If you’re buying or selling a home in North Carolina, you’ve probably seen properties labeled under contract, contingent, or pending. These terms all sound so similar, but have different meanings in real estate. In North Carolina, the due diligence period makes them especially important to understand.
Let’s break it down clearly so you know exactly what each status means and what it means for your deal.
Key Takeaways
- Under contract means a seller has accepted an offer, but the transaction is not yet finalized, or closed.
- In North Carolina, buyers typically complete inspections, obtain financing approval, and negotiate any repairs or price adjustments during the due diligence period.
What is the Due Diligence Process?
In North Carolina, contracts have a due diligence period, and can include a due diligence fee. This is a set period of time in which the buyer satisfies all “contingencies”:
- completes all property inspections inspections (home, septic, well, roof, etc as desired)
- gets mortgage approval if obtaining a loan
- has the appraisal completed if necessary for the loan or if they choose to for a cash deal
- negotiates if necessary any repairs or purchase price changes
The due diligence fee is a negotiated amount paid directly by the buyer to the seller when the property has an accepted contract. This amount is non-refundable, but is applied to the purchase price at closing. This is a “good faith” fee for the seller to take the property off the market while the buyer satisfies their contingencies Earnest Money deposits are written to and held in a trust account (in North Carolina, typically the closing attorney holds). These funds are fully refundable to the buyer during the due diligence period. In North Carolina, contracts generally have both Due Diligence and Earnest Money fees.
What Does Contingent Mean?
In most states, contingent means there is a contract on the property, but the buyer has certain checklist items to complete. There are several different types of contingencies:
Inspection contingency refers to a period of time in which the buyer can complete all their home inspections, then choose to move forward as-is or to ask for repairs or a reduction in price.
The Appraisal Contingency is when the property will be appraised for value. A lender needs to see that the appraised value of the property is at least the contracted purchase price. If not, the buyer can negotiate a lower price, or will have to make up the difference from their own funds.
For contracts with a Financing Contingency, the buyer is obtaining a loan. The lender will review all their finances and make sure they can afford the loan. The contingency is released once the lender has agreed that the buyer is solid and they can loan the money.
Sale contingency is the only specific clause in the North Carolina contract. The buyer must sell their current property in order to purchase the new one. In most cases, buyers don’t make an offer on a new house until they have accepted a contract on theirs, though they do have the option of disclosing that they have a house to sell that still needs to be listed, or is actively marketed but not yet under contract.
What Does Pending Mean?
Pending is a term used in many states that gives clarity to the type of contract. There are a few different types:
Pending Short Sale – The seller’s mortgage holder must approve the contract because the seller owes more on the property than it is worth.
Pending Taking Back-ups – The property has an active contract but the seller will take back-up offers, meaning if the primary contract is terminated, the back-up contract will become active.
Pending No Show – The property has an active contract and the seller will not accept any additional showing requests.
What Does Under Contract Mean?
Under Contract means that there is an active contract on the property. For many online sites, this means that there are still contingencies in place.
What Does Contingent Mean on Zillow and REALTOR.com?
Zillow is one of the most popular search sites. Because it isn’t state-specific, it often uses terms that are confusing based on the state the buyer is in. These also can differ based on the information provided by the MLS feed. On Zillow specifically, statuses usually break down like this:
Pending – Continue to Show: Seller is still allowing showings and possibly backup offers
Contingent: Offer accepted, contingencies still active
Pending: Contingencies are likely removed and the deal is heading to closing
Can You Make an Offer on a House That is Contingent or Under Contract?
It’s possible to make an offer on a property that’s under contract in North Carolina, if the seller is willing to accept a back-up offer. Typically this would occur during the due diligence period. Once the due diligence period has ended, the sale is more likely to be completed.
Bottom Line
At Altamont Property Group, we’re here to support you through the entire process – from finding your dream home or land, through the entire due diligence process to closing and beyond. Reach out today to talk through all your questions about the home buying process!
Contingent vs. Pending FAQ
How long does a home stay under contract?
Typically, homes stay under contract 30-45 days. This is dependent upon the type of loan and type of property. Some may even close within two weeks!
Why would a listing change from pending back to active?
A listing changes from pending/under contract to active if the sale has fallen through. In North Carolina, the buyer can back out of the contract during the due diligence process for any reason. Typically, this is related to something that showed up in the inspections.
Can sellers accept multiple offers while under contract?
A seller can accept one contract as the primary, and then can accept a back-up contract.
Is pending the final step before closing?
Yes, pending (especially on sites like Zillow) is the final step before closing.
