When browsing homes on Zillow, it’s common to come across listings marked as “under contract.” For many, this term sparks curiosity and raises questions about what it means for buyers and sellers. Understanding this status is crucial for anyone navigating the real estate market, whether they’re actively searching for a home or simply exploring options.
“Under contract” signifies an important step in the home-buying process, but it doesn’t necessarily mean the deal is final. It indicates that a buyer and seller have agreed on terms, but certain conditions still need to be met before closing. This phase can present opportunities and challenges, depending on the circumstances.
For prospective buyers, knowing what “under contract” entails can help clarify whether a property is still worth pursuing. For sellers, it’s a reminder of the steps required to finalize the sale. Understanding this term can make the real estate journey smoother for everyone involved.
Understanding “Under Contract” On Zillow
On Zillow, “under contract” means a property has an accepted offer between the buyer and seller. The agreement outlines purchase terms but is not yet finalized.
This status usually indicates the property will not accept new offers, although some deals may fall through if contingencies like inspections, appraisals, or financing approvals are unmet. It remains in the seller’s best interest to maintain communication with backup buyers during this phase.
Prospective buyers viewing such listings should know these properties are not entirely off the market until closing. Sellers should prepare for potential delays or changes during the contractual period based on buyer qualifications or inspection results.
The Home Buying Process Simplified
The home-buying process involves several stages, each requiring careful attention from buyers and sellers. Understanding these steps provides clarity, especially when encountering terms like “under contract” on platforms like Zillow.
Key Terms You Need To Know
- Pre-approval: A lender’s conditional agreement to provide a loan, based on the buyer’s financial status.
- Offer: A written proposal from the buyer to purchase the property at a specified price and terms.
- Contingency: Conditions that must be met for a sale to proceed, such as inspections, appraisals, or financing approval.
- Closing: The final stage in a property transaction, where ownership is officially transferred from seller to buyer.
These terms create the foundation for navigating real estate transactions smoothly.
Where “Under Contract” Fits In The Process
The “under contract” status falls between the offer acceptance and closing phases. After the seller accepts an offer, the property is labeled “under contract” while buyers address contingencies. Common contingencies include a successful home inspection, an appraisal aligning with the agreed purchase price, and securing financing.
What Does “Under Contract” Mean On Zillow?
“Under contract” on Zillow shows that a property has an accepted offer, but the sale hasn’t been finalized. This status means the buyer and seller have agreed on terms, and the property is in the escrow process pending specific conditions.
Active Status vs. Under Contract
Active status indicates the property is open for offers without a binding agreement in place. When a property is marked under contract, an offer has been accepted, but the sale is not yet complete. For example, during the under-contract phase, buyers address contingencies such as home inspections or financing. If issues arise, the property may return to the market.
The Implications For Buyers And Sellers
Buyers should proceed cautiously with properties under contract, as their offers might only be considered if the first deal falls through. Serious buyers can communicate their interest as backup buyers. Sellers should continue marketing their property to backup buyers to avoid delays if a deal collapses due to unmet contingencies. Understanding this status helps both parties act strategically during the transaction process.
Can Deals Fall Through After Being Under Contract?
Yes, real estate deals under contract can fall through. Various factors might disrupt the transaction before closing, often due to unmet contingencies or changed circumstances.
Common Reasons Contracts Fail
- Inspection Issues
A property inspection could reveal significant problems like structural damage or mold. Buyers may walk away if repairs can’t be negotiated or financed.
- Appraisal Discrepancies
If the property’s appraised value is lower than the agreed sale price, lenders may refuse full financing. This can jeopardize the deal unless the buyer or seller adjusts financially.
- Financing Denials
Buyers sometimes fail to secure their mortgage due to changes in credit status, employment, or other criteria set by the lender.
- Contingency Disputes
A breach or disagreement over contingencies, like selling an existing home before buying a new one, can lead to contract termination.
- Title Issues
Legal claims or unresolved liens on the property can halt the sale process, especially if not resolved promptly.
What Buyers And Sellers Should Know
- For Buyers: They should prepare for inspections, appraisals, and financial documentation early to avoid delays or surprises. Monitoring credit scores and responding promptly to lender requests reduces the risk of financing issues.
- For Sellers: They should address potential inspection concerns beforehand, such as repairing visible defects or obtaining a pre-sale inspection report. Staying transparent about the property’s condition can prevent future disputes.
Understanding these risks helps both parties approach the under-contract phase with realistic expectations and necessary preparations.
Tips For Buyers When A Home Is Under Contract
When a home is under contract, buyers can still take specific actions to stay prepared and potentially secure the property if the deal falls through.
Exploring Backup Offers
Submitting a backup offer ensures buyers are next in line if the current deal doesn’t close. Backup offers are legally binding if the seller accepts them, so terms must be clear before submission. Sellers often consider backup offers when uncertainties exist around contingencies like inspections or financing. This approach increases a buyer’s likelihood of securing the property without waiting for a new listing.
Staying Alert For New Opportunities
Monitoring additional listings during this phase expands options for buyers. Even though the preferred home is under contract, new properties frequently appear on platforms like Zillow. Setting alerts for new listings with specific criteria helps buyers act quickly. This strategy reduces missed opportunities while staying engaged with the current property under contract.
How Zillow Displays “Under Contract” Listings
Zillow marks properties as “under contract” when a seller accepts a buyer’s offer, but the sale has not yet closed. This label helps users differentiate between available properties and those in the contracting phase.
Navigating Zillow’s User Interface
Zillow uses visual indicators such as tags or labels for “under contract” properties. These labels appear on the main property search results page and individual listing pages, often in bold or a distinct color. When selecting a listing, users can view more details about the contract status, including any contingencies mentioned in the description.
Filtering Search Results Efficiently
Filters allow users to exclude “under contract” properties from search results. By adjusting the search settings, users can focus on properties marked as “For Sale” rather than those in the process of being sold. This option reduces unnecessary distractions for buyers interested in available homes.
Conclusion
Understanding the “under contract” status on Zillow is essential for navigating the real estate market effectively. It provides clarity on where a property stands in the transaction process and helps buyers and sellers make informed decisions. By staying prepared, communicating openly, and knowing what to expect during this phase, both parties can better manage their expectations and increase the likelihood of a successful outcome. Whether you’re buying or selling, having a solid grasp of this term ensures you’re well-equipped to handle the complexities of the home-buying journey.
Frequently Asked Questions
What does “under contract” mean in real estate?
“Under contract” means a property has an accepted offer from a buyer, but the sale is not yet final. The deal hinges on meeting specific contingencies, such as inspections, financing, or appraisals, before closing.
Can a property under contract still accept offers?
Generally, properties under contract stop accepting new offers. However, sellers might consider backup offers in case the initial deal falls through.
What are common reasons deals fall through when under contract?
Deals may fail due to inspection issues, appraisal discrepancies, financing denials, unresolved contingencies, or title problems.
How can buyers prepare if a home’s “under contract”?
Buyers can submit a backup offer, stay informed on the property’s status, and regularly monitor new listings to explore other opportunities.
How does Zillow display “under contract” properties?
Zillow marks “under contract” listings with visible tags to help differentiate them. Users can also filter search results to exclude these properties when browsing.
Is there a chance to still buy a home that’s under contract?
Yes, buyers can submit a backup offer, which becomes valid if the initial agreement falls through.
What is the difference between “active” and “under contract” on Zillow?
“Active” means the property is open for offers without an accepted deal. “Under contract” signifies an offer has been accepted but is pending contingencies.
How can sellers protect themselves during the under-contract phase?
Sellers should maintain backup offers, address potential inspection issues upfront, and communicate openly with buyers to avoid delays or cancellations.
What should buyers do if their offer is accepted but the home is under contract?
If their offer is accepted as a backup, buyers should prepare financially and stay in communication with their agent to be ready if the initial deal collapses.
Can contingencies delay the closing process?
Yes, contingencies such as inspections, appraisals, and loan approvals may extend the timeline if unexpected issues arise.
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