Active Under Contract
If you’ve browsed real estate listings lately, you may have seen the status active under contract on some home listings. This term can generate a lot of questions for buyers and sellers alike. Active under contract means that a seller has accepted an offer to purchase their home. However, the buyer will have aĀ contingency period to investigate the condition of the property.
What Does Active Under Contract Mean?
However, the home is still being marketed and shown during this contingent period. This keeps options open in case the current buyer needs to back out for any reason before closing. It allows the sellers to find alternate buyers if necessary more easily.
Why Would A Home Be Active Under Contract?
Purchasing a home that is under contract presents unique challenges for potential buyers. The property is under contract as the sellers accepted an offer.Ā Any offer made on the property would be considered a backup offer. No money is deposited as the seller is under contract with a buyer.
One primary challenge is the potential for a competing backup offer. Despite the property being under contract, unforeseen circumstances could lead to the deal falling out of escrow. In such cases, the seller may entertain backup offers, leaving the current buyer at risk of losing the home to a higher or more favorable bid. Buyers must navigate this delicate situation with careful consideration of their offer’s competitiveness.
The timeline is another important consideration. The under contract phase involves completing buyer contingencies and requirements specified in the purchase agreement, such as seller disclosures, a home inspection contingency, home appraisals, and lender considerations. Delays in any of these home buyer contingencies can impact the closing date, causing uncertainty.
When a home is under contract, the property remains off the market but is not yet off-limits to other buyers. The buyer in first position invests time and money into inspections to perform their due diligence.Ā In summary, while active under contract homes offer potential buyers an opportunity to secure a property in back up status. Be sure to ask real estate questions about the meaning of the different listing statuses.
When Does the Status Change From Active Status?
The shift from active status in real estate occurs when a seller accepts an offer on the property. Escrow is opened and the buyer deposits the earnest money deposit. At that time, there are still contingencies on the property for a buyer to complete.
Once the contingencies have been removed, the status will be changed to pending. This means that the buyer has completed all the investigation of the property and is satisfied these include inspection, appraisal, review of the disclosures and a loan contingency.Ā Agreed upon home inspection repairs have been completed by the seller by the time that escrow closes.
The status changes to sold once escrow has closed and the property has been conveyed to the buyer.
Final Thoughts
When a property is under contract, the seller can take backup offers. It is important for the listing agent to not disclose any details of the first offer.
About the Author
The blog post āActive Under Contract | 5 Important Facts ā was written by Sharon Paxson, a topĀ Newport Beach Real Estate Agent. With experience since 2005, representing buyers, sellers, landlords, and tenants, we welcome the opportunity to share our expertise with you and guide you through your real estate transaction.