The phrase “under contract” is a key term in real estate that often sparks curiosity. If you’re navigating the home-buying or selling process, understanding this stage is essential. While being under contract is an exciting milestone, it’s not the final step. Let’s dive into what it means, what happens during this phase, and what you can expect along the way.
What Does “Under Contract” Mean?
When a home is “under contract,” it means that a buyer has made an offer on the property, and the seller has accepted it. At this point, both parties have entered into a binding agreement, laying out the terms of the sale.
However, being under contract doesn’t mean the sale is complete. Instead, it marks the beginning of a crucial period where specific steps need to be completed before the transaction can close. These steps are outlined in the purchase agreement and typically include:
- Inspections
The buyer arranges a home inspection to evaluate the condition of the property and identify any potential issues. - Appraisal
The lender requires an appraisal to ensure the home’s value supports the agreed-upon purchase price. - Securing Financing
The buyer works with their lender to finalize their mortgage loan. - Title Work
The title company conducts a title search to confirm there are no legal claims or liens on the property and prepares the necessary documents for transfer.
How Long Can a House Be Under Contract?
The length of time a home is under contract can vary, but it typically ranges from 30 to 60 days. This timeline depends on several factors, including:
- Type of Financing
Different types of loans have varying approval processes. For example, FHA or VA loans may take longer to close than conventional loans due to additional requirements. - Financing Approval
How quickly a buyer can secure financing plays a significant role. Pre-approved buyers may move through this step faster, while others may face delays if additional documentation or reviews are needed. - Inspections and Appraisals
Scheduling and completing inspections and appraisals within the agreed-upon timeframes is critical. If these uncover issues, additional negotiations or repairs may extend the timeline. - Title Work
Title companies process paperwork to ensure the property’s title is clear. While this is usually straightforward, any complications, such as liens or ownership disputes, can cause delays.
In some cases, contracts may close faster, particularly if all parties are motivated and organized. Conversely, if unforeseen challenges arise, the process can take longer. It’s important to remain flexible and proactive to keep things on track.
What Happens During the Under-Contract Phase?
Here’s a step-by-step look at what typically happens once a home goes under contract:
- Earnest Money Deposit
The buyer submits an earnest money deposit to show they’re serious about the transaction. This amount is usually held in escrow until closing. - Inspections
The buyer schedules inspections to assess the property. If significant issues are found, the buyer and seller may negotiate repairs or credits. - Appraisal
An appraiser evaluates the home to ensure its value aligns with the purchase price. If the appraisal comes in low, the buyer and seller may need to renegotiate the terms. - Contingencies
Buyers work to meet the contingencies outlined in the contract, such as securing financing, selling their current home, or resolving inspection concerns. - Title and Escrow
The title company conducts a title search and prepares for the property’s transfer. Escrow ensures funds are securely held and distributed at closing.
Final Walkthrough
Just before closing, the buyer conducts a final walkthrough to confirm the property is in the agreed-upon condition.
Tips for Staying on Track During the Under-Contract Phase
Navigating the under-contract phase successfully requires coordination and communication. Here are some tips to help ensure a smooth process:
- Stay in Close Contact with Your Realtor
Your Realtor is your go-to resource during this phase. They’ll keep you informed, monitor deadlines, and address any issues that arise. - Respond Promptly to Requests
Whether it’s providing documents to your lender or signing forms for the title company, quick responses can prevent delays. - Be Prepared for Potential Hiccups
Issues like low appraisals or inspection findings can happen. Work with your Realtor to address these challenges and explore solutions. - Review Deadlines Carefully
The contract will include specific deadlines for contingencies and other steps. Missing these dates could jeopardize the transaction. - Stay Patient and Flexible
Real estate transactions involve many moving parts. Delays can happen, but keeping a positive mindset will make the process less stressful.
How Long Does Closing Take?
Many people wonder how long the actual closing process takes at the table. With advancements in technology, the signing process has become more efficient. Here’s what to expect:
- In-Person Closings: Typically take about 30 minutes to an hour to complete, as you review and sign final documents.
- Electronic Closings:
Many transactions now allow for secure electronic signatures, enabling you to sign most documents in advance. In some cases, the entire closing can be done remotely.
Final Thoughts
Being “under contract” is an exciting milestone, but it’s just one step in the journey toward buying or selling your home. As your Realtor, I’m here to guide you every step of the way—answering your questions, keeping track of deadlines, and ensuring everything moves as smoothly as possible.
If you ever feel uncertain about the process or just want an update, don’t hesitate to reach out. My job is to make this experience seamless and stress-free for you, so you can look forward to closing day with confidence and excitement. Let’s make it happen together!