That house you’ve been eyeing? Well, it’s officially labeled as “under contract” now. But don’t toss in the towel just yet—there might still be a glimmer of hope.
So, what’s this “under contract” business all about? Gwinn Volen with The Volen Group says, “When a home goes under contract, it means the seller and buyer have shaken hands on a deal. They’ve both signed on the dotted line, and the buyer has paid a binder deposit.”
This binder deposit is usually required within three days of agreement and will become non-refundable to the buyer once contingencies to the contract have expired. The binder deposit is usually 2 to 3% of the home’s price. This money later gets deducted from your final amount due at closing.
The binder deposit isn’t just for show. It’s a financial promise between buyer and seller. It shows the seller that the buyer is serious about purchasing the property and once contingencies are cleared, the binder, per the contract, becomes non-refundable. If a listing says “pending,” it means contingencies have been cleared.
What Does Under Contract Mean?
So, what happens after a home goes under contract? There’s a whole checklist to tick off. If you’re the lucky buyer, that means scheduling inspections and getting all your financial information organized.
Be prepared to do any inspections you wish to have completed on the home immediately. The inspection period is typically 10 days once an agreement has been made with the seller. So, put your detective hat on, get those inspections on the calendar and dig into the property disclosures.
Financing and Mortgage
If you’re planning on getting a mortgage, you will have some paperwork to tackle and hopefully you have connected with a lender prior to starting your home search to get pre-qualified. Once your home offer is accepted, contact your lender immediately to finalize the application process and get your financing in check. While you’re going through the financing process, it’s important to hold off on any big credit-driven purchases that can mess with your financing options and your credit score.
For the Seller
Sellers, you’ll be hustling to get the house ready for its new owner while crossing your fingers that everything goes as planned. That means keeping the place spotless, entertaining backup offers, and being ready for home inspections and fixes. Once you and a buyer agree on an offer, you and your agent will be communicating through the entire process. Once contingencies are cleared, there is a quiet period until you get closer to the closing day.
What is a Backup Offer?
But wait, what’s the deal with backup offers? When a house is under contract, it’s just the beginning of the marathon. There’s a long way to go before the finish line, and things could still hit a snag.
Sellers can keep showing the home even if they are under contract. Why? It’s like having a safety net in case the deal goes south. Gwinn explains, “Life happens. Financing can fall apart, inspections can unveil some surprises, or sometimes buyers just get cold feet. If that happens, the seller might throw the house back on the market, giving others a shot. Having a backup offer eliminates the waiting game of searching for another buyer.”
So, if you have your heart set on a home that’s already on someone else’s radar, don’t throw in the towel. You can submit a backup offer, which is like a Plan B if Plan A falls apart. Just understand that the seller isn’t tied to accepting your backup offer. They might go with it, or they could decide to go back to the drawing board and start fresh.
Even if you don’t stand a chance at snagging that “under contract” home, it’s still not a bad idea to peek at it. Just checking out a home labeled as “under contract” can give you a good sense of what folks are loving in the area.
Before you get all worked up over that “under contract” tag on a property search site, have your agent to get all the details. They’ve got the inside track on what’s happening, whether it’s homes about to hit the market, those already under contract, or the ones that are pending or sold.
So, what does “under contract” mean? Under contract signals the handshake, while “pending” whispers that all the nitty-gritty details are being sorted for the big finale of closing day.
About the Author
Jenn Heller is the Operations Manager for The Volen Group, Keller Williams Luxury International, a top real estate team in Ponte Vedra Beach. Jenn has over 18 years experience in Real Estate all in Ponte Vedra Beach, she is an Atlantic Beach resident via Long Island, NY since 1991, a book worm, and loves sports, dogs and the beach.