What Does Under Contract Mean in Real Estate? – A Complete Guide by Sireen Properties

When buying or selling a home, you’ll encounter many terms that can feel overwhelming at first. One of the most common — and sometimes confusing — phrases is “under contract.” But what does under contract mean in real estate? At Sireen Properties, we believe that understanding the process is the key to making confident decisions. In this detailed guide, we’ll break down what it means when a home is under contract, why it matters, and what both buyers and sellers should know.

What Does Under Contract Mean in Real Estate?

In the simplest terms, when a property is under contract, it means that a buyer has made an offer on a home, and the seller has accepted that offer. However, the deal isn’t finalized yet. The property is essentially “spoken for,” but the sale is still pending because both parties must meet certain conditions before the transaction is complete.

Think of it like a handshake agreement that’s been put into writing. The buyer and seller have agreed on the main terms — such as the purchase price — but the contract includes contingencies that must be met before the deal officially closes.

Why Understanding “Under Contract” Is Important

Many people ask us at Sireen Properties: If a home is under contract, can I still buy it? Or If my house is under contract, can I keep showing it? These are important questions, and the answers depend on understanding the details of the contract.

Here’s why it matters:

• For Buyers: Knowing the status helps you avoid wasted time and disappointment. If a house is under contract, you may not be able to swoop in — unless the deal falls through.
• For Sellers: Once your home is under contract, you have obligations to the buyer. Failing to honor them could lead to legal issues.
• For Investors: Timing is everything. Understanding when a property is still “in play” helps you spot opportunities.

Key Stages in the “Under Contract” Process

To fully understand what does under contract mean in real estate, it helps to look at the typical timeline. While each deal is unique, here are the common steps:

1. Offer and Acceptance

The process begins when a buyer submits an offer on a home. If the seller accepts, both parties sign a purchase agreement. At this point, the home becomes under contract.

2. Earnest Money Deposit

Most contracts require the buyer to provide an earnest money deposit — essentially a good-faith payment that shows they’re serious. This money is typically held in escrow.

3. Contingency Period

This is where the bulk of the work happens. Contingencies are conditions written into the contract that must be satisfied. Common contingencies include:

• Inspection Contingency: The buyer can have the home inspected and request repairs or renegotiate.
• Financing Contingency: The buyer must secure a mortgage loan.
• Appraisal Contingency: The home must appraise at or above the purchase price.
• Title Contingency: The title must be clear of liens or disputes.

4. Negotiations and Amendments

If issues arise — say the inspection reveals a major repair — the buyer and seller can renegotiate. Sometimes contracts are amended, but both parties must agree.

5. Closing

Once all contingencies are met and financing is secured, the deal moves to closing. Only then does the property officially transfer ownership.

Under Contract vs. Pending — What’s the Difference?

Another term that often confuses buyers and sellers is pending. So, what does under contract mean in real estate compared to pending?

• Under Contract: The home has an accepted offer, but contingencies still need to be satisfied.
• Pending: All contingencies have been met, and the deal is moving toward closing. At this stage, the chance of the sale falling through is much lower.

At Sireen Properties, we like to explain it this way: “Under contract” is the in-progress stage, while “pending” means you’re in the final stretch.

Can a House Under Contract Still Be Sold?

Yes — and no. This is one of the most common questions we hear.

• For Buyers: If you see a property that’s under contract, you can sometimes submit a backup offer. This means that if the current deal falls through, you’ll be next in line.
• For Sellers: You’re generally committed to the buyer you signed with. However, accepting a backup offer can provide peace of mind in case something goes wrong.

Remember: until the deal closes, there’s always a chance that the contract won’t go through. Financing issues, failed inspections, or even a change of heart can derail a deal.

Common Reasons Why a Deal Under Contract Falls Through

When exploring what does under contract mean in real estate, it’s important to also understand why contracts sometimes don’t make it to closing. Some of the most frequent reasons include:

1. Financing Issues: The buyer can’t secure the mortgage.
2. Inspection Problems: Major issues like foundation cracks, roof damage, or plumbing failures scare the buyer away.
3. Appraisal Gaps: If the home appraises lower than the agreed price, the lender may not approve the loan.
4. Title Issues: Unresolved liens or disputes about ownership can stop a sale.
5. Cold Feet: Sometimes, buyers simply change their minds.

What Sellers Should Know About Being Under Contract

For sellers, going under contract is an exciting milestone — but it’s not the finish line. Here are a few tips from the Sireen Properties team:

• Stay Flexible: Expect negotiations after the inspection.
• Be Honest: Disclose known issues upfront to avoid delays.
• Keep Your Home Ready: Appraisers, inspectors, and contractors may need access.
• Don’t Pack Too Early: Wait until the deal is truly closed before making major moving plans.

What Buyers Should Know About Making an Offer

If you’re a buyer, knowing what does under contract mean in real estate helps you strategize. Here’s how to strengthen your offer:

• Get Pre-Approved: This shows sellers you’re serious and financially ready.
• Offer a Competitive Price: In hot markets, lowball offers are less likely to succeed.
• Limit Contingencies (When Possible): Too many conditions may turn sellers away.
• Consider a Backup Offer: If your dream home is under contract, don’t lose hope. Submit a backup offer and stay patient.

Real-Life Example from Sireen Properties

One of our clients recently made an offer on a charming three-bedroom home. The property went under contract quickly, but during the inspection, major plumbing issues were discovered. Instead of walking away, our buyer negotiated a repair credit with the seller. The contract was amended, and the deal closed smoothly.

This example shows that under contract doesn’t mean final — it means there’s still room for negotiation.

FAQs — What Does Under Contract Mean in Real Estate?

Q: Is a house under contract off the market?
A: Usually, yes. But some sellers accept backup offers.

Q: How long does a house stay under contract?
A: Typically 30–60 days, depending on financing, inspections, and negotiations.

Q: Can a seller back out when under contract?
A: It depends on the contract terms. Backing out without valid reasons can lead to legal consequences.

Q: Should I make an offer on a house that’s under contract?
A: Yes, you can submit a backup offer. If the first deal fails, you’ll be next in line.

Final Thoughts

So, what does under contract mean in real estate? It means that a seller has accepted a buyer’s offer, but the deal isn’t complete yet. The property is in a transition stage where contingencies — like financing, inspection, and appraisal — must be satisfied before closing.

For buyers, this stage is an opportunity to secure financing and ensure the home is a good investment. For sellers, it’s a reminder to stay patient and cooperative until the sale is finalized.

At Sireen Properties, we specialize in guiding clients through every stage of the buying and selling process. Whether you’re making an offer, accepting one, or navigating contingencies, our team ensures that you understand each step with clarity and confidence