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Dave Sutton, Windermere Portland

Making people outrageously happy with their home sale or purchase

By Dave Sutton, Windermere, Portland | Broker in Portland, OR
  • Does “Pending” Status Mean a Home is Really “Sold”? Maybe

    Posted Under: Credit Score in California  |  January 5, 2010 1:41 PM  |  350 views  |  No comments

    First let’s get a simplified (not for legal purposes) definition of the terms.  

    “Pending” means the seller has accepted a buyer’s offer and, if several things happen as both parties plan, it will be sold in the next few days or weeks.   Another term for pending is “an escrow has been opened”.   The buyer has made a deposit with the escrow company and wheels are turning to conclude a sale.

    “Sold” means the transaction has been completed and the home has been registered in the buyer’s name with the County Recorder’s office.   The escrow that was opened to start the process has been closed – all the money has been disbursed, the mortgage has been recorded

    In most cases, the wheels turn pretty much as planned and the home becomes “sold” when the escrow closes, usually in about 30 days from the day it was opened.

    Why Might “Pending” Not Turn Into “Sold”?

    Most Purchase Agreements contain at least one of three common “contingencies”, many times all three and sometimes others as well.  So “Pending” becomes “sold” when the buyer removes all contingencies.  The three most common are:

    1-      The buyer must be able to get the loan aproval needed.

    2-      The home must appraise at the offered price (which may also be a condition of the loan)

    3-      The home must pass the buyer’s inspection (professional home inspections are not usually done until an escrow is opened). 

    All of these are really protection for the buyer, who agrees to buy the home at the price agreed IF the loan comes through as planned, IF the appraisal is at least for the sale price, and IF the inspections don’t reveal anything that makes the buyer want to cancel the deal.

    Probably the most common reason a sale doesn’t close is a problem with the financing.  If the home doesn’t appraise at the purchase price, the bank won’t loan the planned amount.  If the buyer can’t come up with additional funds, the deal is off.   (Remember bank loan preapprovals are subject to contingencies as well, the biggest being the appraisal). 

    The second most common is that the loan doesn’t come through as planned, again for a variety of reasons.

    Finally, it’s the inspection.  If it turns up a few minor things, the sale usually goes ahead as planned.  If it turns up something a little more expensive to fix, the buyer typically asks the seller to either repair it or give the buyer credit for an amount estimated to fix it.   If that agreement can happen, the sale goes ahead.  If not, the sale falls apart. 

    I’m personally sensitive to this issue because the home my wife and I bought four years ago was “pending” when we first previewed it.  I told the listing agent if something fell through we’d be interested.  It did, we were, and we’ve enjoyed our home for all this time.

 
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