A “contract” sale means that an agreement has been reached between the seller and the buyer, but the sale is still subject to contingencies. In a “pending” sale, the contingencies have expired and the deal is about to close. A pending sale can still fail if there is a problem with the financing or inspection of the home. According to Forbes, the inexperience of first-time buyers is one of the reasons why pending home sales are falling.
This group, which represented about a third of buyers according to a NAR report, may be more likely to have a short credit history. This can cause problems during the mortgage application process. First-time mortgage applications also receive additional scrutiny, Forbes reports. If first-time homebuyers can't get a mortgage, the deal could fail.
Pending home sales fall more often than you might expect. There are several common causes, ranging from a poor home inspection to the sudden discovery of prohibitive levies. Fortunately, sellers can take preventive measures to help minimize the risk of their sale failing. All may be well, but if a buyer is struggling to sell their home, they may have to delay closing or cancel the sale entirely if they can't sell their old home.
