Real estate jargon can be frustrating to decipher. If you are on the hunt for a new home, you may have come across properties that have been labeled “under contract” and wondered what it means. Can you still view and make an offer for the house? What makes properties that are ‘under contract’ different from properties that have been labeled ‘pending’? These are all common and very valid questions! Read on to find out what ‘under contract’ really means in real estate and what you can and cannot do.
What Does ‘Under Contract’ Mean?
Properties ‘under contract’ may alternatively be labeled as ‘pending sale’ or ‘active under contract’, which means that someone has already put forth an offer and the seller has accepted it. Put simply, an agreement is underway, and the house is no longer on the market.
However, this does not mean that the agreement will go through. Oftentimes, such agreements have contingencies. If the contingencies are not met within the stipulated time period, the deal will fall through, and the house will once again be back on the market.
Nonetheless, even if a property is ‘under contract’ you may still make an offer, but keep in mind that the chances of the seller accepting is very low as they are only allowed to accept your offer as a backup if the initial one has fallen through.
Making An Offer for ‘Under Contract’ Properties
The saying “you’ll know it when you see it” is especially true when house hunting. Sometimes, you come across your dream house and the only thing standing in your way is the dreaded ‘under contract’ label. What can you do in such a situation?
Properties that are ‘under contract’ can still be shown and will continue to be listed until the deal is sealed. This means that you can still tour your dream home and make an offer for it. It is dependent on the broker or the seller to continue accepting incoming offers. In practice, sellers may choose to accept your offer as a backup, in case they will not be proceeding with the pending agreement, so keep your hopes up!
Reasons a Deal May Fall Through
During the agreement negotiation process, various stipulations may be included upon which the deal is contingent on. Such stipulations are known as contingencies and can come in various forms. These terms will allow either the seller or the buyer to back out of the deal should the property or circumstances not meet the stipulations within a pre-determined time period. Depending on the parties involved, contingencies can be complex, and it is not uncommon for deals to fall through because one or all parties were unable to meet them.
Of course, if the initial deal falls through, you may want to think twice about the property or examine it with a closer eye as the deal pay has fallen through because of common contingencies such as a failed house inspection or significant defects found. You may be excited that your dream home is within your grasp again but make sure to still do your due diligence!
