make an offer for a property that’s under contract. If the primary contract falls through, your offer may be considered.

• Real estate deals are complex and involve a lot of paperwork, but you can significantly streamline the entire process with the right contract management platform.

Manage all your contracts in one place

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Under contract vs. pending: quick comparison

"Under contract" means that a seller has accepted an offer but the buyer and the seller still have conditions to meet relating to inspection, appraisal, and financing. "Pending" means that those conditions have been met or waived and the sale is waiting to close. Here's how both of these stages compare to each other:

If you want to track each stage and keep every signature in one place, see how PandaDoc handles real estate contracts.

Under contract vs. pending: What are the differences?

The terms “under contract” and “pending sale” describe two distinct phases of the real estate transaction and have different implications for everyone involved — homebuyers, sellers, and realtors alike.

The main difference lies in the level of certainty and the exact stage of the selling process.

"Under contract" indicates that an offer has been accepted and that both sides have to fulfill the conditions (contingencies) of the contract for the home purchase to take place.

"Pending sale" implies that the necessary steps and contingencies have been addressed, bringing the transaction closer to completion.

Let’s look at the details.

What does “under contract” mean?

"Under contract" refers to the initial stage in the selling process where the homeowner has accepted an offer from a buyer.

At this point, both parties still need to meet outstanding conditions.

If you’re looking to buy, making an offer for a property that’s under contract still makes sense.

If you’re looking to sell, you might specify that a property is still “active under contract,” i.e., that you’re accepting offers.

Both parties have agreed on the terms of the contract, including the purchase price, obtaining financing, any additional sale contingencies, and closing date.

However, the sale is not yet finalized.

Additionally, there are two options; the sale might be:

• Contingent under contract, i.e., subject to specific conditions regarding financing, inspections, repairs, or the seller buying a new home (or the buyer selling their current home)

• Noncontingent under contract, i.e., where both parties have agreed on the specifics and the property will be purchased “as is”

As you’ll notice, we’re talking about a sale that’s “under contract”... What about the contract itself, though?

The contract outlines all the specifics, which means that it should be well-written and include all the necessary details.

To simplify all this for you, we’ve created a property sale agreement template which you can use for free.

It helps ensure a smooth transaction between a buyer and seller and contains all the key elements of the sale.

Read more:

Under contract, pending, and contingent — real estate terms explained

What does “pending” mean?

"Pending" refers to a later stage in the process, when all contingencies outlined in the contract have been met or waived, including all conditions around inspections, ordering an appraisal and steps to secure financing.

The pending stage typically precedes the closing of the deal.

During this stage, both parties make final preparations to execute the sale, including finalizing the financing, preparing all additional documents, and coordinating the sale with all parties involved (lenders, escrow agents, title companies).

While the sale might still fall through (for example, if the buyer fails to secure financing), the probability for this is much lower.

In all cases, it’s important to assess whether you risk losing your deposit.

Under contract vs pending: a comparison chart

Here’s a comparison chart that outlines the difference between a purchase under contract and a pending sale:

Understanding these differences is crucial for buyers and sellers alike.

As a buyer, knowing whether a property is under contract or pending can guide your expectations regarding the availability and likelihood of a successful purchase.

As a seller, understanding these stages helps you manage the selling process effectively and navigate toward a successful closing.

Under contract vs. pending: visual timeline

There are four stages that a home sale moves through on its way to closing. Here is where “under contract” and “pending” fall in the timeline:

1. Active listing

The home is on the market and open to offers.

2. Under contract

The seller has accepted an offer, and the buyer and seller are working through the contract's contingencies.

3. Pending

All contingencies are satisfied or waived, and the sale is moving toward closing.

4. Closed

All the paperwork is signed, funds are transferred, and ownership of the home is handed over to the buyer.

Why are contingencies so important?

Contingencies play a crucial role in the home purchasing process and help protect buyers from purchasing a property that has major problems or losing their earnest money deposit.

They also protect sellers by laying out the conditions of the sale and making it easier to close the deal.

Essentially, contingencies:

Protect the buyer and enable them to conduct due diligence

Nobody wants to buy a home only to discover massive problems with its structural integrity three months later.

So, contingencies serve as safeguards for the buyer, enabling them to conduct thorough due diligence on the property.

The buyer can include specific conditions in the purchase contract that must be met for the sale to proceed, such as inspections, specific repairs or replacements made, securing financing, a clause requiring their current house is sold as a condition of buying the new property, and more.

If any of these common contingencies aren’t satisfied, the buyer may be able to back out of the contract without penalty.

Serve as a framework for the necessary inspections, eventual repairs, and financing

A home inspection contingency allows the buyer to hire a professional inspector to evaluate the property's structure and overall condition.

If during inspections you uncover any significant issues, you can negotiate repairs, ask for the sale price to be adjusted, or even choose to withdraw from the contract.

Provide financial protection

Loan and financing contingencies help ensure that the buyer can secure financing to make the purchase.

For example, the purchase may be contingent upon the buyer obtaining a mortgage loan at specific terms and interest rates.

If the buyer is unable to secure financing within the agreed-upon timeframe or the terms are unfavorable, this contingency allows them to back out.

Can be used as a negotiation tool

Contingencies can be used as a negotiation tool between the buyer and the seller and provide the buyer with an added layer of flexibility.

If you’re the buyer, you can request specific remedies as a condition for moving forward with the purchase, for example repairs.

Read more:

4 super simple tools to accelerate Contract Negotiations in PandaDoc

Streamlining your real estate contracts

When buying or selling a home, a lot of paperwork is involved. Every stage from “under contract” to closing depends on getting all of it signed accurately and on time. This is made easier for buyers, sellers, and agents when the right digital tools are in place.

A contract management system like PandaDoc allows you to start from a real estate contract template, then customize it for your deal. You can also collect legally binding e-signatures without having to print documents or meet in person. Plus, the platform lets you see where each document stands as the sale moves toward closing, so you’re never guessing the status. 

With PandaDoc, you can start from a real estate contract template, customize it for your deal, and collect legally binding e-signatures without printing or in-person meetings. You can also see where each document stands as the sale moves toward closing.

PandaDoc helps everyone to move through the sale process quickly, negotiate all elements of the deal more efficiently, and make necessary changes immediately.

The real estate sale process is complex — but you can make it simpler

Under contract and pending sale are two distinct stages of the real estate selling process.

Essentially, under contract signifies the start of the marathon, while pending sale means you’re actually seeing the finish line, where you only have to run the final meters to reach it.

With PandaDoc, you can streamline the entire real estate negotiation and purchasing process, regardless of your role in it.

Sellers, buyers, and real estate agents all have a lot to win by going digital, both in terms of simplicity and speed.

Simplify your next real estate deal with PandaDoc's contract templates and eSignatures. Start your free trial today.