Buying or selling a home can feel overwhelming, especially with all the real estate jargon tossed around. One term that often raises questions is “under contract,” particularly when browsing popular platforms like Zillow. It’s a phrase that holds significant meaning in the home-buying process but isn’t always clear to everyone.
When a property is marked as “under contract” on Zillow, it signals a critical step in the transaction. However, many wonder if it means the home is officially off the market or if there’s still a chance to make an offer. Understanding this term can help buyers and sellers navigate their options more effectively.
Understanding “Under Contract” On Zillow
A property marked as “under contract” on Zillow means the seller has accepted an offer from a buyer. However, the sale hasn’t been finalized yet, as certain steps like inspections, appraisals, or securing financing are still ongoing.
If a home is under contract, the agreement between the buyer and seller is legally binding, depending on contingencies. Contingencies are conditions that need to be met for the sale to proceed, such as the buyer’s ability to obtain a mortgage or the results of a home inspection.
The property often stays listed on Zillow as “under contract” until all contingencies are resolved. Once these are completed and both parties move forward, the status may change to “pending,” indicating the sale is close to closing. Although rare, deals can fall through, which may return the property to active status.
The Home Buying Process: Key Stages
The home-buying process includes several essential steps that move a property from being listed to officially sold. Understanding these stages helps buyers and sellers stay informed.
The Role Of An Offer In Real Estate
An offer is a formal proposal a buyer submits to purchase a property. It specifies the price they’re willing to pay, any contingencies, and a timeline for the sale. Sellers review offers to decide which best matches their expectations. Once they accept an offer, the property enters the next stage of the process.
Example contingencies include home inspections, appraisal requirements, and financing approval.
From Offer Acceptance To Under Contract
Once the seller agrees to the buyer’s terms, the property transitions to “under contract.” This means both parties sign a purchase agreement, outlining their commitment and any conditions that need fulfillment. During this phase, the buyer arranges inspections, finalizes financing, and ensures compliance with contract deadlines.
The contract remains active until contingencies are satisfied or resolved. If either party fails to meet these terms, the sale could be canceled, and the property might be relisted.
What Does “Under Contract” Mean On Zillow?
A property marked as “under contract” on Zillow indicates that the seller has accepted a buyer’s offer, but the transaction is not complete. Certain conditions and steps must occur before the sale is finalized.
Buyer And Seller Agreements Explained
Buyer and seller agreements involve a signed purchase contract. This contract outlines the terms, including price, contingencies, and deadlines. It’s legally binding unless specific contingencies, such as inspection results or financing issues, terminate the agreement.
During this stage, the buyer conducts due diligence, such as home inspections and appraisals. Financing must be approved, and any agreed-upon repairs may need completion. The property remains “under contract” during these activities until contingencies are met or waived.
Common Misconceptions About Listings Under Contract
Many assume a property under contract is completely off the market. However, it’s still possible for deals to fail. Buyers may back out if inspections reveal significant problems or financing falls through. Sellers might relist the property if the contract is voided.
Some believe it’s unnecessary to consider homes under contract. While chances are slim, submitting a backup offer can position another buyer ahead if the current deal collapses. Understanding this potential helps buyers avoid overlooking opportunities.
Can You Still Make An Offer On A Home Under Contract?
Making an offer on a home marked as “under contract” depends on the circumstances. Although the seller has already accepted an offer, additional offers are sometimes considered in specific situations.
Situations Where Offers Might Be Accepted
- Backup offers: Sellers may accept backup offers, which are secondary agreements activated if the initial contract fails. This ensures a smoother transition if the original buyer withdraws or cannot meet the terms.
- Contingency issues: If the current buyer struggles to meet contingencies like financing or inspection approvals, sellers might entertain other offers to maintain flexibility.
- Investor interest: For properties with investor demand, sellers sometimes prioritize financially secure backup offers, especially when the existing contract seems unstable.
Why Some Contracts Fall Through
- Inspection results: Poor inspection outcomes, such as structural damages or safety concerns, can cause buyers to back out if repair negotiations fail.
- Financing problems: Buyers losing loan approval or failing to secure necessary funds often result in contract cancellations.
- Contingency disagreements: Unresolved disputes over contingencies, like appraisal differences or sale-of-current-home clauses, might force the deal’s collapse.
- Cold feet: Occasionally, buyers withdraw due to personal reasons or changing circumstances. Sellers may reopen the property to new buyers in such cases.
Tips For Buyers And Sellers Navigating “Under Contract” Status
Understanding the “under contract” status helps both buyers and sellers make better decisions. It’s essential to know your options and responsibilities during this phase.
Advice For Homebuyers
- Prepare Backup Offers: Buyers should consider submitting backup offers for properties labeled as “under contract.” This provides a chance to secure the property if the initial deal falls through due to contingencies or buyer withdrawal.
- Monitor Contingency Periods: Buyers can track the progress of contingency periods, such as inspections or appraisals, by staying updated through their real estate agent. This helps determine whether another bidding opportunity might arise.
- Remain Flexible: Being prepared to act quickly if a property returns to active status increases the chance of securing it. Financial pre-approval and immediate follow-up can assist in competing with other potential buyers.
Guidance For Sellers
- Consider Backup Offers: Sellers can accept backup offers while a property is under contract. These offers provide a fallback in case the primary buyer cannot fulfill contingencies or financing requirements.
- Communicate Clearly: Maintaining regular updates between the seller and buyer improves understanding of contract progress. Sellers can also address potential issues early to minimize delays.
- Assess Contract Terms: Sellers should carefully evaluate all terms in the purchase agreement during the “under contract” phase. This ensures commitments, timelines, and contingencies are realistic and achievable, lowering the chances of a canceled deal.
Conclusion
Understanding what “under contract” means on Zillow is crucial for navigating the real estate market confidently. This status signifies important progress in a property transaction but also leaves room for potential changes. Both buyers and sellers should stay proactive during this phase, whether by monitoring contingencies, preparing backup plans, or maintaining open communication. By knowing how to approach properties under contract, individuals can make informed decisions and increase their chances of success in the competitive housing market.
Frequently Asked Questions
What does “under contract” mean in real estate?
“Under contract” means the seller has accepted an offer from a buyer, but the sale is not yet final. The agreement depends on contingencies, such as inspections, appraisals, or financing, that need to be resolved before the transaction is completed.
Can I make an offer on a home that is “under contract”?
Yes, you can submit a backup offer. While the primary buyer may have the first claim on the property, backup offers give you a chance if the initial deal falls through.
How long does a property stay “under contract”?
The duration varies but typically lasts from a few weeks to a couple of months. It depends on how quickly contingencies like inspections and financing are fulfilled.
Why do deals under contract sometimes fall through?
Deals can fail due to poor inspection results, financing issues, unresolved contingency disagreements, or a buyer withdrawing for personal reasons.
What is the difference between “under contract” and “pending”?
“Under contract” means contingencies are still unresolved, while “pending” indicates all contingencies have been met, and the sale is in its final stages.
Should sellers consider backup offers on properties under contract?
Yes, sellers should consider accepting backup offers to have an alternative in case the original deal fails due to issues like financing or inspections.
Can a seller back out of a property under contract?
It’s rare but possible if specific contingencies outlined in the contract aren’t met. However, backing out without valid reasons can lead to legal consequences.
Is a property under contract still on the market?
While technically still listed, a property under contract is usually considered off the market. However, backup offers can be entertained if the seller permits them.
How can a buyer improve their chances with a backup offer?
To improve your chances, ensure your backup offer is competitive, flexible, and free from unnecessary contingencies. Quick communication also helps if the deal falls through.
What can buyers do if a property they want is under contract?
Buyers can submit a backup offer, monitor the property’s status, and stay prepared to act quickly if the original deal collapses.
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