What Does 'Pending' Mean? A Realtor Defines the 10 Terms That Trip Up Homebuyers the Most
Unless you’re a licensed real estate agent, you’ve probably smiled blankly and nodded at a word you didn’t understand while house hunting (or watching Selling Sunset), only to discreetly turn to your phone and Google “What does pending mean?” Or “What is escrow?”
Thankfully, those search results are no longer, uh, pending (c’mon, spotty signal!), thanks to Realtor Jessica Lingscheit of The Somerday Group. Read on for the top real estate terms she says you should know to make shopping for your dream home so much easier, especially if you’re a first-time homebuyer.
What does pending mean?
When an offer on a home has been accepted and is now under contract, it’s listed as “pending.” In other words, Lingscheit shares, if a home is pending it has “an active contract on it, and is in the process of being sold” but it has not been sold yet. The misconception here? Just because a home doesn’t have a “sold” sign outside doesn’t mean it is still available or open for viewing. Instead, pending means the process to get that “Sold” sign is underway, and it can take up to a month (or more) to get there. You’ll often see it on real estate listings—especially now, with the market being so hot—but many sites, like Trulia and Zillow, allow you to filter out homes listed as “pending” if you don’t want to get your hopes up.
Realtor Tip: If you’re interested in a home that’s pending, you can ask your real estate agent if you are able to place a back-up contract on the property, so that if, for whatever reason, the original contract falls through, you’ll be the next to scoop it up before it’s relisted as active on the market.
9 Other Real Estate Terms Every Homebuyer Should Know
1. AppraisalAn estimated amount given by an expert (appraiser) to determine the value of the home. Sellers often get an appraisal to determine an accurate listing price, while buyers are required by the bank to get an appraisal for loan approval if they’re obtaining financing.
The final step in the home buying and selling process during which the buyer signs all documents. As soon as the deal funds, meaning payments from the lender and the buyer are made, the new homeowner can get the keys to the property.
3. Closing Costs
These are all of the fees and expenses you need to show up at closing ready to pay, beyond the down payment (more on that below). The Somerday Realtor says these can range anywhere from property taxes and Home Owners Association (HOA) dues to title fees and home insurance.
Realtor Tip: Ask your realtor or your lender what your closing fees might look like beforehand to get a sense of cost. (Expect to spend anywhere from 2 to 5 percent of the cost of your house on closing costs.)
4. Down Payment
If you’re taking out a loan to buy your home, your bank will typically require a down payment, or a percentage of the cost of the home upfront. A 20 percent down payment is often recommended, just so you can secure the best mortgage rate and avoid paying mortgage insurance. However, depending on the type of loan you have, you may not need a down payment (say, if you’re a member of the military or veteran applying for a VA loan) or your minimum could be as low as 3 to 3.5 percent. It is important to remember that the down payment is only a portion of the cost of closing, Jessica notes.
5. Escrow Deposit
This is the initial deposit placed on the property that will eventually be applied at the closing table.
6. HOA (Home Owners Association)
A private organization that manages a community (condominiums, townhouses, single-family homes, etc.) that often requires monthly, semi-annual or yearly payments. They often include certain regulations that can determine things like whether you can Airbnb your home or even what colors are acceptable for painting the exterior of your house.
Realtor Tip: Review all info about the HOA before placing an offer to ensure you are aware of all rules, regulations and fees that come with living in that particular community.
7. Inspection Period
This is the optional time during which the home is being reviewed, from its plumbing to the age and condition of the roof, by a home inspector. Essentially, the inspector is looking for any issues that may affect the value of the home (and repairs you’ll need to do down the road). It’s an additional cost on the homebuyers’ part—typically $300 to $500—but it’s worth it. “If you are given time to inspect the property, take full advantage of it,” Jessica emphasizes. “Even if the home is a new construction home, I recommend getting a home inspection. This can save you a headache down the road.” If the inspector finds huge issues with the house, you can negotiate the price, ask the seller to make these repairs before closing or choose to walk away from the deal.
Realtor Tip: Ask your agent about the inspection period before going under contract, then find a thorough inspector in your area who can give you a full report outlining any home defects or maintenance issues.
If you plan on taking out a mortgage to buy a house, you’ll want to have a “pre-approval” from your lender. This is essentially a letter stating that the lender has reviewed your income and assets and approved that they’ll loan you a set amount of money. When you go to place an offer on a house, the seller will want to see this to ensure you have the funds to buy the home. (Before you start seriously searching for homes, it’s good to find a lender and acquire this letter. Be prepared to fill out an application, provide income statements or pay stubs, and have your credit pulled as part of the pre-approval process.)
A real estate agent who belongs to an association in the area and is required to pay annual dues and take certain classes and training. “All realtors are real estate agents but not all real estate agents are realtors,” Jessica points out, adding, “Where I’m from, realtors also have access to electronic lockboxes, whereas someone who does not belong to an association may not be able to access these homes.”