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What does under contract mean in real estate?

Under contract in real estate
Under contract in real estate

The term “Under contract” in real estate indicates that there is a binding, signed agreement between buyer and seller to transact the property. Once a property is under contract, both parties have agreed to certain terms, the seller has accepted the offer, and the property is now “locked up” and no more offers can be accepted on the property, unless the current one is canceled. If the under contract deal is not canceled, then the property will sell. The under contract status in real estate is significant. When a property goes “under contract” the transaction process begins.

How long does the under contract status typically last in real estate?

The under contract duration in real estate varies. Typically, under contract in real estate lasts 30 to 60 days. The under contract period in real estate depends on contingencies. In real estate, under contract time frames reflect negotiation outcomes. Complex transactions extend the under contract phase in real estate. When unexpected problems or issues arise, such as need for repairs, or additional specialized inspections (geology, for example) the under contract phase is longer.

Can a seller legally back out of an under contract status in real estate?

Backing out of under contract in real estate is complex. Sellers face legal risks if they exit under contract in real estate. Under contract means there is a binding agreement which should not be breached.  However, specific clauses can allow exit from a real estate contract. Legal advice is crucial when considering backing out of an under contract deal (on the sellers side).On the buyers side, generally the worst that can happen is the buyer loses their earnest money deposit when they back out. (This is not always true but in most cases parties agree to this term)

What steps follow after a home goes under contract in real estate?

After a home goes under contract in real estate, several steps follow. Inspection and appraisal occur when under contract in real estate. In real estate, under contract leads to mortgage approval processes. Finalizing the sale is the last step after under contract in real estate. Each phase post under contract in real estate is critical.

What distinguishes the under contract status from being sold in real estate?

In real estate, under contract differs from sold status. Under contract in real estate means agreement is reached but not finalized. Sold status in real estate indicates completed transaction. Under contract in real estate involves pending contingencies and an under contract deal can always be broken.  In contrast, sold in real estate represents a concluded deal, from which there is no turning back.

What contingencies commonly arise in real estate during an under contract situation?

During under contract in real estate, contingencies are common. Inspection and financing are key contingencies in under contract real estate. In real estate, under contract may include appraisal contingencies. Sale contingencies often occur during under contract in real estate. Knowing the laws of navigating contingencies when you are under contract, is crucial. An agent with high levels of knowledge and diligence in handling contingencies, can save real estate clients quite a bit of money and headaches.

What role do inspection and appraisal play during the under contract phase in real estate?

Inspection and appraisal are vital during under contract in real estate. In real estate, under contract inspection assesses property condition. Appraisal determines property value when under contract in real estate. Both impact negotiations and final terms in under contract real estate. 

How can one make an offer on a house that is already under contract in real estate?

Making an offer on a house under contract in real estate is challenging. In real estate, under contract usually means the seller has committed. However, backup offers are possible when a property is under contract in real estate. Under contract in real estate doesn’t always lead to sale completion. 

What are the legal implications of breaking an under contract agreement in real estate?

Breaking an under contract agreement in real estate carries legal implications. In real estate, under contract terms are legally binding. Violating under contract conditions in real estate can lead to lawsuits and other penalties.  Legal guidance is crucial when real estates under contract and either party seeks to exit the deal.

What risks do buyers face when a house is under contract in real estate?

Buyers face risks when a house is under contract in real estate. In real estate, under contract situations can change rapidly. Buyers risk losing deposits if under contract real estate falls through. 

How does escrow function when under contract in real estate?

WHen real estate goes under contract, this is usually when the escrow process begins.  In real estate transactions under contract, funds of both parties are held in escrow. Escrow ensures security and fairness in under contract real estate. 

How are repairs negotiated during the under contract phase in real estate?

Negotiating repairs when real estate is under contract is common. Typically inspection findings influence repair discussions and negotiations during the under contract phase. Repair agreements impact the final sale in under contract real estate. Skilled negotiation is key when under contract, and clients should have a trusted real estate agent assisting them.

What financing options are available for homes under contract in real estate?

Financing options vary for homes under contract in real estate. Mortgage loans are common in under contract real estate. In real estate, under contract buyers explore various lenders. Cash purchases are another option in under contract real estate. Understanding financing is crucial when under contract in real estate.

 

What are the home insurance considerations when a property is under contract in real estate?

Home insurance is important when a property is under contract in real estate. Buyers must consider insurance early in under contract real estate. In real estate, under contract properties require insurance before closing. Insurance protects interests during under contract phases in real estate. Navigating insurance is a key aspect of under contract real estate.

What is the typical timeframe for closing after a property goes under contract in real estate?

The closing timeframe after a property goes under contract in real estate varies. Generally, under contract in real estate leads to 30-60 day closing periods. In real estate, under contract closing times depend on contingencies. Efficient processing shortens under contract closing times in real estate. The under contract phase is critical for timely real estate closings.

Are buyers allowed to visit a home while it’s under contract in real estate?

Buyers visiting a home under contract in real estate is subject to agreement. In real estate, under contract visits need seller approval. Home visits during under contract in real estate can occur for inspections. Real estate agents facilitate visits to under contract properties. In real estate, under contract visits are part of the buying process.

What is the difference between under contract and pending in real estate?

In real estate, under contract and pending differ significantly. Under contract in real estate implies active negotiations. Pending status in real estate suggests progress towards closure. In real estate, under contract status typically means that contingencies/conditions still exist, which must be negotiated.  When real estate is “pending” this means that contingencies are generally met, so the transaction will close unless something unpredictable happens. Not all agents however, strictly comply with these definitions, and sometimes properties that are under contract are listed as pending, and vice versa.

Sources

Madison, M. (2002). The Real Properties of Contract Law. Boston University Law Review. Available at: https://ir.lawnet.fordham.edu/faculty_scholarship/849

Lutz-Christian Wolff. (2020). The relationship between contract law and property law. Sage Journals. Available at: https://journals.sagepub.com/doi/full/10.1177/1473779520903729

 Michael Madison. (2002). The Real Properties of Contract Law. Fordham Law Archive of Scholarship and History. Available at: https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1848&context=faculty_scholarship

 Hubbard W. McDonald Jr.  (1969). Real Estate Broker’s Contract–Broker’s Rights to Compensation for a Sale by the Vendor under an Exclusive-Right-To-Sell Agreement. South Carolina Law Review. Available at: https://scholarcommons.sc.edu/cgi/viewcontent.cgi?article=1948&context=sclr

James Penner. (2000). Property and Contract I: The Power to Sell and the Influence of Markets. Oxford University Press. Available at: https://academic.oup.com/book/1609/chapter/141125051

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