What is what does it mean when a home is under contract?

When a home is under contract, it means that a buyer has made an offer to purchase the property, and the seller has accepted that offer. However, the sale is not yet final. Several steps must still be completed before the transaction is closed, and the property officially changes ownership.

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

• Agreement: A legally binding agreement exists between the buyer and seller outlining the terms of the sale. This includes the agreed-upon <a href="https://www.wikiwhat.page/kavramlar/purchase%20price" >purchase price</a>, closing date, and any contingencies.

• Contingencies: The contract often includes contingencies that allow the buyer (and sometimes the seller) to back out of the deal without penalty if certain conditions aren't met. Common contingencies include:

  • <a href="https://www.wikiwhat.page/kavramlar/home%20inspection" >Home Inspection</a>: The buyer has the right to have the property inspected by a professional to identify any potential issues. If significant problems are found, the buyer may be able to renegotiate the price, request repairs, or withdraw from the contract.
  • <a href="https://www.wikiwhat.page/kavramlar/appraisal" >Appraisal</a>: The lender will order an appraisal to ensure the property's value is in line with the purchase price. If the appraisal comes in lower than the agreed-upon price, the buyer may need to renegotiate, come up with additional funds, or back out of the deal.
  • <a href="https://www.wikiwhat.page/kavramlar/mortgage%20approval" >Mortgage Approval</a>: The buyer's ability to secure financing is often a contingency. If the buyer is unable to obtain a mortgage, they can typically terminate the contract.
  • <a href="https://www.wikiwhat.page/kavramlar/title%20search" >Title Search</a>: A title search is conducted to ensure the seller has clear ownership of the property and that there are no outstanding liens or encumbrances.

• Earnest Money: The buyer typically provides <a href="https://www.wikiwhat.page/kavramlar/earnest%20money" >earnest money</a> as a deposit to show their good faith. This money is usually held in escrow and is applied to the purchase price at closing.

• Escrow: An <a href="https://www.wikiwhat.page/kavramlar/escrow" >escrow</a> account is established to hold funds (earnest money, loan funds, etc.) and documents related to the transaction. An escrow agent acts as a neutral third party to facilitate the closing process.

• Closing: The closing is the final step in the real estate transaction. All parties sign the necessary documents, funds are transferred, and the property ownership is officially transferred to the buyer.

During the "under contract" period, the seller generally cannot accept other offers on the property. However, depending on the specific terms of the contract, there may be situations where the seller can consider backup offers. The "under contract" status doesn't guarantee the sale will close; the transaction can fall through if contingencies aren't met or if either party breaches the contract.