What does active under contract mean?

What does active under contract mean

01 Nov 2020

"Active under contract" is a term indicating the status of a house or a property, which can be a single-family home, condo, townhome or other types of residency, that is put up for sale wherein the seller accepts an offer from a buyer, but the deal is not yet closed. 

Another common term is "under offer", which means an offer has been made, but it hasn't yet been accepted, and negotiations are still not completed. Under offer also means a buyer made an offer under the asking price, and the owner is considering whether or not to accept it; on the other hand, some agents use the term for properties where the owner has accepted an offer, but the paperwork has not yet been completed. 

real estate broker uses "sale agreed" or "sold STC" terms for situations where an offer has been made, and the seller accepted it. In such conditions, the sale is not legally binding, as it is "subject to contract". The sale will be completed once the paperwork and contracts are completed.

When a property is 'under offer', it does not mean the sale has been completed, so there is no legally binding contract. Under Offer means a buyer has put forward an offer, and the seller is currently considering buying the property. It is often used by estate agents when marketing or advertising a property. However, the transaction is not yet legally binding, so another buyer can still make an offer for the property for the seller to consider.

What is Active under Contract? 

If an agent gets a listing and signs a real estate agreement with a seller to promote their home, they use certain terms to inform about the status of the property transactions, and they post the status on local or regional MLS. If the property is up for sale and available to other agents, the status changes to 'active.'

If a buyer makes a contractual offer and the seller accepts it, the listing status changes to Active Under Contract

If a property is listed as Active Under Contract, a written offer forms a binding agreement which takes the property off the market due to the following reasons – 

a) It stops the seller from getting into an agreement or signing another contract for the same home with another party, and 

b) It requires the buyer to pay for the home. 

 What does active under contract mean in real estate?

If the listing status mentioned by the real estate firms remains 'Active Under Contract,' the seller cannot make another contract for the same house with other buyers. However, the sellers can get backup offers from other interested parties. Backup offers serve as placeholders for the next buyer (s).

If there's a breach of contract, the sale falls through with the original offer, or the seller can proceed quickly to the next offer due to the failure to perform the terms. Backup offers are pretty standard in the real estate markets where inventory is low, and demand is high.

House under contract

A House under contract means that a buyer has made an offer on the home that the seller has accepted. 

What is an active option contract? 

If a home is listed as being in an "active option contract," the seller has accepted an offer, but the deal isn't finalised; instead, the sale is in the stage of an inspection—or option —phase; such contracts allow the buyer to reserve a property through an offer within a specified period that includes being able to cancel a deal without forfeiting their earnest money legally.

Although the characteristics of an active option contract period can differ from one market to another, the typical period is between five and ten days. During this time, the property under the active option contract is reserved for the buyer. The buyer uses the time to evaluate the property—including getting it inspected—while reserving the right to terminate the proposed deal if they want to.

What does contingent mean? 

There are certain contingencies in nearly every real estate contract related to home inspection, title search, attorney review, and home appraisal. The deal closes when the contingencies as mentioned in the contract are fulfilled. However, occasionally contingencies remain unfulfilled, and it opens the possibility for the deal to fall through in the later stages. Therefore the home remains available to view online.

The deal's duration can be from a couple of days to 30 days in normal circumstances, but the closing stage can sometimes take longer when the lenders or the appraisers take more time to keep pace with the higher demand and greater volume.

How long can a house be under contract?

There is no maximum or minimum duration for how long a house can remain under offer. The property can remain open as long as both parties work through the contract-making and exchanging process. Under contract is the stage where buyers and sellers have agreed to contract terms such as price, closing date, money earned, personal property, tax, and contingencies. When a purchase contract is signed, provisions specify how long a buyer must secure the mortgage and close the deal. There may be delays, but often the buyer takes a certain amount of time to do the home inspection or appraisal. 

The closing stage of the home buying process typically takes up to two months in some markets. Some sellers will not provide viewing or tours of the house when it is Active Under Contract. They may wish not to be disturbed. As per some rules, if the property has been on the market for more than a month, sellers will likely consider any offer, even a low-priced offer to prevent it from falling off. 

What does under contract show mean?

If a property that you are interested in buying is under contract, you may still have the option to buy it if the current buyer or seller cannot fulfil any of the contingencies of the purchase agreement. In such a case, the home returns to the market listings due to disagreement between the two parties. 

Twenty-five per cent of real estate agents during covid lockdowns said they had at least one client who signed a contract without setting foot on the property. 

What is the difference between active under contract and pending?

A pending status shows all contingencies are met, and the home is in the escrow phase, where the final paperwork and disbursement of funds may happen.

There are some contracts where the buyer pays for the option period and has the unrestricted right to end the contract for any reason. It is called option pending, where you need to do all the amendments or repairs to the property, or you may opt-out of the deal anytime.

Some properties are pending, but they appear in the listings. They are considered pending, and the listings show the home where a contract has been accepted. If there is any contingency or waiting for any financing approval through Third Party Financing Addendum, one can cancel the deal anytime before the option period.  

Real estate agents are not legally allowed to tell you the exact amounts of other offers on a property made; nevertheless, a good agent will help you get the best offer while still securing the property you want.

What is active under contract?

It means 

·The seller accepts a contingent offer.

·There are some contingencies that one should consider before finalising the deal.

·The duration of the contract depends on the type of contingency.

·The seller may consider a backup offer if the current contract is cancelled.

Generally, a house won't stay under offer for more than two months. So the buyer, seller and agent will want to get contracts signed as soon as possible after the offer has been accepted. However, the buyer will need to complete several actions before signing a contract. It includes an agreed offer, mortgage valuation and mortgage in principle, surveys required, searches by the conveyancing solicitor, deposit funding arranged, and a completion date agreed.

Specifically, how long a property moves from the state of 'under offer' to 'sold' depends entirely on the speed and efficiency of both sides' solicitors. However, one can quickly speed the process up by providing the necessary information and paperwork.

What are contingent for active under contract property?

Some of the contingencies are 

Home Inspection

The seller is expected to disclose the house's condition to the potential buyer. First, however, the buyer should get the home inspected by a third party to understand the property's conditions adequately. An inspection contingency means the buyer can discover any major flaws not disclosed beforehand. The buyer can then opt to get out of the deal or negotiate the price.


Even though buyers get pre-approval for a mortgage before making an offer, there is no guarantee that the buyer will get approved for a loan because the lender will thoroughly review the application and may decline in later stages.  

Home Sale

'Upgrading' means buying a bigger house. Most buyers plan to sell their current home before buying a new one. A home sale contingency means an offer that you accept on your home gives you more negotiating power while making an offer on the property you wish to buy. It is not recommended to put an offer on a house until you have at least accepted an offer on your property and completed the deal within the chosen time period.


An appraisal contingency means the deal is good only if the property's market value is not lower than the price agreed in the contract. This contingency is included because lenders can reject your home loan application if the property value is less than the price quoted on the contract.

If a property is listed as 'sale pending,' the contingencies have been removed, and the property is ready to close.

Understand that property marked as active under contract cannot be sold and purchased as standard after the contract is made, but there are always some contingent clauses when it is not fulfilled; the property may be sold or purchased by other buyers. So the deal will only be fulfilled when the contingent clauses are removed. Contingent clauses are:-  

· No buying before the home inspection, No buying before a home appraisal.

· Buying and selling are the subjects of attorney review, and only in the case of a favourable report from an attorney a deal could be closed.

· The agreement will depend on the buyer's ability to have adequate money for purchasing the house.

Can you make an offer on a house that is under contract?

In general, you can make an offer on a property when you are seriously interested in buying it. If you put an offer in on the house, it usually involves the following stages:

·The buyer makes an offer for the property.

·The seller accepts the offer or counters /negotiates or rejects it.

·If the seller agrees to the new negotiated offer, the buyer will make a written agreement for it.

·If the seller accepts the offer, both parties can move to the next stage of legal procedures and exchanging contracts.

·If the seller refuses the offer, the buyer can make a new contract or continue to look elsewhere.

Conclusions: - 

It may not be very reassuring for a buyer to see the property of choice as "under contract". Although most home sales take time and assessment could be below, or there can be some issues at the negotiations, it's important to understand why a home fell out of the process. If the property fell out during any negotiation when buying a propertyyou should view any property under offer to ensure there is no legal issue. There are no restrictions on viewing the property under contract. The estate agents may still set up viewings even if the seller is considering an offer to attract a competing price. 

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