What Does Under Contract Mean In Real Estate

If you’re in the market for buying or selling a home, you may be wondering, “What does under contract mean in real estate?” In real estate, “under contract” means that a seller receives an offer to purchase their home from a buyer. The home is not considered sold until all contingencies on the property (if any) are met.

Your dream home you’ve been dreaming about just changed its listing status to “under contract.” It may seem like your dream of owning your own home is over, but there may still be hope. Here in this article, we are about to tell you every related information about under contract means in real estate that you need to know. So continue reading.

What Does Under Contract Mean In Real Estate World

A contract in a real estate transaction is considered “under contract” when the buyer and seller agree to the terms of the contract, sign the contract, and the buyer pays the earnest money. A property that is under contract is a home in which the seller has accepted an offer from a buyer. This is the answer to what under contract means in real estate.

However, until all of the home’s contingencies are taken care of and ownership is transferred to the new homebuyer during the closing, the deal may still fall through. If a property is in contract and the agreement does not come to fruition, a backup offer may be made.

What happens after a house is under contract?

After knowing what does under contract mean in real estate, you might want to know what happens after a house is under contract. When you see “under contract” on a listing, it’s a sign that the seller accepts an offer but still has some contingencies that need to be cleared before the sale can close.

There are many things that need to be done as the buyer, including scheduling inspections and making sure your financing is in order. If you’re the buyer that’s under contract, you’ll want to do as much as you can to research the property, location, and anything else that’s important to you during the initial 10 days after you accept the offer. What are Contingencies?

Contingency clauses are terms that are added to real estate contracts. If all of your contingencies are met, your sale can proceed. If one of your contingencies can’t be met, you can walk away without losing your deposit. The next thing to understand what under contract means in real estate is the few common contingencies while house shopping:

The Contingency Of Financing:

If you’re looking to buy a home, you need to get financing unless you’re using all cash. If you can’t get enough money, the sale can’t go through.

The Contingency Of Appraisal:

Lenders won’t lend you more than the value of the house, so they need to do an appraisal to make sure it’s worth the money. If the appraisal shows the value is lower than the price you paid, you can cover the rest out of pocket, talk to the seller, or just walk away.

The Inspection Of Property:

This gives you a few weeks to hire an inspector to check out the house. If the inspector finds any major issues, you can renegotiate, ask for repairs, or end the deal. This is for buyers who want to sell their old house, usually so they don’t have to pay two mortgages at the same time.

House Sale:

The home sale contingency gives you a set amount of time, usually 30 to 90 days, so you can sell your old house and move on to the next one.

How long can a house be under contract?

If you want to know what under contract means in real estate then you might also want to know about how long a house is under contract.

The typical under-contract period is 30 to 60 days, but it can be longer or shorter depending on various factors, including contingencies, negotiations, and local regulations. Some states have mandatory waiting periods or disclosure requirements that can affect how long an under-contract period lasts.

The type of financing you’re using can also affect the length of your under-contract period, including FHA and VA loans. It’s essential for buyers and sellers that they have a good idea of how long their under-contract period will be and that they are able to communicate their concerns and issues to their real estate agent.

Submission Of A Back-Up Offer

The term “under contract” refers to a home that is still in the process of being sold. There are a number of factors that need to be taken into consideration for a home to be considered under contract. However, it also means that the sale can go through at any time.

A home that is in contract means that the seller has received an offer from the buyer. However, experts note that a seller may choose to continue to list a home for sale that is in contract as a “back-up offer” should the house return to the market in the future. Hope you want to know about the backup offer since you wanted to know what under contract means in real estate.

A “backup offer” is a legally binding agreement that guarantees a home offer will be accepted in the event of a previously accepted deal falling through. If you are interested in a home that is in contract and would like to submit a backup offer, make sure to discuss the pros and cons with your local real estate agent or real estate REALTOR.

Under Contract vs Pending

“Under contract” means the seller is open to “backup” offers. “Pending” means the home is “under contract,” but there are still “conditions” that need to be met before closing. That is the basic difference between under contract and pending.

Conclusion

This article starts with a question that asks what under contract means in real estate and we hope that you are satisfied with the answer. To wrap it up all we can say is an “under contract” listing means a seller has agreed to a buyer’s offer to buy the home.

However, there are certain conditions that must be met before the sale can close. If these conditions are not met, the sale may not go through.

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