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What Does "Under Contract" Mean on a House Sale in the US?

The process of buying or selling a house can be complex and overwhelming, especially for first-time homebuyers. One term that often comes up during this process is "under contract." If you're unfamiliar with the real estate jargon, you might wonder what this phrase means and how it affects the sale of a house. In this article, we will delve into the meaning of "under contract" in the context of a house sale in the US, providing expert insights and clarifying any confusion.

When a house is listed for sale, potential buyers have the opportunity to make offers on the property. If an offer is accepted by the seller, the house is considered to be "under contract." This means that both the buyer and seller have come to an agreement on the terms and conditions of the sale, and a legally binding contract has been signed. The "under contract" phase is an essential step in the homebuying process, as it signifies that the buyer's offer has been accepted and the seller has agreed to sell the property.

During the "under contract" period, several crucial steps occur. Firstly, the buyer typically conducts a home inspection. This inspection allows the buyer to thoroughly examine the property for

Can I make offers on homes that are listed as 'active under contract'? You can. But sellers can't accept your offer if they've already signed a purchase and sales agreement with other buyers, even if your offer is higher. If the sale doesn't reach closing, though, the sellers can consider your offer.

Why does a house for sale say under contract?

“Under contract” means the seller has accepted an offer, but there are still conditions to clear before closing. “Active under contract” means the seller is welcoming backup offers. “Pending” means the home is under contract, and all conditions have been met for the deal to close.

What's the difference between pending and under contract?

Under contract comes right after a buyer's offer is accepted, while pending sale is the last stage before finalizing a deal. While contracts can fall through during either stage, its occurrence is far more likely when a deal is under contract.

Why would a home be under contract for so long?

If significant repairs are needed, it can prolong the under-contract period as negotiations continue. Another factor that can impact the length of the under-contract period is the financing contingency.

Can a seller accept other offers while under contract?

While laws vary by state, in general, up until that contract is signed by both parties—even after counteroffers have been sent out—all new offers can be considered and accepted. Once both parties have signed it, however, the seller is pretty much locked into the deal.

How long do you have to stay in a house before you sell it?

Five years More time lets you build more equity (the difference between how much you owe on your mortgage and the home's value) and take advantage of potential home value growth. A guideline commonly cited by real estate experts is to stay at your house for at least five years.

How fast can you move into a house after you buy it?

Some buyers may be able to negotiate an immediate possession date. This means as soon as the transaction is closed and the deed is recorded, the buyer can move in. A few other common buyer possession dates may be 15 days, 30 days, 60 days, or even 90 days after closing, depending on how much time the seller needs.

Frequently Asked Questions

How do I avoid capital gains tax on my house?

A few options to legally avoid paying capital gains tax on investment property include buying your property with a retirement account, converting the property from an investment property to a primary residence, utilizing tax harvesting, and using Section 1031 of the IRS code for deferring taxes.

What does it mean when Zillow says under contract?

What Does Under Contract Mean in Real Estate? 'Under Contract' is probably the most accurate way to describe a pending or 'contingent' sale. It means the same as the other statuses above; a buyer and seller have agreed to terms and have executed a contract. But, the contract has yet to go to closing.

How long do you have to live in a house before you sell it?

Five years A guideline commonly cited by real estate experts is to stay at your house for at least five years. On average, this is how long it takes a homeowner to make up for mortgage interest and closing costs.


How long do I have to live in a house before selling to avoid capital gains?
The seller must have owned the home and used it as their principal residence for two out of the last five years (up to the date of closing). The two years do not have to be consecutive to qualify. The seller must not have sold a home in the last two years and claimed the capital gains tax exclusion.
What happens to your mortgage when you sell your house and don t buy another?
The biggest point to remember when considering what happens to your mortgage when you sell your house is that the debt doesn't disappear when you sell the home. You'll still owe the money, even if you're planning on using the proceeds from the sale of your home to pay off the mortgage.
What is the 2 out of 5 year rule?
When selling a primary residence property, capital gains from the sale can be deducted from the seller's owed taxes if the seller has lived in the property themselves for at least 2 of the previous 5 years leading up to the sale. That is the 2-out-of-5-years rule, in short.

What does under contract mean on house sale

Is buyer's remorse normal when buying a house? Buyer's remorse isn't uncommon. According to an October survey from Hippo, a home insurance company, more than three-fourths of U.S. homeowners who purchased a home in 2022 experienced buyer's remorse.
What does it mean when a home for sale is under contract Dec 12, 2022 — "Under contract" is one of them, which is exactly what it sounds like: a prospective seller and a buyer have entered into a process where they
How much equity should I have before selling? How much equity should you have before you sell your house? At the very least you want to have enough equity to pay off your current mortgage, plus enough left over to make a 20% down payment on your next home.
  • What is the slowest time of the year to sell a house?
    • The number of homes sold usually increase in the spring season. The sales of houses between February and March increase 24%, followed by the busiest months of May, June, July and August. In contrast, the slowest months are November, December, January and February.
  • What to do if you hate the house you just bought?
    • Here's what to remember if you hate the house you just bought:
      1. It's normal to feel some regret after you buy a house.
      2. You're typically better off making the most of the home than selling it right away.
      3. Budget-friendly changes to the home, such as new paint and decor, can make a big difference to how the space feels.
  • How soon can i sale my house
    • Oct 25, 2019 — While you can sell anytime, it's usually smart to wait at least two years before selling. This gives you time to (hopefully) gain some equity to 

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