Has your real estate agent added a “Sale Pending” notice onto the “For Sale” signpost on the lawn in front of your home? That’s an exciting step for you, especially if you are a first-time home seller. So what happens next?
While it seems like reaching sale pending status should be the moment to tell your friends, “I sold my house,” selling your home actually requires a few more important steps. You'll need to survive the back and forth of the counteroffer process as you come to a deal with your buyer on price and terms, along with a few other steps. The good news? You’re likely only a few weeks away from being able to give your friends your good news.
Here's what to know about how the selling process works.
What “Sale Pending” Means
When you receive an offer from a buyer, the next step is to come to terms on terms (and more importantly to you, on price). As the seller, you can either accept or reject the purchase offer, or make a counteroffer. Sometimes, this is the only back and forth that will happen between you and the buyer at this point in the selling process. Often, however, the back and forth can continue over several more counteroffer proposals until both parties reach an agreement.
Once you and the buyer have reached a deal, that is when your home moves to a “sale pending” status. While this status does not mean your home is ‘sold,’ it communicates a message to other agents and their clients that the sale of your home is expected to be final within days or weeks, or on an agreed-upon date.
Sale Pending vs. Under Contract
There are other home sale statuses you may have heard that sound similar to a “sale pending” status. One of these is “under contract.” The primary difference between these two terms is that when the sale of a home is under contract, it means there are contingencies that will need to be met before the sale becomes final.
Examples of buyer’s contingencies include the need to sell their home or have financing for new home approved by a lender. An example of a seller’s contingency might be that you request that the sale of your home be by a specific date. More on contingencies later in this article.
Once your home has moved to sale pending, the buyer and buyer’s agent will schedule a home inspection. When the inspector’s report is completed, there may be negotiations you will engage in with the buyer on the report’s findings. The buyer will not typically want to negotiate about small or minor defects in your home. Instead, expect that the buyer’s negotiations will be around repairs that the buyer thinks may be costly. If you as the seller agree to specific repairs, the next step for you is to ensure agreed-upon repairs are completed.
Buyer Loan Approval
The buyer also needs to get loan approval on the agreed-upon purchase price. As the seller, it’s important to know that the average time between when your buyer applies for a mortgage and the closing can take up to 45 days or more. The steps in the process include the buyer submitting the required loan documents, appraisal time, and the mortgage underwriting process. Among the snags that can slow down the selling process is an appraisal that comes in lower than the purchase price. It’s not common, but if it occurs, there can be a period of more negotiation.
To finalize the sale of your home, there may also be certain conditions to meet, such as in the case of a contingency sale, where your buyer is closing escrow on the home they currently own in order to buy your home. Consult your real estate agent on how this step will be completed, and what your legal rights are in the event a contingency is not met to ensure you dot every i and cross every t.
Now Is Your Home Sold?
Even after negotiated repairs are complete, the buyer’s loan is approved, and any contingencies are met, you still have not really sold your home just yet. It is considered sold only when the deed to your home has been recorded and you have received your proceeds.