I still remember falling in love with a charming three-bedroom home, only to check the listing later that evening and see the dreaded words: “Under Contract.” My stomach dropped, but my real estate agent reassured me—it wasn’t necessarily off the table. That moment made me dig deeper into what does under contract mean in real estate, and it turns out, it’s not the same as “sold.”
In U.S. real estate, “under contract” simply means the seller has accepted a buyer’s offer, and both have signed a purchase agreement—but the sale isn’t yet complete. The deal is still in progress while both sides work through specific terms, called contingencies, that must be satisfied before the property officially closes.
What Does “Under Contract” Really Mean?
When a property goes under contract, it enters a crucial stage between offer and closing. During this time, the listing status changes to “under contract,” signaling that the seller and buyer have agreed to terms but still have tasks to complete before finalizing the sale.
This period allows the buyer to perform due diligence, including:
- Securing a mortgage: The buyer applies for final loan approval from their lender.
- Conducting inspections: A professional home inspection checks the property’s structure, roof, plumbing, and electrical systems for potential issues.
- Obtaining an appraisal: The lender orders an independent appraisal to confirm that the home’s market value supports the agreed-upon price.
It’s a busy stage filled with paperwork, phone calls, and inspections—but it’s where both parties ensure that everything checks out before money changes hands.
“Under Contract” vs. “Pending” — What’s the Difference?
Many listings use these terms interchangeably, but they actually describe different points in the transaction timeline.
| Aspect | Under Contract | Pending |
| Stage of Sale | The initial phase after the seller accepts the buyer’s offer. | The final stage after all contingencies are met or waived. |
| Certainty of Sale | Still uncertain—either party could walk away if conditions aren’t met. | Very likely to close, with fewer chances of the deal falling through. |
| Backup Offers | Often accepted. Listings marked Active Under Contract signal the seller is open to backup offers. | Typically not accepted, as the deal is nearly complete. |
So if you spot a house that’s “under contract,” there’s still a slim chance it could re-enter the market. But once it’s “pending,” the odds are high that it’s heading to the closing table.
What Happens During the Under-Contract Period?
Once both parties sign the purchase agreement, the clock starts ticking. Here’s what typically happens next:
1. Earnest Money Deposit
The buyer places an earnest money deposit—usually 1–3% of the purchase price—into an escrow account. This deposit shows good faith and is held until the deal closes or terminates.
2. Inspections and Repairs
The buyer arranges a home inspection to uncover any defects or safety concerns. If problems arise, the buyer and seller negotiate repairs, credits, or price adjustments. In some cases, a deal can collapse if the inspection reveals major issues neither party can agree on.
3. Mortgage and Appraisal
The buyer’s lender conducts a full underwriting process, verifying income, assets, and credit. Simultaneously, the lender orders an appraisal to ensure the property’s value aligns with the loan amount. If the home appraises lower than expected, renegotiation may be necessary—or the deal could fall apart.
4. Title Search and Insurance
A title company checks for liens, disputes, or ownership problems. Once cleared, the buyer typically purchases title insurance to protect against future legal claims.
5. Final Walk-Through and Closing
Before closing, the buyer does a final walk-through to confirm the property’s condition and that agreed-upon repairs are complete. Then comes signing day—the closing—where ownership officially transfers.
What Happens if a Deal Falls Through?
A property under contract can return to the market if a contingency isn’t met. Common deal-breakers include:
- Inspection issues: Major structural or safety problems that the seller refuses to fix.
- Financing failure: The buyer’s mortgage isn’t approved in time.
- Low appraisal: The appraised value doesn’t match the purchase price, and neither party compromises.
- Home sale contingency: The buyer couldn’t sell their current home as required.
When this happens, the contract terminates, the property relists, and the seller may consider backup or new offers.
Can You Still Make an Offer on a Home That’s Under Contract?
Yes, but your offer would be considered a backup offer. This means it only becomes active if the current buyer backs out. In competitive U.S. markets—like Dallas, Phoenix, or Atlanta—backup offers are quite common and can give you an edge without disrupting the primary deal.
If you’re serious about the property, ask your agent to check whether it’s listed as Active Under Contract, which indicates the seller is open to additional offers.
How Long Does a Home Stay Under Contract?
Most homes in the U.S. remain under contract for 30 to 60 days, depending on the lender’s timeline and inspection results. Cash deals can close in as little as 10 to 14 days, while transactions with repair negotiations or title issues might stretch beyond two months.
Frequently Asked Questions
1. Is “under contract” the same as “sold”?
No. “Under contract” means both parties have agreed to the terms, but the sale isn’t final until all contingencies are met. The property becomes “sold” only once the deal closes and ownership transfers.
2. Can I still tour a home that’s under contract?
Usually, yes—especially if it’s marked “Active Under Contract.” You can view the property and even submit a backup offer if the seller allows it.
3. What happens to earnest money if the deal falls apart?
If you cancel for valid reasons outlined in the contract—like inspection or financing failures—your deposit is typically refunded. But backing out without a contractual reason may cause you to lose that money.
4. What’s the average time to move from under contract to closing?
Typically 30–60 days. The timeline can vary depending on financing approval, appraisal delays, or repair negotiations.
The Final Word: “Under Contract” Is Just the Beginning
So, what does under contract mean in real estate? It’s the handshake before the handover—a sign that the home is one step closer to changing owners, but not there yet. The process is full of moving parts, deadlines, and fine print—but it’s also where deals transform from hopeful offers to life-changing closings.
If you’re a buyer, use this period wisely—stay proactive, keep communication open, and track every deadline. If you’re a seller, stay flexible and transparent. The finish line is near, but until the ink dries at closing, the deal isn’t done.
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