In real estate, a property that is “under contract” means that the seller has accepted an offer from a buyer and the two parties have signed a contract. The contract will outline the terms of the sale, such as the purchase price, the closing date, and any contingencies.
Once a property is under contract, it is no longer available for sale to other buyers. The buyer has the right to back out of the contract under certain circumstances, such as if they are unable to obtain financing or if the property fails a home inspection. However, the seller is generally not able to back out of the contract once it has been signed.
There are a few different ways that a property can become under contract. The most common way is for a buyer to make an offer on a property and the seller to accept it. However, a property can also be under contract if the seller has entered into a listing agreement with a real estate agent. In this case, the agent will find a buyer for the property and negotiate the terms of the sale on behalf of the seller.
Once a property is under contract, the buyer and seller will begin the process of closing the sale. This process typically takes several weeks or months, and it involves a number of steps, such as obtaining financing, getting the property appraised, and transferring title to the buyer.
If you are interested in buying or selling a property, it is important to understand what it means for a property to be under contract. This will help you to avoid making any mistakes that could jeopardize the sale.
Here are some additional details about the process of a property being under contract:
- Offer: The first step in the process is for the buyer to make an offer on the property. The offer will typically include the purchase price, the closing date, and any contingencies.
- Acceptance: The seller can either accept or reject the offer. If the seller accepts the offer, the two parties will sign a contract.
- Contingency: A contingency is a condition that must be met before the contract is finalized. For example, the buyer may have a contingency that the property must pass a home inspection. If the home inspection does not pass, the buyer may be able to back out of the contract.
- Closing: The closing is the final step in the process. This is when the buyer pays the purchase price and the seller transfers title to the property.
- Sure, here is a final paragraph on other terms related to “under contract” in real estate:
Here are some other terms that you may come across when buying or selling a property that is under contract:
- Earnest money deposit: The buyer typically pays an earnest money deposit when they make an offer on a property. This deposit is held in escrow by the real estate agent or title company and is forfeited to the seller if the buyer backs out of the contract without a valid reason.
- Due diligence: The buyer has a right to conduct due diligence on the property before closing the sale. This includes things like getting the property appraised, having a home inspection, and reviewing the seller’s disclosures.
- Counteroffer: The seller may make a counteroffer to the buyer’s offer. This is a new offer that may change the terms of the sale, such as the purchase price or the closing date.
- Contingent offer: An offer that is contingent on something happening, such as the buyer obtaining financing or the property passing a home inspection.
- Waiver: A buyer or seller may waive a contingency, which means that they are agreeing to proceed with the sale even if the contingency is not met.
It is important to understand these terms so that you can make informed decisions when buying or selling a property that is under contract. Read our article on What it means to be “under offer” in real estate.