What is what does it mean if a house is under contract?

A house being under contract means that the seller has accepted an offer from a buyer, and both parties have signed a legally binding agreement to proceed with the sale. However, the sale isn't final yet. There are typically several contingencies that must be met before the deal is closed.

Here's a breakdown of what being "under contract" entails:

• Binding Agreement: A signed purchase agreement is in place, outlining the terms and conditions of the sale, including the agreed-upon price, closing date, and any included personal property.

• Contingencies: These are conditions that must be satisfied for the sale to move forward. Common contingencies include:

  • Home Inspection: The buyer has the right to have the property inspected by a professional. If significant issues are found, the buyer can renegotiate the price, request repairs, or back out of the deal.
  • Appraisal: The lender will order an appraisal to ensure the property is worth the loan amount. If the appraisal comes in lower than the purchase price, the buyer might need to renegotiate or bring more cash to closing.
  • Financing: The buyer's ability to obtain a mortgage loan is often a contingency. If the buyer cannot secure financing, they can typically withdraw from the contract without penalty.
  • Title Search: A title company will research the property's history to ensure there are no liens, encumbrances, or other issues that could cloud the title.

• Earnest Money Deposit: The buyer typically provides an earnest money deposit, which is held in escrow. This deposit demonstrates the buyer's good faith and commitment to the purchase.

• Escrow: A neutral third party (the escrow company) holds the earnest money and other funds related to the transaction and ensures that all conditions of the contract are met before disbursing funds and transferring ownership.

• Timeframe: The period between "under contract" and closing can vary depending on the specific terms of the agreement and the complexity of the transaction. It typically ranges from 30 to 60 days.

• Still Not a Done Deal: Until all contingencies are met and the closing is complete, the sale is not final. Either the buyer or seller could potentially back out of the deal if certain conditions aren't fulfilled (depending on the specific terms of the contract and applicable laws).