Yes, appraisers can use pending sales, but in almost every residential assignment a pending sale is supporting evidence rather than a replacement for a closed comparable. Both USPAP and the major lending guidelines require closed sales as the backbone of the sales comparison approach, and pending contracts sit alongside active listings as supplementary data that help the appraiser gauge where the market is heading. The one real exception is new construction, where Fannie Mae permits limited substitution when no sales have closed inside the project yet.
What Fannie Mae and Freddie Mac Allow
For any loan sold to Fannie Mae or Freddie Mac, the appraisal must include a minimum of three closed comparable sales. Contract offerings and current listings can supplement those closed sales but cannot replace them. An appraiser might discuss a pending sale in the report and lean on it to justify a time adjustment, but the three-closed-sale minimum is not negotiable for conventional conforming loans.
The New Construction Carveout
Fannie Mae makes one meaningful exception. When the subject is among the first units to sell in a new condo project, subdivision, or planned unit development, there may be no closed sales inside the project at all. In that case, the appraiser can use two pending sales from within the project in place of one settled sale. The report must still include at least three settled comparables from projects, subdivisions, or PUDs outside the subject’s development.
If the subject is not the first unit under contract in the project, Fannie Mae requires the appraiser to include at least one pending sale from the subject’s project as a supplemental exhibit, even when three closed comparables are already reported. In new developments, internal transaction activity is the clearest evidence of how buyers are receiving that specific product.
FHA Goes Further in Shifting Markets
FHA appraisals follow HUD Handbook 4000.1, as updated by Mortgagee Letter 2025-18. In markets with increasing or decreasing property values, FHA requires the appraiser to include at least two active listings or pending sales on the sales comparison grid in addition to the standard three settled sales. Pending and listing data are mandatory on FHA appraisals in shifting markets, not optional.
When a pending sale appears on an FHA grid, the appraiser has to do several things with it:
- Confirm the comparable had reasonable market exposure, so overpriced properties are not treated as market evidence.
- Use the actual contract price when available, and when it is not, adjust using listing-to-sale price ratios for the market.
- Report the original list price, any revised list prices, and total days on market, with an explanation if DOM differs from typical neighborhood absorption.
- Reconcile the pending data against the settled sales, and if the adjusted values of settled comparables come in higher than the adjusted values of the pending sales or listings, evaluate whether a market conditions adjustment is warranted.
That last point forces the appraiser to confront what pending sales are saying about direction. If closed sales from three months ago show higher values than today’s contracts, the market is likely declining, and the appraiser has to account for that rather than anchoring to the older, higher numbers.
What USPAP Requires
The Uniform Standards of Professional Appraisal Practice sets the baseline for all licensed appraisers. USPAP defines “credible” as “worthy of belief” and requires assignment results to be supported by relevant evidence and logic. Pending sale data is permitted under that standard, but only when the appraiser has verified the information and can show why it supports the value conclusion.
Standards Rule 1-4 requires appraisers to analyze available comparable sales data when using the sales comparison approach. Standards Rule 1-5 goes further for the subject property itself, requiring the appraiser to analyze all current agreements of sale, options, and listings of the subject as of the effective date, plus all sales of the subject within the prior three years. For the subject property, analyzing pending contract data is mandatory when it exists and is available in the normal course of business.
Standards Rule 1-6 then requires the appraiser to reconcile the quality and quantity of all data analyzed. A verified pending sale with known terms earns more weight than one where the contract price is unknown. A closed sale with confirmed arms-length conditions earns more weight than either.
How Appraisers Verify a Pending Sale
An MLS status change to “pending” confirms that a contract exists, but it tells the appraiser almost nothing useful for valuation. The contract price, concessions, contingency status, and financing terms are what matter, and none of that reliably appears in MLS data alone.
The standard practice is to call the listing agent directly. Most agents will disclose the contract price when another appraiser asks, and experienced appraisers report getting the information roughly nine times out of ten. Beyond the price, the appraiser needs to confirm whether the sale is arms-length, what contingencies remain open, whether the seller is paying closing costs or offering concessions, and whether unusual financing is involved. Each of these factors affects how the contract price translates into a market value indication.
When the contract price is genuinely unavailable, the appraiser can still use the pending sale by adjusting the last known list price using listing-to-sale ratios observed in that market segment. If similar homes typically sell at 97% of list price, a pending sale listed at $400,000 can be estimated at roughly $388,000. That is less precise than a verified contract price, but it provides useful directional data, especially in markets with thin closed-sale activity.
How Much Weight a Pending Sale Carries
A pending sale used as a comparable goes through the same adjustment process as a closed sale for physical and location differences. Concessions get adjusted out, and financing terms get normalized. The one factor unique to pending sales is transaction status itself. Because the deal has not closed, the buyer could walk after an inspection, the financing could collapse, or the parties could renegotiate the price. Appraisers handle this by giving the pending sale less weight in reconciliation rather than applying a specific dollar adjustment.
A pending sale with a verified contract price, known terms, minimal remaining contingencies, and strong similarity to the subject carries real analytical weight. One where the appraiser could only estimate price from list-price ratios and could not confirm whether the buyer is getting seller concessions carries much less. An appraiser who places heavy reliance on an unverified pending sale over three solid closed comparables is inviting trouble from underwriters.
When Pending Sales Matter Most
Pending sales earn their keep in a few specific situations. In rapidly appreciating markets, they keep the appraiser from understating value by relying on stale closed sales. In declining markets, they do the opposite, signaling that buyers are no longer willing to pay what the last round of closings reflected. In rural or low-volume areas where closed comparables are scarce and may be months old, a recent pending contract can be the best available evidence of current demand.
They also matter in new construction, where the Fannie Mae exception explicitly permits their use. A brand-new subdivision with no closed sales but six signed contracts paints a clearer picture than three closed sales pulled from an established neighborhood two miles away. The pending sales confirm absorption pace, buyer willingness to pay at the developer’s price point, and demand for that specific product type.
Where pending sales add little is in stable, active markets with plenty of recent closings. If ten comparable homes closed within the last 60 days and prices are holding steady, a pending sale adds little that the closed data does not already show. Appraisers working in those conditions typically note the pending activity as context and rely almost entirely on the closed comparables for the value conclusion.