Under contract in real estate means the seller has accepted an offer from a buyer and both parties have signed a purchase agreement, but the sale is not yet final because certain conditions, known as contingencies, still need to be met. It is a legally binding stage between an accepted offer and the completed sale, during which the buyer typically completes inspections, secures financing, and obtains an appraisal. The property is generally considered off the market, though some sellers may still accept backup offers.
How Under Contract Differs from Contingent and Pending
Real estate listings use several statuses to indicate where a property is in the sales process. Understanding the differences helps buyers and sellers know what to expect.
- Under contract: The seller accepted an offer and both parties signed a purchase agreement. Contingencies are still being worked through, and the sale could still fall through if those conditions aren't met. The home may still be shown, and backup offers may be accepted.
- Contingent: This is often used interchangeably with under contract, but it specifically means the sale is contingent on certain conditions being met, such as a home inspection or financing. The deal is more likely to fall apart during this stage.
- Pending: All contingencies have been satisfied or waived, and the sale is moving toward closing. The deal is much more likely to close, and backup offers are rarely accepted.
According to Navy Federal Credit Union, the contingent stage is when a deal is most likely to fall apart, while pending sales close at a much higher rate. However, terminology can vary by region and multiple listing service (MLS), so it's always best to confirm the exact status with a real estate agent. You can also explore SFH in Real Estate? Single-Family Homes Explained for a closer comparison.
What Happens During the Under Contract Period
Once a home is under contract, the buyer and seller work through the contingencies outlined in the purchase agreement. Common contingencies include:
- Home inspection: The buyer hires a professional inspector to evaluate the property's condition. If significant issues are found, the buyer may renegotiate, request repairs, or back out of the deal.
- Appraisal: The buyer's lender requires an appraisal to ensure the home's value supports the loan amount. If the appraisal comes in low, the buyer may need to renegotiate the price or bring extra cash to closing.
- Financing: The buyer must secure final loan approval. If the buyer's financing falls through, the deal can collapse.
- Title search: A title company checks for liens or ownership disputes that could prevent a clear transfer of title.
Most homes stay under contract for 30 to 60 days while these contingencies are resolved, according to Opendoor. However, the timeline can vary based on the type of financing and the complexity of the transaction. Cash buyers, for example, can often close in about two weeks because there is no lender or appraisal contingency to clear.
Can You Still Make an Offer on a Home That's Under Contract?
In many cases, yes. If the listing status is "active under contract" or "contingent," the seller may still be accepting backup offers. A backup offer puts you in line to purchase the home if the primary deal falls through. According to Rocket Mortgage, "active under contract" means the seller and buyer have agreed on a price and signed an offer, but the deal isn't complete, and the seller may still accept backup offers.
However, if the status is "pending," the seller is typically not accepting backup offers because the sale is nearly guaranteed to close. Even if a home is under contract, it's worth asking your agent to check with the listing agent about the possibility of submitting a backup offer, especially if the current deal has a high risk of falling through.
How Often Do Under Contract Deals Fall Through?
Not all under contract deals make it to closing. According to Opendoor, about 14.3% of pending deals fell through in January 2025, most often because of financing, appraisal, or inspection issues. This means that while most deals do close, there is a meaningful chance that a home under contract could become available again.
For buyers, this is why submitting a backup offer can be a smart strategy. For sellers, it's why accepting backup offers can provide a safety net if the primary buyer's financing fails or an inspection reveals major problems.
What Under Contract Means for Buyers and Sellers
For buyers, being under contract is an exciting but critical phase. You have a signed agreement, but you still need to complete your due diligence and secure financing. It's important to stay on top of deadlines, respond quickly to requests from your lender, and be prepared to negotiate if issues arise during inspection or appraisal.
For sellers, under contract means you have a committed buyer, but the sale isn't guaranteed. You should continue to maintain the property and be prepared to address any repair requests. You may also want to keep the listing active to attract backup offers, especially if you have concerns about the buyer's financing or the home's condition.
In both cases, working with an experienced real estate agent can help you navigate the complexities of the under contract period and increase the likelihood of a successful closing.
Key Takeaways
- Under contract means a signed purchase agreement exists, but the sale is not final.
- Contingencies like inspection, appraisal, and financing must be resolved before closing.
- The under contract period typically lasts 30 to 60 days.
- Backup offers may be accepted if the status is active under contract or contingent.
- About 14.3% of pending deals fell through in January 2025, often due to financing, appraisal, or inspection issues.
For more detailed information, consult these resources: Navy Federal Credit Union, Garretts Realty, Advantage Real Estate, Fidelity, and Opendoor.