If you've been browsing home listings or scrolling through real estate apps, you've likely seen the status "under contract" pop up next to a property that caught your eye. But what does under contract mean exactly? In simple terms, it indicates that the seller has accepted an offer from a buyer, and the property is in the process of being sold, but the deal isn't sealed yet. Contingencies like inspections, appraisals, or financing approvals still need to clear before closing. Understanding this status can save you time, frustration, and even money whether you're buying or selling in today's market. Let's unpack it step by step so you can navigate your next real estate move with confidence.

The Basics: Defining Under Contract in Today's Housing Market

In real estate, "under contract" is a milestone between accepting an offer and final closing. Once a seller agrees to a buyer's terms price, closing date, concessions the property shifts from "active" to "under contract" on the MLS (Multiple Listing Service). This alerts other potential buyers that the home is spoken for, but it's not off the market entirely. Many contracts include escape clauses for issues discovered during due diligence.

In hot 2025 markets like those in South Carolina or Florida, under-contract properties sometimes accept backup offers. If the primary deal falls through say, due to a low appraisal the backup buyer steps in seamlessly. This status protects both parties while allowing time for critical steps like title searches and loan underwriting.

Stages of a Real Estate Deal: Where Under Contract Fits In

From Offer to Acceptance

The journey starts when a buyer submits an offer. If the seller counters and negotiations lead to an agreement, a purchase contract is signed. At this point, the listing updates to under contract.

The Contingency Period

This is the heart of under contract. Buyers typically have 7-21 days to complete home inspections, secure financing, and appraise the property. Sellers might need to provide disclosures or repair estimates. If everything checks out, contingencies are removed, and the deal moves toward closing.

Closing and Beyond

Once contingencies clear, closing is scheduled, usually 30-60 days from contract signing. Funds exchange, deeds transfer, and the status changes to "sold."

What Under Contract Means for Buyers: Opportunities and Pitfalls

For buyers spotting an under-contract listing, it's not always a dead end. Some agents encourage submitting backup offers, especially in competitive areas. If the original buyer backs out—common reasons include failed inspections (28% of deals per 2025 NAR data) or financing issues—you could slide right in.

Tip: Always ask your agent to monitor under-contract homes you love. Sometimes sellers accept stronger backup offers with fewer contingencies or higher earnest money. But beware: pursuing these can lead to disappointment if the primary deal holds.

Take Emily, a first-time buyer in a suburban market. She fell for an under-contract colonial but submitted a backup offer $5,000 above asking with waived inspection. When the original buyer's loan fell through, Emily closed smoothly two weeks later.

Implications for Sellers: Managing Expectations During Under Contract

Sellers often breathe a sigh of relief at under contract, but it's no time to celebrate yet. About 15-20% of contracts fail before closing, per recent industry reports. Smart sellers keep the home show-ready and consider backup offers to minimize downtime if things go south.

Actionable insight: Use this period to prepare for moving—declutter, secure storage, and line up movers. If repairs are negotiated, get quotes early to avoid delays. And communicate openly with your agent to stay ahead of potential issues.

Common Reasons Deals Fall Apart While Under Contract

Financing denials top the list, especially with 2025's fluctuating interest rates. Low appraisals force renegotiations or cancellations. Inspection revelations—like hidden mold or structural cracks—can scare buyers away. Title issues, such as unresolved liens, also derail deals. Pro tip: Buyers, get pre-approved (not just pre-qualified) before offering. Sellers, order a preliminary title report early.

Conclusion

Grasping what does under contract mean demystifies a key phase of real estate transactions, empowering you to act strategically as a buyer or seller. From understanding contingencies to leveraging backup offers, knowledge turns potential setbacks into opportunities. In 2025's dynamic market, staying informed keeps you ahead.

Ready to sell without the under-contract uncertainties? Redhead Home Properties buys homes as-is with fast cash offers.

FAQ

What does under contract mean for a house I'm interested in buying?

It means a seller has accepted an offer, but the sale isn't final. You can submit a backup offer in case it falls through.

Can I still make an offer on a house that's under contract?

Yes, many sellers accept backup offers. Work with your agent to craft a competitive one.

How long does a house stay under contract before closing?

Typically 30-60 days, depending on financing type and contingencies. Cash deals can close faster.

What happens if a deal falls through while under contract?

The property often relists as active. Backup offers may activate, or it goes back on the market.

Does under contract mean the same as pending?

Not exactly. Under contract often includes active contingencies; pending means they're cleared and closing is imminent.

Can sellers back out of a deal under contract?

Rarely, unless contingencies allow it. Backing out without cause risks losing earnest money or legal action.

What should buyers do during the under contract period?

Complete inspections, secure financing, and review disclosures promptly to avoid delays.

Is under contract the same in all states?

Core meaning is similar, but terminology and timelines vary by state real estate laws.