What Does Under Contract Mean In Real Estate
When you hear the term “under contract” in the real estate industry it signifies that a buyer a seller have reached an agreement signed a legally binding contract for the purchase or sale of a property. This milestone is a crucial step in the real estate transaction process indicates that both parties are committed to moving forward with the deal.
The Contract Signing Process
The process of becoming “under contract” typically involves several stages:
- Offer Acceptance: The buyer submits an offer to the seller which includes the proposed terms conditions of the purchase. The seller can accept decline or present a counteroffer.
- Negotiations: If the seller presents a counteroffer negotiations may occur until both parties reach a mutually acceptable agreement.
- Acceptance: Once the buyer seller agree to the terms they sign the contract making it legally binding.
Implications of Being Under Contract
Being under contract has various implications for both the buyer seller:
- Seller’s Obligations: The seller is obligated to follow through with the sale of the property. They may no longer entertain other offers or enter into a contract with another buyer.
- Buyer’s Obligations: The buyer is responsible for fulfilling the terms of the contract including paying the agreed-upon purchase price completing necessary inspections securing financing meeting other contingencies outlined in the contract.
- Property Status: While under contract the property is considered “off the market” but is yet to close. It may still receive backup offers but the seller is under no obligation to entertain them.
Contingencies Due Diligence Periods
Many real estate contracts include contingencies that protect the buyer’s interests during the under-contract phase. These contingencies typically provide a due diligence period during which the buyer can thoroughly inspect the property conduct appraisals secure financing. If the buyer encounters any issues or concerns during this period they can opt to terminate the contract or request repairs or concessions from the seller depending on the agreed terms.
Understanding what it means to be under contract in real estate is vital for both buyers sellers. It ensures that both parties have reached a mutual agreement are committed to moving forward with the transaction. By knowing the implications various stages of the under-contract process individuals can navigate the real estate market more confidently.