As a borrower, there are several important steps to be aware of when it comes to the home buying process. First and foremost, you should know that the process does not solely consist of finding the house of your dreams, making an offer, and moving in shortly after. Sure, you can find a home and make an offer, but that bid is actually only the first step of the closing process. There are several additional steps to take before that offer becomes an official sale. Throughout this time period, the house sale is known as “pending” or “under contract”.
Within the first ten days that the offer is accepted, you (the borrower) should complete the following:
- Contact your mortgage lender: You should request an appraisal for the new home.
- Order a home inspection: Although this step is not required, it is highly recommended because it could save you thousands of dollars on home repairs in the long-run.
- Make your deposit: This is usually due about 10 days after your offer was submitted.
- Review and sign the purchase and sale agreement: This contains every detail about the real estate purchase.
For more information on the steps to take before closing, see here. Once every step is completed in the closing process, then ownership transfers to the buyer and a “closed deal” is reported. It’s important to remember that if a house sale is pending, but you don’t complete every step in the closing process, then the sale could fall through and another buyer could make an offer.
Although pending sales seem rather insignificant in the home buying process, this stage is actually a great indicator of where home sales will head in the future. In fact, each month the National Association of Realtors tracks all pending home sales to review the status of the overall housing market. Last month, for example, pending home sales dropped slightly, a total of .8 percent, which means pending sales still remain higher than March of last year.
NAR chief economist, Lawrence Yun, thinks this slight dip is due to the nation’s low housing inventory levels. “Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range,” he reported. “In most areas, the lower the price of a home for sale, the more competition there is for it.”
If you’re still asking yourself “so what does it mean if a house sale is pending,” or you’d like to know more about how pending home sales affect the housing market, contact one of our mortgage specialists today.