First letâ€™s get a simplified (not for legal purposes) definition
of the terms.Â Â
â€œPendingâ€ means the seller has accepted a buyerâ€™s offer and,
if several things happen as both parties plan, it will be sold in the next few
days or weeks.Â Â Another term for pending is â€œan
escrow has been openedâ€. Â Â The buyer has
made a deposit with the escrow company and wheels are turning to conclude a
â€œSoldâ€ means the transaction has been completed and the home
has been registered in the buyerâ€™s name with the County Recorderâ€™s office.Â Â The escrow that was opened to start the
process has been closed â€“ all the money has been disbursed, the mortgage has
In most cases, the wheels turn pretty much as planned and
the home becomes â€œsoldâ€ when the escrow closes, usually in about 30 days from
the day it was opened.
Why Might â€œPendingâ€ Not Turn Into â€œSoldâ€?
Most Purchase Agreements contain at least one of three common
â€œcontingenciesâ€, many times all three and sometimes others as well.Â So â€œPendingâ€ becomes â€œsoldâ€ when the buyer removes
all contingencies.Â The three most common
1-Â Â Â Â Â
The buyer must be able to get the loan aproval needed.
2-Â Â Â Â Â
The home must appraise at the offered price
(which may also be a condition of the loan)
3-Â Â Â Â Â
The home must pass the buyerâ€™s inspection
(professional home inspections are not usually done until an escrow is
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 donâ€™t
reveal anything that makes the buyer want to cancel the deal.
Probably the most common reason a sale doesnâ€™t close is a
problem with the financing.Â If the home
doesnâ€™t appraise at the purchase price, the bank wonâ€™t loan the planned
amount.Â If the buyer canâ€™t come up with
additional funds, the deal is off.Â Â
(Remember bank loan preapprovals are subject to contingencies as well,
the biggest being the appraisal).Â
The second most common is that the loan doesnâ€™t come through
as planned, again for a variety of reasons.
Finally, itâ€™s the inspection.Â If it turns up a few minor things, the sale
usually goes ahead as planned.Â 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. Â Â If that agreement can happen, the sale goes
ahead.Â If not, the sale falls
Iâ€™m personally sensitive to this issue because the home my
wife and I bought four years ago was â€œpendingâ€ when we first previewed it.Â I told the listing agent if something fell
through weâ€™d be interested.Â It did, we
were, and weâ€™ve enjoyed our home for all this time.