When browsing homes on Zillow, it’s common to come across the term “under contract.” For many, this phrase can be a bit confusing, especially for first-time buyers or those new to the real estate market. Understanding what it means is essential for anyone actively searching for their dream home.
In real estate, “under contract” signifies a crucial step in the home-buying process. It indicates that a seller has accepted an offer from a buyer, but the deal isn’t finalized yet. While the property is no longer actively available, the sale could still fall through under certain circumstances. Knowing the implications can help buyers and sellers navigate their next steps with confidence.
What Does Under Contract Mean On Zillow?
On Zillow, “under contract” refers to a property whose seller has accepted a buyer’s offer. This status indicates that both parties have agreed on key terms, but the transaction isn’t finalized yet. During this phase, necessary steps like inspections, appraisals, and mortgage approvals take place.
A property marked under contract is not actively marketed to new buyers. However, the deal may still fall through if conditions outlined in the purchase agreement aren’t met. Examples include failing to secure financing or unresolved inspection issues. Other buyers could then have an opportunity, depending on the situation.
This status helps users understand a property’s buying phase and track potential availability. Understanding the term aids in making informed real estate decisions.
How The Home Buying Process Works
The home-buying process typically involves several steps, beginning with making an offer and concluding with the final transaction. Each phase plays a significant role in securing a property.
Making An Offer
Buyers submit a written proposal to purchase a home. This offer outlines the price they’re willing to pay and any additional terms or contingencies, such as a home inspection or financing approval. Contingencies protect buyers by allowing them to back out if specific conditions aren’t met. Negotiations may occur during this step if the seller’s expectations differ from the buyer’s proposal.
Accepting The Offer
Once both parties agree on price and terms, the seller accepts the buyer’s offer. At this stage, the house moves into “under contract” status. The agreement includes all contingencies that must be completed before closing. During this phase, the seller cannot entertain new offers unless the deal falls through. Inspections, appraisals, and financing approvals are arranged to fulfill agreed-upon terms.
Differences Between Under Contract And Pending
The terms “under contract” and “pending” describe different stages in the real estate sales process. Both terms signal progress but carry distinct meanings.
What Under Contract Signifies
“Under contract” means the seller accepted a buyer’s offer, and both parties signed a purchase agreement. The terms in this agreement often include contingencies, such as inspection, financing, or appraisal. If contingencies aren’t met, the deal may fail. During this stage, the property isn’t actively marketed, but backup offers from other buyers may still be considered in case the sale falls through.
How Pending Differs
“Pending” status indicates all contingencies have been resolved, and the transaction is nearing closing. At this point, the home isn’t available to new buyers, and the sale is almost guaranteed. Only minor details, such as final document signing or funding transfer, remain before completion. While under contract allows some flexibility, pending represents a more secure and advanced stage of the sale.
Can A Home Under Contract Still Be Sold?
A home under contract can theoretically still be sold if the current deal doesn’t close successfully. This depends on contingencies and the progress of the sale.
Situations When Contracts Fall Through
- Inspection Issues
A contract may fall through if serious problems arise during a home inspection. For example, structural damage or electrical system failures might lead a buyer to withdraw.
- Financing Problems
Buyers sometimes face loan denials after going under contract. Insufficient credit scores or incomplete loan applications are common reasons.
- Contingency Clauses
If the buyer or seller cannot meet agreed-upon contingencies, such as selling another property first, the deal may collapse.
- Appraisal Differences
Deals may fail if the property appraises for less than the agreed price and the parties cannot renegotiate.
- Title Issues
Disputed ownership or unresolved liens could prevent the property from being sold, voiding the contract.
Buyer And Seller Options
- Backup Offers
Sellers can accept backup offers, which become active only if the current contract terminates.
- Negotiation
Both parties may choose to revise terms or contingencies instead of canceling the agreement entirely.
- Relisting The Property
If a contract falls through, the seller can relist the home on Zillow or similar platforms to attract new buyers.
- Canceling The Purchase
Buyers might exercise their rights to cancel under certain contingencies if significant issues arise.
- Seeking Legal Advice
Buyers or sellers involved in disputes may consult legal professionals, especially for title problems or breached agreements.
Tips For Buyers Viewing Homes Marked Under Contract
- Check Contingencies
When a home is under contract, focus on the contingencies involved. These may include home inspection, financing, or appraisal requirements that need to be addressed before closing. If contingencies are not fulfilled, the deal might fall through, giving you a chance to make an offer.
- Monitor the Property’s Status
Track the property’s status regularly. Real estate platforms like Zillow update listings when a home moves from “under contract” to “pending” or back to “active.” Save the listing and set up notifications to stay informed about any changes.
- Consider Backup Offers
Sellers often accept backup offers while under contract. Contact the listing agent to indicate your interest. This approach positions you as the next buyer, should the current contract fail.
- Research Comparable Properties
While monitoring the home, review similar properties. Market research helps prepare alternate options and ensures you’re not limiting yourself to one listing.
- Engage a Real Estate Agent
A real estate agent can provide insights into the home’s contract terms and the likelihood of it returning to the market. They can also strategize offers if the current deal falls through.
Conclusion
Understanding the “under contract” status on Zillow is essential for navigating the real estate market effectively. This phase represents a critical part of the home-buying process, offering both opportunities and challenges for buyers and sellers. While it signals progress toward a sale, the possibility of deals falling through keeps the door open for backup plans and alternative strategies.
By staying informed about the implications of this status and working closely with a real estate agent, buyers and sellers can make confident, well-timed decisions. Knowing what “under contract” entails ensures better preparation for the complexities of real estate transactions.
Frequently Asked Questions
What does “under contract” mean in real estate?
“Under contract” means the seller has accepted a buyer’s offer, and both parties have signed a purchase agreement. However, the sale is not finalized yet, as it depends on conditions like inspections, financing, and appraisals being fulfilled.
Can a house under contract still be sold to someone else?
Yes, if the current deal falls through due to unmet contingencies, the property can be made available again. Sellers may also accept backup offers as a precaution.
What is the difference between “under contract” and “pending”?
“Under contract” means the deal has contingencies left to resolve. “Pending” indicates all contingencies are resolved, and the sale is close to completion.
What are common reasons a home under contract may fall through?
Deals can collapse due to issues like failed inspections, financing problems, unmet contingency clauses, appraisal discrepancies, or title complications.
Can buyers make backup offers on homes under contract?
Yes, buyers can make backup offers. If the initial contract fails, the seller may consider the backup offer without re-listing the property.
Should I monitor a home’s status if it’s under contract?
Yes, keeping an eye on the property’s status can help you identify opportunities in case the deal falls through. A real estate agent can assist in tracking updates effectively.
What contingencies are common in real estate contracts?
Contingencies often include home inspections, financing approval, and appraisals. These clauses protect buyers and allow them to exit the agreement if conditions aren’t met.
Why is understanding “under contract” important for buyers?
Knowing the “under contract” status helps buyers identify if the property is likely to return to the market and strategize their next steps, including exploring backup offers or alternative options.
How do platforms like Zillow indicate a property is “under contract”?
Zillow and similar platforms mark properties as “under contract” to show the seller has accepted an offer, but the sale is not yet final. This status helps buyers understand the transaction’s progress.
Can the seller accept new offers while a house is under contract?
No, the seller cannot accept new offers unless the current contract falls through. However, they may accept backup offers for added security.
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