If you’re on the hunt for a new house, you’ve likely stumbled upon listings that note the property is “under contract.” What does this mean exactly, and what should you know if you’re interested in the property?
Essentially, a house under contract means that a buyer has made an offer on the property, and the seller has accepted. However, the sale has not yet been finalized, as there are still contingencies and other steps that need to be taken before the deal can be closed.
Here’s a breakdown of some key terms and steps to keep in mind when dealing with a house under contract:
1. Contingencies: When a buyer makes an offer on a property, they typically include contingencies, which are conditions that need to be met in order for the sale to go through. Common contingencies include:
– Home inspection contingency: This allows the buyer to have the property inspected by a professional to identify any potential issues that they may want to negotiate with the seller.
– Financing contingency: This states that the sale is contingent on the buyer being able to secure financing for the purchase. If they are unable to do so, the sale may fall through.
– Appraisal contingency: This states that the sale is contingent on the property being appraised at or above the agreed-upon purchase price.
2. Due diligence: Once a seller accepts a buyer’s offer, the buyer typically has a set period of time (often 30-60 days) to complete their due diligence, which includes tasks such as:
– Having the property inspected
– Securing financing
– Reviewing the title and other documents
– Reviewing any HOA or neighborhood rules and regulations
3. Closing: If all contingencies are met and the due diligence period is completed successfully, the sale can move forward to closing. This is when the buyer and seller sign all of the necessary documents and the property officially changes hands.
So, what should you know if you’re interested in a property that’s under contract? While it’s still possible for the sale to fall through (due to failed contingencies or other issues), it’s generally not worth getting your hopes up until the property is officially back on the market.
However, if you’re really interested in the property, it may be worth reaching out to the listing agent to see if they are accepting backup offers. These are offers that would be considered if the first deal falls through, and can be a good way to ensure you’re next in line if the property becomes available again.
Overall, a house under contract can be a bit of a waiting game, but understanding the process can help you be more informed and prepared if you’re interested in the property.