The traditional way of evaluating a home (and still the best method) is to look at what has recently sold. However, what if nothing has recently sold? Or what if nothing that is similar to the home you are interested in has sold? That’s where you look at when is under contract, also known as in escrow or pending sales.
The market can fluctuate quickly. Sometimes certain styles are in, so homes of a particular type rise in value, or there was a change in economic outlook, so buyers are holding back. The sale is a snapshot in time, thus not a true depiction of what is going on today.
However, when taking a look at pending sales, that is happening now. It generally means that a buyer has entered contract recently. This is as fresh as it can get. Pending sales can also show trends. If you see homes in a neighborhood enter escrow quickly, and higher prices than what has sold in recent past, that could be an indication that home prices are on the rise. And using the example about styles, the same can apply here. For example if we are seeing Spanish style homes starting the sell quickly where in the past they were taking their sweet time, then it could mean that buyers’ taste are changing.
This information is also useful if you are thinking of selling your home. If you are seeing that your neighborhood is becoming hot, then it may be a good time to sell. Conversely, if everything is taking longer than expected, and you are seeing price reductions below what has sold, then you may want to wait for the market to improve and see what these pending sales ultimately sell for.
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