What Does It Mean When a House is Under Contract?

If you’re like many people looking for homes for sale in Baltimore County, you’ve seen listings that say “Under Contract.” But what does that mean in real estate, and can you still put in an offer if you find something you love? Here’s what you need to know.
What Does It Mean When a House is Under Contract?
When a house is under contract, it means that the seller has accepted an offer from someone else. The buying process has already started – and the parties may be at the beginning or the end of the transaction. 
Generally, a real estate transaction follows these steps (though sometimes there’s some variation in the order):

  1. A prospective buyer gets preapproved for a mortgage loan.
  2. The buyer begins looking at homes that may meet their needs.
  3. The buyer finds the right home and makes an offer.
  4. The seller has the chance to accept the offer, reject it, or try to negotiate.
  5. If the seller accepts the offer (or if the two parties negotiate and reach a deal), the buyer begins his or her due diligence and actually secures financing.
  6. The buyer completes all the steps necessary to secure financing while the seller completes any agreed-upon repairs, updates or upgrades.
  7. The buyer hires a home inspector who visits the home and looks for any issues. The buyer can hire specialized inspectors, like pest inspectors and swimming pool inspectors, as well.
  8. The buyer pays for a title search.
  9. The parties and the lender negotiate closing costs (such as who will pay and how much they’ll be).
  10. The buyer does his or her final walk-through.
  11. The parties (including the lender) meet at the closing table to sign the final paperwork to transfer ownership of the home.

At any point during this transaction, the deal could fall apart. Sometimes buyers back out, whether it’s because they’ve discovered an issue with the home that they can’t live with or they simply get cold feet. Sometimes sellers back out, too, for their own reasons. And in some cases, buyers aren’t able to secure financing to purchase the home – so if that happens (provided there’s a financing contingency in the contract), the deal won’t go through.

What Does It Mean When a House is Under Contract?

So what does all that mean?

It means a home purchase isn’t a done deal until all parties – including the lender – have signed the final paperwork and the new owner has the keys in his or her hand.
Related: 3 mistakes to avoid when you buy a bigger house
Can You Make an Offer on a Home That’s Under Contract?
Sometimes you tour homes all day, go back to see the first one you visited, and decide that’s the one you want to make an offer on… only to find out that someone has beaten you to the punch. If that happens, you can still make an offer (and the deal isn’t “under contract” until the seller has accepted an offer). 
But even when a home is under contract, you can submit a backup offer to show the seller that you’re willing to buy if their existing transaction falls through. 
However, if you choose to make an offer on a home that’s under contract, there are a few things to consider. First, remember that there’s only a slim chance that the deal will fall through – and know that you should keep looking for the right home. Second, know that if the deal falls through, it could mean there’s something wrong with the home (but you’ll hire your own inspector to find out, should it come to that). Finally, you need to know that even if the deal falls through, you may not be the only person who puts in a backup offer; you may still have to increase your offer, and you could even get into a bidding war, depending on how many similar homes are currently for sale.

Are You Buying or Selling a Home in Baltimore County or Howard County?

If you’re ready to buy or sell a home in Baltimore County or Howard County, we can help. Check out these listings:

If you’re thinking about selling your home, we can help you sell it quickly – and at the best possible price. You can:

If you have specific questions, fill out the form below or call us at 443-955-1227 – we’re here to help you with any aspect of your real estate transaction.[wpforms id=”220617″]

Published On: May 21st, 2021Categories: Buyers, Tips, Life Hacks & How-toTags: , , , 824 wordsViews: 24

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