When browsing homes on Zillow, you might come across the term “under contract.” For many, this phrase raises questions about the property’s availability and what it means for potential buyers. Understanding this term is crucial for navigating the home-buying process with confidence.
“Under contract” signifies an important stage in real estate transactions, but it doesn’t always mean the deal is final. Knowing what this status entails can help buyers and sellers alike make informed decisions. Whether you’re actively searching for a home or just curious about the process, getting clarity on this term can save time and avoid confusion.
Understanding “Under Contract” On Zillow
“Under contract” on Zillow means the seller has accepted a buyer’s offer, but the transaction isn’t complete. It indicates that both parties have agreed to the terms and conditions, and the property is in the escrow phase.
During this phase, various steps occur, such as inspections, appraisals, and securing financing. If these steps don’t result in issues, the property moves towards closing. However, the sale isn’t guaranteed, as contingencies allow either party to back out under specific conditions.
Properties labeled “under contract” may still receive backup offers. This helps sellers safeguard against potential deal cancellations and keeps options open for interested buyers.
How Properties Get Under Contract
A property gets under contract when a buyer and seller come to an agreement and sign a contract after an offer is accepted. This marks the beginning of the closing process, where the transaction details are finalized.
Key Steps In The Home Buying Process
Buyers typically start by searching for properties, either online or through an agent. Once they find a suitable home, they submit an offer to the seller, which includes the purchase price and any contingencies, such as inspections or loan approval. If the seller accepts, both parties sign a purchase agreement, and the property is marked under contract.
After the contract is signed, a buyer schedules inspections to check for any property issues. An appraisal is also performed to determine the home’s market value. Lenders then work on approving the buyer’s financing. Once these steps are completed, the process moves toward closing.
Buyer And Seller Agreements
The purchase agreement outlines terms agreed upon by both parties, including the purchase price, closing date, and any contingencies. Buyers may include contingencies requiring satisfactory inspections or securing a loan. Sellers might agree to handle necessary repairs identified during inspections or provide credits to cover certain costs.
Both parties commit to fulfilling their contractual obligations. Failing to meet these terms could lead to the cancellation of the agreement, allowing either the buyer or seller to walk away under specific conditions.
What “Under Contract” Means For Buyers
When a property is marked “under contract” on Zillow, the seller has accepted a buyer’s offer, but the final sale isn’t complete. Buyers can explore opportunities in certain cases depending on contingencies and seller preferences.
Can You Still Make An Offer?
A buyer can submit a backup offer on a property listed as “under contract.” Backup offers are considered if the initial agreement falls apart due to financing issues, inspection problems, or unmet contingencies. Interested buyers should contact the seller’s agent to understand if backup offers are being accepted.
What Happens If The Deal Falls Through?
If the primary deal collapses, the property is relisted, or the seller might accept a backup offer if one exists. Reasons for deal cancellations include appraisal disputes, failed inspections, or financing obstacles. Buyers monitoring under-contract listings should act quickly if the property returns to active status.
What “Under Contract” Means For Sellers
For sellers, “under contract” signals a crucial stage where a buyer’s offer has been accepted, but the sale isn’t finalized. Although this status represents progress, the process remains active until all terms are met.
Protecting Your Transaction
Sellers secure their interests by ensuring the buyer meets contingencies outlined in the purchase agreement. Typical contingencies include financing, property inspections, and appraisals. Each step should be completed within specified timelines to avoid delays. For instance, if the buyer fails to secure financing or the appraisal value falls short, sellers might renegotiate or agree to terminate the contract under those conditions. Clear communication with agents and adherence to the contractual obligations protect sellers from unnecessary setbacks.
Potential Risks And Backup Offers
Transactions under contract aren’t guaranteed because buyers can withdraw if contingencies are unmet. Examples include inspection failures or low property valuations. These risks make backup offers valuable for sellers. Backup offers provide an alternative agreement, ensuring the property remains in demand if the initial deal collapses. For instance, a backup buyer could step in if an appraisal dispute causes the primary sale to fall through. Keeping the property attractive to other potential buyers minimizes market re-listing and maximizes the chances of a smooth sale.
Difference Between “Under Contract” And “Pending”
“Under contract” and “pending” describe different stages of a real estate transaction. Both terms appear on platforms like Zillow to indicate the status of a property but hold distinct meanings.
- Under Contract
A property labeled “under contract” signals that the seller has accepted an offer, and both parties have signed a purchase agreement. Although the property has a buyer, the sale hasn’t closed due to remaining steps, such as inspections, appraisals, and financing approval. Contingencies in the agreement allow either party to cancel if specific conditions aren’t met. Properties under contract often accept backup offers to safeguard the deal.
- Pending
A “pending” status means the transaction has moved past most contingencies, such as inspection or financing. At this point, the deal is closer to closing, and no new offers are usually accepted. The pending phase primarily involves preparing final documents and completing necessary payments to finalize the sale.
The key difference lies in contingencies. Properties under contract still face possible deal cancellations, while pending properties are usually in the final stages of the process.
Conclusion
Understanding the meaning of “under contract” on Zillow is crucial for navigating the real estate market effectively. This status represents a pivotal moment in the transaction process but doesn’t guarantee a finalized sale. Both buyers and sellers should stay proactive, ensuring all contingencies are addressed to avoid potential setbacks. Backup offers remain a valuable strategy for both parties, offering flexibility and security if the initial deal falls through. By staying informed about the nuances of “under contract” and related terms, individuals can make smarter decisions and better manage the complexities of buying or selling a home.
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, but the sale isn’t finalized. It indicates the initial stage of the closing process where contingencies like inspections and financing must still be resolved.
Can I still make an offer on a home that is “under contract”?
Yes, you can submit a backup offer on a home that is “under contract.” If the initial deal falls through due to unmet contingencies, your offer may be considered.
What happens after a home becomes “under contract”?
After a home is under contract, several steps occur, including inspections, appraisals, and financing approval. Both parties work to meet the terms of the purchase agreement during this escrow phase.
Can a deal fall through if a home is “under contract”?
Yes, deals can fall through due to issues like failed inspections, appraisal disputes, or financing problems. Contingencies allow either party to back out under specific circumstances.
How is “under contract” different from “pending”?
“Under contract” means the property is still subject to contingencies like inspections or financing. “Pending” indicates most contingencies are resolved, and the sale is closer to closing, with no new offers typically accepted.
What should buyers do when a property is “under contract”?
Buyers can monitor the property or submit a backup offer. If the original deal falls through, backup offers provide an opportunity to be considered for the purchase.
What are the risks for sellers when a home is “under contract”?
For sellers, the primary risk is deal cancellation if buyers fail to meet contingencies such as financing or inspection results. Backup offers help mitigate this risk.
Can backup offers improve my chances of buying a home?
Yes, backup offers increase your chances of purchasing a property if the original deal falls through. They ensure you’re next in line for consideration.
Why do properties labeled “under contract” sometimes reappear on the market?
Properties may reappear on the market if the transaction is canceled, often due to financing issues, inspection problems, or unmet contingencies outlined in the purchase agreement.
What is included in a real estate purchase agreement?
A real estate purchase agreement outlines terms like the purchase price, closing date, and contingencies. Both parties must fulfill these obligations to complete the sale.
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