Have you ever driven by a house and seen a Real Estate broker’s sign in a yard? Of course, you have. But do you know what it means to be Under Contract or Pending?
If you’ve found yourself pondering what exactly the sign in the yard means, the following will bring you clarity.
Ok, this one is easy. If the sign says “FOR SALE” then the home is being offered for sale. If the seller is represented by an agent, the agent’s brokerage firm will be listed on the sign along with a contact phone number. Should you be interested in the property, ask your agent call the listing agent to set up a showing for you. If you are unrepresented, it’s ok to call the agent yourself. Do not, however, contact the seller directly. The listing agent has been hired by the seller to handle all inquires and showings of the home.
If the home is FOR SALE BY OWNER (FSBO), then the seller is not represented by an agent. If you have an agent, it is best you let them contact the owner on your behalf. It is highly recommended you have a buyer agent as they will work to protect and advocate for your best interests. The representation contract you sign with your agent will state how your agent is paid commission. If the seller is responsible for paying your buyer agent, make sure the owner of the FSBO home is willing to pay your agent’s commission. Depending on the terms of your contract, you may have to pay the commission of the seller is unwilling to do so.
In the event you decide not to hire a buyer agent, at least consult with a transaction broker. You can either hire them to facilitate your contracts or get help with drafting your own. Contracts need specific elements to be legal and binding. Using a real estate attorney or seeking their advice is also recommended if you are not going to be represented.
This terminology is often confused with PENDING, which we will discuss next. When a home is under contract it means the seller has accepted an offer from an able buyer and both have agreed to a contract to buy and sell. However, the sale is still in the early stages and may fall through if the buyer can’t secure financing or has any objections to the appraisal, inspection, HOA terms, etc. that can’t be resolved with the seller. If it ends up back on the market that is the time to have your agent submit an offer. Sometimes sellers will have a back-up offer in case something should go wrong.
What if your dream home goes under contract? Be sure to ask your agent to keep you informed on the property and to communicate with the seller’s agent about submitting a back-up offer. Keep in mind it may end up being a waiting game you might not win.
The terms “PENDING” and “UNDER CONTRACT” are often used to mean the same thing. However, there are nuanced differences. A pending sale means the seller has accepted an offer, gone under contract, and is no longer taking any more offers. The home is still considered under contract, but is much closer to being sold. There are no more contingencies the buyer and seller need to address; however, they aren’t totally in the clear. Should the buyer get cold feet or not show up to closing, the sale will fall through. In the unlikely event the sale falls out of contract, you may see the home come to market again.
A sign not seen often, this type of sale is not any comment on the contract status of the home. Instead, a contingent sale refers to the existence of conditions that need to be met for a seller to sell and/or a buyer to buy. The most common contingencies referred to by this type of yard sign are the buyer needing to sell a property before buying another, or the seller needing a rent-back agreement while they look for their new home.
A home can be listed as both under contract and as a contingent sale. It is more likely contingent sales will fall through if the buyer and seller cannot agree or compromise on their contingencies. If that occurs, you and your agent can inquire into the seller’s contingencies, if any, and whether you would like to make an offer based on that knowledge.
Technically, all sales are contingent sales. The buyer has many opportunities to issue objections based on their financing terms, the appraisal, the inspection, and so forth. These are all contingencies that must be passed before a sale moves to PENDING.
Seeing a SOLD yard sign can make or break your day, depending on your perspective. If you are the seller or buyer, that is terrific news. However, if you are not the buyer, and the yard happens to be that of your dream home, then it’s a total bummer.
Once a house is sold it is no longer on the market. You will either need to move on or wait however long it takes for the property to come back to market. Most folks don’t have the time for the latter. Though it is heartbreaking to lose a home to someone else, your agent will help you through it and find more homes for you to see. Your next dream home might just be among them.
If you would like to see a SOLD sign in your yard, contact us today about selling your home. Interested in buying a home? We can help with that, too. When you buy or sell with Live Dream Colorado, The Power is in Your Hands.