what does under contract mean?

TLDR: "Under contract" in real estate means a seller has accepted a buyer's offer, but the sale is not yet finalized. This status involves agreed terms, contingencies that must be met, and potential for backup offers. Understanding this stage is crucial for all parties involved in the transaction.

In real estate, "under contract" signifies that a seller has accepted a buyer's offer, but the sale is not yet complete. This status indicates that both parties have agreed on key terms, including the purchase price and closing date, while also outlining any contingencies that must be resolved before finalizing the sale. Common contingencies include financing, home inspections, and appraisals, which can affect the progression of the transaction. It's important to note that properties listed as "active under contract" may still accept backup offers, indicating that the current deal could potentially fall through.

During the "under contract" phase, several critical steps must be navigated, such as home inspections, appraisals, and securing financing. Buyers should conduct thorough due diligence to ensure they are prepared to proceed if contingencies are met. For sellers, this stage typically limits their ability to market the property or entertain other offers until the contingencies are resolved. Understanding the nuances of being "under contract" is essential for buyers, sellers, and real estate agents to effectively manage expectations and work towards a successful closing.