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Active Under Contract Vs Pending. What Does It Mean?

March 23, 2021


It’s almost the weekend, you’ve got you’re favourite latte or glass of wine beside you, and you’re looking online at real estate listings. You’re dreaming of your new backyard when you come across a listing that is either marketed as active, under contract, pending or sold. What do these real estate terms mean for you and prospective buyers? Can you still put in an offer on your dream home? Let’s find out below: 


What Is An Active Listing?

Before a home can be listed on the Multiple Listing Service, a home seller will meet with their realtor and fill out a listing agreement. The listing agreement is an official agreement between the home seller and the listing agent’s brokerage and outlines the length of the listing contract and terms agreed upon with the seller.


When a listing status is listed as active, the property is available for showings to potential buyers and their real estate agents. The property will continue to be advertised on the Multiple Listing Service, real estate websites, and social media channels.


At this stage, interested buyers will be able to submit a written offer for the seller’s consideration. Depending on the terms and conditions included in the buyer’s offer, a seller can reject, counter or accept a buyer’s formal offer.


Once there is a conditionally accepted offer, the home’s status will change from active to active under contract. This tells prospective buyers that there is a conditional or unconditional accepted offer on this property.


It is up to the seller if they choose to accept backup offers at this stage – but more on backup offers below.


What Does It Mean When A Listing Is Active Under Contract?

Active under contract is when there is a conditional or unconditional accepted offer.


As mentioned above, once there is an accepted offer, a legally binding agreement occurs between the seller and an interested buyer, and the property status is now active under contract.


Usually, the conditions written out in the contract of purchase and sale are for the home buyer’s benefit. The property has either an accepted offer with conditions or an unconditional offer waiting on the buyer’s deposit. At this stage, the property is still listed as active but may be marketed as “under contract.”


Depending on the length of the condition or contingency period, the buyer will have a certain number of days to complete their due diligence and satisfy the conditions agreed to in the contract of purchase and sale. This is called the contingency period or due diligence phase.


The cumulative days on market (DOM) for the property will continue to increase until the listing agent changes the active status to pending. The current buyer will need to fulfill and remove their conditions before the conditionally accepted offer becomes pending. 


What Are Examples Of Common Contingencies (also known as conditions)?

Conditions are agreed-upon clauses in the contract of purchase and sale that the buyer or seller must fulfill for the transaction to change to pending and proceed towards completion.


The contingency period may fluctuate depending on the strength of the real estate market, but usually, the condition period is between 7-10 days. This allows enough time for the buyer (and occasionally the seller) to complete their due diligence.


Financing Condition 

This condition is almost always for the benefit of the buyer. The buyer has the opportunity to ensure that they will get mortgage financing that is satisfactory to the buyer’s desired terms and rates.


The financing condition period allows a buyer to get firm approval from their mortgage broker or bank to ensure that they will obtain mortgage financing upon completion.


Home Inspection Contingency

It is always recommended for a home buyer to have a home inspection by a professional inspector. The due diligence period allows the buyer time to schedule this inspection and review any findings.


Inspectors will look at plumbing, electrical systems, the roof, visible insulation, walls, ceilings, windows, and the integrity of the foundation. They also check for lead paint, asbestos, mould, outdated and dangerous wiring, and evidence of pests like mice or termites.


If you’re purchasing a strata property, I would highly recommend a home inspection company that also looks at the depreciation report, strata minutes, and financials in addition to inspecting your unit.


Home Sale Contingency 

This condition is included in the contract of purchase and sale when the interested buyer has to sell their current home before they can purchase the property.


Home Appraisal Contingency

This is a condition that is subject to a professional appraisal on the subject property. An appraiser will determine the value of a home based on comparable properties within the subject property’s location. A mortgage lender will lend on the lower of the purchase price or the appraised value.


Can I Submit A Backup Offer?

The listing agent can (and should) still show the property in case the first offer falls thru.


Once the seller has accepted a conditional offer, the seller may be open to accepting a backup offer. If the first buyer does not remove their conditions, the backup offer will become binding upon the seller and the second buyer.


As a homebuyer, your real estate agent needs to communicate with the listing agent to see if they are willing to accept a backup offer. You never know if the first deal will go firm, and if this is your dream home, then it could be worth a shot! 


When Does The Listing Status Change To Pending?

A listing will change to pending once all contingencies or conditions have been fulfilled or the offer was unconditional, and the buyer’s deposit has been submitted.


When a listing’s status has changed to pending, the buyer’s deposit has been received by the buyer’s agent’s brokerage, and the real estate transaction is moving towards completion. Realtors will be able to view the sale price once a property is listed as a pending sale.


Any Other Terms That I Should Know?

Expired: A listing agreement between a seller and the listing agent is set for a predetermined amount of time. If the property is not sold during the length of the listing agreement, the status of a listing will change to expired. The property will no longer be advertised or included in MLS listings for sale.


Withdrawn: This is usually a temporary situation where the listing is withdrawn for a short duration. It could be due to a seller’s various reasons or a market change. A valid listing contract exists and the property remains on the MLS.


Cancelled: This is when the listing agreement has been terminated in writing by all parties. The listing is no longer active on the MLS.


Finally, What Does It Mean When A Listing Is Marked As Sold?

When a listing status has changed from pending to sold, the transaction has completed, and the listing is no longer on the market. Ownership has successfully transferred from the seller to the buyer, and the seller has received the sale proceeds. At this point, the buyer can move into their new home!


March 23, 2021

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