Scrolling through Zillow can be exciting, especially when you spot a home that feels perfect. But then, you notice the status says “under contract,” and suddenly, you’re left wondering what that really means. Is the house still available? Should you move on or hold out hope?
I’ve been there, and I know how confusing real estate terms can get. Understanding what “under contract” means is key to navigating your home search with confidence. It’s not just a phrase—it’s a critical step in the buying process that could impact your next move. Let’s break it down so you know exactly what to expect.
Understanding “Under Contract” On Zillow
“Under contract” on Zillow means a seller has accepted a buyer’s offer, but the sale isn’t final. This status indicates the property is in the process of fulfilling contingencies included in the purchase agreement. These can include inspections, appraisals, or financing approvals.
Home buyers often view “under contract” as a potential end to their interest in the property. However, these deals can fall through if contingencies aren’t met. For instance, a buyer may back out after an inspection reveals significant repairs, or financing may fail if the loan doesn’t get approved.
Zillow updates the listing to “pending” once all contingencies are resolved, signaling the transaction is near completion. Until then, “under contract” properties might still return to the market, offering opportunities for backup offers.
How Does A Property Become Under Contract?
A property becomes “under contract” when a seller accepts a buyer’s offer, initiating a legally binding agreement. This status reflects progress but leaves room for contingencies to be fulfilled.
Steps In The Buying Process Leading To “Under Contract”
- Listing and Offer Submission: Sellers list properties on platforms like Zillow, detailing price, condition, and terms. Buyers submit offers with purchase price, earnest money, and any conditions. For example, a buyer might request an inspection contingency.
- Negotiation and Acceptance: Once the offer is reviewed, sellers may accept, reject, or counter. If accepted, both parties sign a purchase agreement, formalizing the terms.
- Contingency Period Initiated: Contingencies, such as inspections or financing, begin once under contract. Sellers may field backup offers during this stage.
Key Parties Involved During This Stage
- Buyer and Seller: Buyers negotiate terms while sellers review and determine whether to accept offers.
- Real Estate Agents: Agents facilitate communication between buyers and sellers, manage paperwork, and ensure legal compliance.
- Inspectors and Appraisers: Inspectors evaluate the property’s condition, while appraisers assess its value for lenders. For example, appraisers justify the purchase price during financing.
- Lenders: Mortgage providers assess buyer qualifications and approve loans. Without lender approval, the contract may fall through.
Implications Of “Under Contract” For Buyers And Sellers
The “under contract” status impacts both buyers and sellers by creating a period of uncertainty where contingencies dictate next steps. Understanding its implications helps navigate potential opportunities or challenges.
Can Buyers Still Make Offers On Under Contract Properties?
Buyers can submit backup offers on properties marked as “under contract.” These offers become active if the original deal falls through. Backup offers don’t guarantee success but position the next buyer in line. Sellers may accept these offers to ensure the property sells promptly. Clear communication with agents is essential to gauge feasibility when considering an under-contract home.
What Happens If A Contract Falls Through?
Contracts fail when contingencies like inspections, appraisals, or financing aren’t satisfied. For instance, if an inspection reveals major structural damage, buyers may terminate the agreement. When contracts fall apart, sellers often relist their property, re-attracting interest on platforms like Zillow. Buyers previously interested can revisit opportunities, potentially re-engaging in the purchase process depending on market dynamics.
Differences Between “Under Contract” And “Pending” On Zillow
“Under Contract” and “Pending” signify different yet closely related stages in a real estate transaction. These terms, found on Zillow, highlight the progression of a property sale with distinct implications for buyers and sellers.
Terminology And Legal Distinctions
“Under Contract” indicates that a seller has accepted a buyer’s offer, but the sale’s completion depends on unresolved contingencies. Examples include home inspections, financing approval, or an appraisal. At this stage, the contract becomes legally binding but doesn’t guarantee a finalized deal.
“Pending” signifies that all contingencies have been addressed, and the transaction is approaching closure. For example, properties move to “Pending” status once financing is secured, inspections are approved, and other contractual obligations are met. In this stage, the agreement is more stable, and the likelihood of cancellation is lower.
What Should Buyers And Sellers Know?
Buyers should note that “Under Contract” properties are still prone to falling through if contingencies aren’t met, allowing room for backup offers. When a property reaches “Pending” status, such opportunities diminish, as there are fewer barriers to closing. Monitoring contingency progress can help buyers gauge the chances of a deal collapsing.
Sellers experience greater uncertainty during the “Under Contract” stage due to potential issues with contingencies. For instance, a failed inspection could jeopardize the deal. Once a property becomes “Pending,” sellers can operate with higher confidence that the transaction will close. Tracking this transition helps sellers manage expectations throughout the process.
Tips For Buyers When A Property Is Under Contract
Understanding how to proceed when a property is under contract can create opportunities. While the sale isn’t final, buyers can take strategic steps to improve their chances of securing a home.
Navigating Backup Offers
Submitting a backup offer keeps me in the running if the initial contract fails. I ensure my offer is strong, including competitive terms or concessions, to make it appealing to the seller. If contingencies in the primary deal fall through, my backup offer might activate without needing renegotiation. My real estate agent communicates with the seller’s agent to stay updated on the contract’s status and the likelihood of progression.
Staying Alert For New Opportunities
While monitoring the under-contract property, I also explore new listings. Properties with similar features might appear on the market unexpectedly. I set alerts on Zillow or similar platforms to avoid missing a potential match. Additionally, I stay connected with my agent, who can inform me about off-market opportunities or homes about to list. Even with a desirable property under contract, I expand my search to increase my chances of finding alternatives.
Conclusion
Understanding what “under contract” means on Zillow can make a big difference in how you approach the home buying process. It’s a reminder that even when a property seems unavailable, opportunities may still exist. Staying proactive, working closely with your real estate agent, and keeping an eye on market trends can help you navigate these situations confidently. Real estate transactions are full of moving parts, but with the right strategy, you can stay prepared for whatever comes your way.
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