Trystan Casey
In the context of real estate, active under contract is a status that indicates that the buyer and seller have reached an agreement, but there are still outstanding requirements or contingencies that must be fulfilled before the sale is finalised. This means that the seller has accepted an offer, but the deal is in its early stages and hasn't closed yet. During this phase, the seller may still accept backup offers from other prospective buyers, which will be considered if the original sale falls through.
| Characteristics | Values |
|---|---|
| Status | The property is for sale and the seller is accepting offers |
| Listing | The property is designated as "active under contract" |
| Seller | The seller has accepted an offer from a buyer |
| Buyer | The buyer can still make an offer on the property |
| Contingencies | There are still some details and contingencies that must be worked out before the sale is final |
| Backup offer | Buyers can make a backup offer which will be considered if the initial deal falls through |
| Contract | The buyer and seller have entered into a contract |
| Closing | The deal is in its early stages and is yet to close |
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What You'll Learn
Buyers can still make offers
When a home is listed as "active under contract", it means that the seller has accepted a buyer's offer, but the deal is still in its early stages and hasn't officially closed yet. The home listing will remain active until all contingencies have been met. During this period, buyers can still make offers on the property, which will be considered backup offers. These offers act as placeholders for potential future buyers if the original deal falls through.
The chances of buying a home listed as "active under contract" are slim as the seller has already agreed to an offer. However, the seller can accept a backup offer if certain contingencies aren't met by the original buyer. For instance, if there are issues with the home inspection, the original buyer cannot qualify for mortgage financing, or the appraisal is too low.
If you are interested in a property that is "active under contract", you can still submit an offer. While there is no guarantee that your offer will be accepted, unforeseen circumstances may prevent the initial sale from going through. To make an offer, the first step is to consult a real estate agent, who can advise on the competitiveness of your offer and guide you through the process.
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Sellers can still accept offers
When a property is listed as "active", it means it's for sale and the seller is accepting offers. Once the seller accepts an offer, the agent will change the status to "active under contract". This means the seller has accepted an offer from a buyer, but the deal is still in its early stages and hasn't yet closed.
When a property is "active under contract", it means the seller has accepted a buyer's offer, and the buyer and seller have entered into an agreement. However, there are still some details and contingencies that must be worked out before the sale is final. These contingencies could include the buyer selling their current home, obtaining financing, or passing a home inspection. The active under contract status can last from a few weeks to over a month, depending on the number of contingencies.
During the active under contract phase, sellers can still accept offers from other buyers, but these will be considered backup offers. Sellers generally cannot break their current purchase and sales agreement to accept a new offer, even if it's more favourable. However, if the original buyer fails to meet any contingencies in their contract, the seller may then consider these backup offers.
Therefore, if you're interested in a property that is listed as active under contract, you can still submit an offer. While there is a low likelihood of your offer being accepted as the primary agreement, it may serve as a backup option if the original deal falls through.
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Offers are considered backup options
When a property is listed as "active under contract", it means that the seller has accepted an offer from a buyer, but the deal is still in its early stages and hasn't yet closed. During this phase, buyers can still make offers on the property, but these will be considered backup offers.
Backup offers are a form of protection for sellers, providing a safety net in case the primary contract falls through. While there is a low chance of the primary deal collapsing, it can happen, and backup offers can ensure a smooth transition if it does. For example, the original buyer may have second thoughts, or there may be financing issues or problems with the home inspection.
Sellers can ask for earnest money deposits to be paid by those making backup offers, to prove that the buyers are seriously interested in the property. If the primary deal closes successfully, the earnest money will be returned. However, if the backup buyer decides to withdraw their offer, they may have to forfeit part or all of their deposit.
As a buyer, making a backup offer can be a good option if you have fallen in love with a property but missed out on making the primary offer. However, it is important to be aware that there is a very low chance of a backup offer being accepted, and it may complicate the sale process or alienate the primary buyer.
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Contingencies must be met
Contingencies are conditions that must be met before a deal is done. They are a crucial part of the "active under contract" stage in the home-buying process. During this phase, the seller has accepted an offer, but the deal is still in its early stages, and there are outstanding requirements that must be satisfied before progressing to closure.
Contingencies can include a variety of factors, such as the buyer securing financing, a successful home inspection, or the buyer selling their current home. For example, the buyer's financing may depend on finalising their mortgage or waiting for an appraiser to determine that the home is worth what they have agreed to pay. The home inspection may uncover issues that need to be addressed before the sale can be finalised. In some cases, the buyer may have a contingency stating that they must sell their current home before closing on the purchase of the new one.
The length of the contingency period can vary, typically ranging from a few days to several weeks, with an average of around 30 days when market conditions are normal. In some cases, it can even extend up to 60 days or more, depending on the number of contingencies and their complexity. During this time, buyers interested in the property can still submit a "backup offer", which will be considered if the initial deal falls through due to unmet contingencies.
It is important to note that there is never a 100% guarantee that all contingencies will be met, and there is always a chance that the deal may collapse. This uncertainty keeps the door open for other potential buyers to make offers, even though the property is technically off the market. However, sellers generally cannot break their current purchase and sales agreement to accept a new offer, even if it is higher.
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The deal is in its early stages
When a property is listed as "active under contract," it means that the seller has accepted an offer from a buyer, but the deal is still in its early stages. At this point, the seller is prevented from signing on with another buyer. However, the original deal is not yet final, and there is a chance it may fall through.
The "active under contract" status indicates that there are still outstanding requirements and contingencies that must be settled before the sale can be completed. These contingencies could include the buyer securing financing, a successful home inspection, or the buyer selling their current home. The length of time that a property remains in this state can vary, depending on how many contingencies are attached to the buyer's offer. On average, it lasts for around 30 days during normal market conditions, but it can range from a few days to several weeks, and sometimes up to 60 days.
During this early stage of the process, buyers who are interested in the property can still submit a backup offer. While these offers will not be accepted unless the original deal falls through, they can put interested buyers in line for consideration if that happens. Therefore, if you are interested in a property that is listed as "active under contract," it is worth preparing an offer or at least keeping in touch with the seller's agent.
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Frequently asked questions
"Active under contract" means that the seller has accepted an offer from a buyer, but the deal is still in its early stages and there are some details and contingencies that must be worked out before the sale is final.
Yes, you can still make an offer on a property that is "active under contract". However, your offer will be considered a backup offer and will only be considered if the initial sale falls through.
"Pending" comes after "active under contract". "Active under contract" indicates that an offer has been accepted but there are still contingencies to be met, whereas "pending" means that all conditions have been met and the sale is imminent.
The "active under contract" status can last anywhere from a few weeks to over a month, depending on how many contingencies are attached to the buyer's offer.
For rental properties, "active under contract" means that there is an approved renter and possibly a signed lease, but the process is not complete. The property is likely still being marketed and shown to potential renters.
