What Is Active Under Contract In Real Estate?

Almost everyone is familiar with the “for sale” sign when looking for a house. However, there are other banners you may see like “active under contract” or “pending” before a house is actually sold that you may not be familiar with.

These statuses are meant to let buyers know what is going on behind the scenes. It also lets buyers know that there may or may not still be time to put in an offer.

What is Active Under Contract?

Active under contract is a real estate term that indicates the status of a property. It means the buyer and the seller have entered into a contract, but there are still a few contingencies that need to be met before the sale is final.

To break it down even further, this contractual offer takes the property off the market and prevents the seller from agreeing to another contract for the same property with another buyer as the current buyer enters into the next phases of the closing process.

However, all real estate contracts usually include contingencies that need to be fulfilled before finalizing the sale. When looking at homes for sale in Desert Shores (or elsewhere), if these contingencies aren’t met, there may be a chance that the deal will fall through, leaving the door open for other buyers.

Contingencies that are outlined in a real estate contract are typically house inspections, home appraisals, and the buyer's overall ability to pay for the home. These contingencies will often add some time to the closing process to allow both parties to see them through.

Making an Offer on a House Active Under Contract

If you are interested in a house that is active under contract you can make what’s called a backup offer. The contingency period bars sellers from entering into another contract with a different buyer. However, sellers can collect backup offers from other parties interested, which serve as placeholders for the next buyers in line.

Can you make an offer on a house that’s active under contract?

In other words, it’s entirely possible to make an offer on a house active under contract, as long as you know going into it that it’s solely dependent on if the contingencies are met or not. The reality is, is that if the contingencies are met, then the sale will go through, leaving you to continue on with your home search.

However, there’s never a 100 percent chance the contingencies will be met, meaning your offer could be next in line. The active under contract status can take a few weeks or longer depending on how many contingencies there are in the contract.

In the meantime, it's a good idea to continue to look for other suitable properties so that you aren’t putting all your eggs in one basket.

Additionally, stay in touch with the real estate agent and ask them to notify your agent of any changes. That way, if the sale falls through you can be ready.

Active Under Contract vs Pending

“Active under contract” and “pending” are two similar statuses in the home buying process. Both indicate that the seller has accepted an offer from the buyer. The two terms also mean that both the seller and the buyer are under contractual obligations.

The main difference is that while active under contract means there are still some outstanding contingencies that need to be met, pending status usually means the sale is going to close.

Conclusion

Falling in love with a house that is active under contract can be difficult because it is already under contract with another buyer. However, houses sometimes go back on the market for many reasons, so if it is your dream home, it’s a good idea to stay in touch with your real estate agent to help you streamline the process if by chance it does come back on the market.

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