What Does It Mean When a House is Under Contract?



What does it mean when a house is under contract? If you plan to buy or sell a house, both parties must understand the term, especially if it's a first-time home trading transaction.

Most homeowners, home buyers, and sellers leave this process to their agents because real estate agents typically cater to such procedures. You must thoroughly understand the numerous terminologies and expressions to understand the many stages of the sales process.

If you're wondering what it means when a home is "under contract" in real estate, it often implies that the seller has accepted an offer from a buyer.

In this article, we'll provide the distinctions between the terms under contract, pending, and contingent, as well as what it means for a home for sale to be in each stage.

What does it mean when a home is under contract?


A property is said to be "under contract" if both the seller and the buyer have agreed to the conditions of a binding contract for the sale of the property. The home is thought to be in the process of being sold during this time and is normally closed to additional bids from interested parties.

The parties have reached an understanding regarding the contract's particular terms and conditions, including the purchase price, contingencies, and closing date. The property remains under contract until all essential procedures, such as inspections, appraisals, and financing, are finished. This means that until the deal is closed and the buyer has ownership, the property is still up for sale.

The seller and the prospective buyer have legally agreed to sell the property when a house is under contract in the real estate sector. A real estate or purchase contract that defines the terms and conditions of the transaction, including the purchase price, contingencies, and other pertinent information, serves as legal documentation for this agreement.

Real estate brokers are frequently involved in the steps leading up to a home being under contract. The agent for the seller negotiates and facilitates the acceptance of an offer from a potential buyer while also representing the seller's interests. The buyer may engage with their real estate agent to identify suitable houses and submit an offer.

Get a NO OBLIGATION offer on your house today

We Buy Houses for cash within DC, Maryland & Virginia. Please submit your details below and we will reach out to you within 24 hours with your fair cash offer.

What 'under contract' means for the buyer and seller


The state of a property is said to be "under contract" when purchasing a home when the buyer and seller have agreed upon a price and signed a binding contract for the sale of the house. Let's delve deeper into what this means:

Negotiating and finalizing the purchase contract is often facilitated by a real estate agent acting on the buyer's or seller's behalf. The buyer's agent assists in locating appropriate properties and works with the seller's agent to deliver the buyer's offer. The seller's agent communicates with potential buyers and negotiates offers on the seller's behalf.

A purchase contract is only signed after the buyer and seller have agreed on all the terms, such as the purchase price, any conditions, and other pertinent information. The terms and conditions of the sale are outlined in this contract. It might have needs, like a requirement that the buyer sells their current house before the purchase or appraisal requirements (where the property must appraise for a particular value).

The residence enters a status known as "pending" or "under contract" when the seller accepts the buyer's offer and signs the purchase agreement. The house is considered off the market during this time, and the seller usually cannot get any new offers from prospective purchasers.


Provisions for backup offers may be included in the buyer's request. This indicates that the seller may accept backup proposals from additional interested buyers while the home is under contract. Backup bids provide a fallback if the buyer fails to meet their obligations or the deal is canceled.

The buying process is in its many steps throughout the pending phase. To evaluate the state of the property, the buyer may perform inspections, such as a home inspection. They might also meet additional contingencies specified in the contract and obtain funding from mortgage lenders. The relevant documentation is finalized at the closing, and property ownership is transferred from the seller to the buyer.


A house may still be listed online and in real estate directories while it is under contract. However, if an agreement is in place, the status will be listed as "pending" or "under contract."

Throughout this process, the buyer is responsible for obtaining the necessary financing and making all necessary preparations, including opening an escrow account and signing the requisite closing paperwork. The buyer's finance and the fulfillment of contingencies will significantly impact whether the contract is successfully completed.

The sale is said to be a "done deal" whenever all of the contract's requirements have been satisfied. The sale is finished, and the buyer takes ownership of the property.

Get a NO OBLIGATION offer on your house today

We Buy Houses for cash within DC, Maryland & Virginia. Please submit your details below and we will reach out to you within 24 hours with your fair cash offer.

The difference between under contract, pending, and contingent

In the real estate market, phrases like "under contract," "pending," and "contingent" are frequently used to characterize various phases of the home-buying process. Let's examine how these concepts differ from one another:

Under contract

When a home is "under contract," the buyer and seller have decided to sell the house and have signed a binding contract. This shows that both parties have approved the criteria mentioned in the purchase agreement. The home is regarded as being in the sales process and is normally not open to fresh bids from prospective buyers.


"Under contract" and "pending" are frequently used interchangeably. It represents the acceptance of a formal offer and the sale of the property. Before the deal closes, the relevant procedures, including inspections, appraisals, and financing, are finished during this phase.


When a home is listed as "contingent," the sale is subject to specific requirements being satisfied. These terms, which may include a house sale contingency, finance contingency, or inspection contingency, are laid out in the purchase agreement. Although the house is under contract, the final sale depends on satisfactorily resolving these issues.

The distinction between "under contract" and "contingent" can change depending on regional customs and specific contracts. While "under contract" denotes a later stage after the contract has been signed, "contingent" in some situations may refer to a location before the agreement is fully implemented.

Real estate agents working for the buyer or seller greatly facilitate negotiating, drafting, and signing real estate contracts. They help manage the different contingencies, facilitate communication among the parties, and direct the transaction through the closing procedure.

In real estate listings and MLS (multiple listing service), the phrases "under contract," "pending," and "contingent" are frequently used to describe the status of a property.

These phrases aid prospective buyers, sellers, and agents in comprehending the status of a transaction and determining whether a property is available for purchase.

Real estate terminology and practices can vary; therefore, it's always wise to speak with a local real estate expert or refer to specific contract language for accurate meanings and interpretations of these words in a specific area or transaction.

The Significance of a Property Being Under Contract

In the real estate sector, when a property is under contract, it has important ramifications for both the buyer and seller involved in the transaction. Let's look at what it means for a property to be under contract:

Progress in the Buying Process

Being under contract denotes that the buyer and seller have successfully discussed and reached an understanding of the specifics of the purchase agreement. It shows that the parties have made strides in purchasing and are determined to move forward with the deal.

Legal Obligations

Once a property is under contract, the buyer and seller are legally required to carry out the terms of the executed purchase contract. This entails keeping to deadlines, addressing unforeseen circumstances, and taking the required steps to ensure a seamless transaction.

Limited Market Availability

A property is often regarded as off the market when it is under contract, restricting the availability of new offers from prospective purchasers.

To let other potential purchasers know that an agreement has been reached and the property is in the process of being sold, real estate agents and multiple listing services (MLS) may post the property as "sale pending" or "under contract."

Contingencies and Due Diligence


The buyer can conduct various inspections and due diligence procedures while the transaction is still under contract. The property's condition may be evaluated through a home inspection; an appraisal may determine its worth, or the acquisition may be subject to financing or other conditions. The buyer must resolve the contract's listed contingencies within a specific time. Buyers can end an agreement without losing money up front or suffering repercussions thanks to the home sale contingency.

Accepting Backup Offers

The seller can entertain backup bids from potential bidders while the property is under contract. Backup offers serve as fallbacks if the present agreement fails due to unanticipated circumstances or stipulations needing to be met. Accepting backup proposals guarantees that the seller has possible fallback options if the preliminary contract cannot be closed.

Moving Towards Closing

The fact that a deal is under contract means that the parties are moving closer to closure when the sale is completed and the buyer becomes the legal owner of the property. In this stage, the buyer obtains finance, the title is investigated, and the necessary closing papers are created. The deal must be completed while it is still under contract.

Buyer-Seller Relationship


A formal relationship between the buyer and seller is created when a contract exists. The parties have agreed to the terms and conditions of the Purchase Agreement, and the performance of the Purchase Agreement by the parties shall be in good faith. The buyer and seller negotiate the last steps necessary for the sale to close while frequently being assisted by their respective real estate agents.

Bottom Line

When a property is under contract, the buyer and seller have agreed to the transaction's terms and executed a binding agreement. This denotes advancement in the purchasing process, mutual legal duties, a limited market for new offers, and the possibility of backup bids. The fact that the project is under contract enables inspections, due diligence, and contingency planning. It denotes an official partnership between the buyer and seller, paving the way for the closing process to complete the deal.

If you need to know a realtor who can hold your hand and take you through this exercise, you can trust us to ensure you get the best out of the deal. Contact us today!

Frequently Asked Questions

What other kinds of contingencies are there?

In real estate, contingency is an action or condition that must be fulfilled for the purchase agreement to be legally binding. There are appraisal contingencies, home sale contingencies, inspection contingencies, common contingencies, and financing contingencies.

What if I like a house under contract?

It wouldn't harm to have the buyer's agent contact the seller's agent with a backup offer if the buyer found a home they adored that was under contract with contingencies, provided the buyer is aware that this backup offer is only valid in the event that the present contract fails.

Get a NO OBLIGATION offer on your house today

We Buy Houses for cash within DC, Maryland & Virginia. Please submit your details below and we will reach out to you within 24 hours with your fair cash offer.