September 13, 2022

So, finally, you have decided to buy your dream house. A house which you can call yours. But, hold on, finding your dream house is not going to be an easy task.

A dream home is generally considered a mansion or a big house; however, for many people in Georgia, mobile homes are the norm. If you are in the market for a mobile home in GA, a platform such as ZeroDown can help you find the right one.

However, sometimes, when you finally find your dream house, that house is listed as under contract.

You have come across this term many times during your house hunting journey. But what does under contract means?

Let us find out!

What Is Under Contract in Real Estate?

Simply put, under contract means that the buyer and seller have entered into the contract. The buyer has accepted the property, but the sale is not final because some contingencies are pending. Under contract does not mean that transaction to sell a house is completed. It is under process until all the contingencies are not met or outstanding.

The house is in the process of sale but has not sold yet.

The under-contract procedure might take 4 to 8 weeks. The property goes through several processes during this period, including house inspections, land surveys, and many other things.

When the house is listed as under contract, the buyer can take his steps back if any contingencies are not met. After that, the house comes back on the market on a full-fledged basis for sale.

Have you ever wondered why the property is listed as under contract?

It is due to some or other contingencies left in the completion of the contract, namely:

Financial Contingencies

Where a buyer has approved for the specified amount of financing, but due to any reason, if the loan/ mortgage is not approved. The offer may be canceled.

Appraisal Contingencies

Ideally, a property must be evaluated for at least the purchase price. This is required under appraisal contingencies. If the appraisal is below that figure, the seller has two options: either reduce their asking price or withdraw the offer without incurring any fees.

Inspection Contingencies

Where the buyer gets a professional home inspector for the inspection of the house, who is looking closely at every detail of the house, and if he finds any repairs, the seller may either resolve it or cancel the contract.

Sales Contingencies

It is the common of all contingencies. It means that the buyer will finalize this house deal only if they can sell their previous home. The contract might depend on selling one, two, or even three houses.

These contingencies are not limited to the above and may include others.

You have a chance to get your dream house even if it is listed as "under contract" because the transaction is not completed yet. And according to a study conducted by the National Association of Realtors, around 8% of contracts are terminated before the closing date.

Under contract has some primary conditions:

Here are some basics of under contract:

The seller should accept the offer of the buyer
The home is under contract when the agreement to sell a house is enforceable.
The buyer is providing some value to the seller for making the contract executable, e.g., earnest money.

WHAT IS THE MEANING OF ACTIVE UNDER CONTRACT?

When the status is active under a contract, the seller accepts the house's offer. But, the deal is not closed because a few papers are pending.

After the whole process of selling a house is completed, the home will be listed as pending on the websites. It means that all the conditions for selling the house are met, and the contract is about to execute.

FREQUENTLY ASKED QUESTIONS

Q.1 Why Properties Under Contract Are Listed for Sale?

Sales can fall through at the last minute due to one or more contingencies. Rather than advertising the house again, the real estate agents keep the house under contract to maintain the buyers' interest till last.

Q.2 Can a House Under Contract Be Sold to Someone Else?

The seller cannot change his mind when the house is listed under contract on the websites. He is legally binding with the agreement, and both parties are required to perform their rights and obligation.

Q.3 Can I Use a Fallen Contract to Make a Better Deal?

Yes, the subsequent buyers may use the fallen contracts as the opportunity to get a better deal.