What Does Contingent, Pending & Under Contract Mean In Real Estate? YouTube

Cover How To Tell If A House Is Under Contract RAELST (600x900)

Table of Contents

• What is Under Contract?
• What Happens After a Property Goes Under Contract?
• Can You Still Make an Offer on a Property Under Contract?
• Can a Seller Back Out of a Contract?
• What is the Difference Between Under Contract and Sold?

What is Under Contract?

When a property is listed for sale, potential buyers can make an offer on the property. If the seller accepts the offer, a contract is signed, and the property is considered to be "under contract." This means that the buyer and seller have agreed on the terms of the sale, and the property is no longer available for sale to other buyers.

Under contract is a legal term that signifies that the buyer and seller have entered into a legally binding agreement. The contract outlines the terms of the sale, including the purchase price, closing date, and any contingencies that must be met before the sale can be completed.

Once a property is under contract, the buyer typically has a certain amount of time to complete the due diligence process, which includes inspections, appraisals, and obtaining financing. If the buyer is satisfied with the results of the due diligence process, they can proceed with the sale and close on the property.

What Happens After a Property Goes Under Contract?

After a property goes under contract, there are several steps that must be taken before the sale can be completed:

1. Due Diligence: As mentioned earlier, the buyer typically has a certain amount of time to complete the due diligence process. This includes inspections to determine the condition of the property and an appraisal to determine the fair market value of the property.
2. Financing: If the buyer is obtaining financing, they must secure a loan commitment from their lender before the sale can be completed. The lender will require an appraisal and will also review the buyer's credit history and financial situation.
3. Title Search: The title search is conducted to ensure that there are no liens or other issues with the property's title that could prevent the sale from being completed.
4. Closing: The closing is the final step in the sale process. At the closing, the buyer will sign all of the necessary documents, pay any remaining closing costs, and take possession of the property.

Can You Still Make an Offer on a Property Under Contract?

Technically, a buyer can still make an offer on a property that is under contract. However, it is unlikely that the seller will consider the offer seriously, as they have already entered into a legally binding agreement with another buyer.

If the buyer who has the property under contract is unable to complete the sale for any reason, the seller may consider other offers. However, in most cases, the seller will not entertain other offers until the current contract has been terminated.

Can a Seller Back Out of a Contract?

In most cases, a seller cannot back out of a contract once it has been signed. If the seller attempts to do so, they could be sued for breach of contract.

However, there are some situations in which a seller may be able to back out of a contract without facing legal consequences. For example, if the buyer fails to meet the contingencies outlined in the contract, such as obtaining financing or completing inspections, the seller may be able to terminate the contract.

Additionally, some contracts include contingencies that allow the seller to terminate the contract if certain conditions are not met. For example, a seller may be able to terminate the contract if they are unable to find suitable housing after selling their current home.

What is the Difference Between Under Contract and Sold?

When a property is under contract, it means that the buyer and seller have agreed on the terms of the sale, but the sale has not yet been completed. The property is still technically available for sale until the closing has taken place.

Once the sale has been completed and the closing has taken place, the property is considered to be "sold." At this point, the buyer has taken possession of the property, and the seller has received payment for the sale.

Conclusion

Understanding what it means when a property is under contract is an important part of the home buying and selling process. When a property is under contract, it means that the buyer and seller have agreed on the terms of the sale, and the property is no longer available for sale to other buyers. However, there are still several steps that must be taken before the sale can be completed, including due diligence, financing, and the closing process. If you are buying or selling a home, it is important to work with a qualified real estate agent who can guide you through the process and ensure that everything goes smoothly.