What Does under Contract Option Mean

As someone who is in the process of buying or selling a property, you may come across the term „under contract.” It is one of the most commonly used phrases in real estate transactions, but what does it mean, exactly?

In simple terms, an „under contract” status means that a buyer and a seller have agreed to enter into a sales contract, and both parties have signed the contract. However, the transaction has not yet been completed, and the property remains listed as „under contract” until the deal is closed.

The under contract status is a crucial step in the real estate transaction process. It indicates that both parties are committed to completing the transaction, and significant progress has been made towards closing on the property. Without this stage, there would be no point in performing inspections or negotiating repairs at all.

During the under contract stage, both the buyer and the seller have various obligations and contingencies to meet before the deal can be finalized. Some of these contingencies may include the buyer`s ability to secure financing, the successful completion of the inspection, or the seller`s ability to rectify any issues that come up during the inspection process.

It is also important to note that while a property is under contract, it is no longer available for sale. The listing agent may stop accepting new offers on the property, although some may choose to continue accepting backup offers in case the initial deal falls through.

The under contract status is typically less precarious than the preceding stage of the real estate transaction, where the property is still available for sale, and numerous offers may be considered. At this stage, there is a higher level of certainty, but the deal is not yet complete, and there is still a risk of the transaction falling through.

In conclusion, the under contract status signifies a significant step in the real estate transaction process. It means that both parties have agreed on the terms of the sale, and significant progress has been made towards closing the deal. As a buyer or seller, it is essential to understand the under contract status and its implications to ensure a successful and smooth transaction.