Real Estate Investing

What Does It Mean When You’re Under Contract in a Home Sale?

June 8, 2024

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Home Sales Under Contract  

If you’re interested in real estate or buying your first home, you’ve most likely seen or used the term ‘under contract.’ Under contract is one of the many statuses a home buyer will undergo when their buyer’s offer is accepted, but what exactly does that entail? 

When you’re under contract in a home sale, you’re in a critical stage where the seller has agreed to your buyer’s offer. But before you can finalize the deal, there are a few key steps to tackle. 

For instance, you will have to address various contingencies that come with the home buying process. From financing approvals to home inspections, each contingency must be addressed. 

In this article, we’ll define what ‘under contract’ means in further detail and explain how this status differs from pending offers. 

Definition of Under Contract  

When you’re in a home sale under contract, you have secured an accepted offer from the seller of the home, which is formalized in a purchase contract. This often involves making an earnest money deposit to show your commitment to the purchase. This means that the seller has agreed to sell the property to you, pending the fulfillment of certain conditions known as contingencies. However, if these contingencies are not completed, the home sale may not happen. 

Common contingencies include financing contingency, home appraisal, home inspection contingency, and the sale of your current home. A home sale contingency allows buyers to back out if they can’t sell their current home within a certain timeframe. It’s crucial to understand that even though you have an accepted offer, the deal can still fall through until the closing process is completed. 

Sellers may also consider backup offers in case the current contract doesn’t proceed as planned. Backup offers and other intricacies of the home sale under contract can be tricky to navigate, so it’s a good idea to seek professional guidance. Real estate agents play a crucial role in guiding buyers through the complexities of the purchase contract and ensuring all contingencies are met. Real estate agents can guide you through this under contract phase and help you navigate any challenges that may arise before the final sale is closed. 

Home Sale Contingencies 

Amidst your home sale under contract, understanding the significance of how contingencies affect the home sale process is paramount in safeguarding your transaction’s progress. Though we’ve briefly touched on them above, here are some details about contingencies that could be helpful to know. 

Contingencies act as safeguards, allowing you to address crucial aspects like financing, home inspections, appraisals, and the sale of your current home before finalizing the deal. These conditions provide you with options and protect you from unforeseen circumstances that could potentially derail the sale. If something falls through, contingencies allow you to renegotiate (e.g., request repairs in case of unknown damage) or back out of the deal entirely without consequence. 

For example, many buyers must take out a mortgage to finance their property. This mortgage and financing process must be completed within a certain amount of time, and even with a prequalification letter from their mortgage lender, buyers still need to obtain final approval from their lender to be able to take out their home loan. If a potential buyer can’t secure financing within a certain amount of time, this contingency could allow them to back out of the deal without financial repercussions. 

By carefully navigating and meeting these contingencies, you ensure a smoother and more secure transaction. 

The Real Estate Transaction Pipeline: ‘Under Contract’ vs. ‘Sale Pending’ 

As you navigate through your home sale under contract, it’s essential to comprehend the distinctions between various real estate statuses to keep track of what’s going on when. Properties that are under contract may still appear in real estate listings until the sale is finalized. 

One common confusion point is the difference between ‘under contract’ and ‘sale pending.’ While under contract means an offer has been accepted with contingencies, pending sale indicates all contingencies have been met, and the property is ready to close. 

Making an offer on a ‘sale pending’ property is usually futile. Once the home has a pending offer, the owner is typically not willing to show it to another potential buyer. Unless you toured the home when it was still actively accepting offers, you may have to put in an offer site unseen. Although there is no legal reason keeping you from extending an offer to sellers of a home that is sale pending, it is not likely that you will be the one receiving the home. 

However, until the final sale is complete, it is still possible that issues could arise, so don’t rule out under contract or sale pending listings entirely. If you love a house under contract, consider having your agent submit a backup offer through the seller’s agent. Backup offers are only valid if the current contract falls through. 


Now that you’re under contract in a home sale, it’s time to focus on meeting all the necessary contingencies to ensure a successful closing. Understanding the differences between under contract and sale pending can help you navigate this phase with confidence.

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