Your Guide to Real Estate Lingo
If you’re browsing real estate listings or just starting your home buying or selling journey, you’ve probably come across the term “under contract.” But what does this phrase actually mean?
Under Contract: The Basics
When a home is listed as “under contract,” it means the seller has accepted a buyer’s offer. This marks a crucial step in the transaction, but there’s a crucial distinction: the house isn’t officially sold just yet.
The Path from “Under Contract” to “Sold”
Think of the “under contract” phase as a bridge between an accepted offer and a finalized sale. It’s a time when a number of things need to happen before the keys change hands:
Contingencies: Most purchase contracts include contingencies. These are conditions that must be met for the deal to move forward. Here are some common examples:
Home Inspection: Buyers can have the home inspected to ensure it’s free of major defects.
Appraisal: The lender wants to verify that the home’s appraised value aligns with the agreed-upon price.
Financing: The buyer’s mortgage needs to be secured and approved.
Renegotiations: If issues arise during inspections or other contingencies, a buyer might renegotiate the price or request repairs. Sometimes, these negotiations may not be successful and the deal can fall through.
Closing: When all contingencies are satisfied or waived, the sale moves to the closing process where the final paperwork is signed and ownership is transferred.
What Does This Mean for Buyers and Sellers?
Buyers: While a house is under contract, it’s usually advisable to keep your house search going. Deals do occasionally fall apart. Still, some sellers will entertain backup offers for security in case the first contract does not close.
Sellers: If your property is under contract, it’s common to take it off the active listings market. However, you may consider keeping it listed as “active under contract” to potentially attract backup offers.
Why Does the “Under Contract” Period Matter?
Understanding this stage is vital for several reasons:
Managing Expectations: Both buyers and sellers should be aware that there’s still a chance for delays or complications, even with a signed offer. This awareness helps everyone be patient with the process.
Making Informed Decisions: If you’re actively house hunting, knowing that “under contract” doesn’t equate to “sold” is crucial, as it affects your options and potential backup offer strategies.
Celebrating Milestones: Reaching the “under contract” stage is a big step! Buyers and sellers can celebrate knowing they’re closer to their goals while remaining prepared for the final steps.
The Edwards Team: Your Guide Through Every Step
Navigating real estate transactions can be complex, but we’re here to make the process clear and smooth for our clients. Whether you’re buying, selling, or simply curious about the real estate world, The Edwards Team has the expertise to answer your questions and guide you with confidence.
Contact us today to learn more about what “under contract” means for your real estate journey and how we can help you achieve your goals!
