What Does ‘Under Contract’ Mean When Buying House?

What Does 'Under Contract' Mean When Buying House

Table of contents

When you think of buying a house, it can all seem overwhelming and sometimes even confusing. It seems like there is always something to read, something to sign, financial records to find, credits checked and rechecked, and the anxiety of everything involved. And then comes new terms that leave us wringing our hands in frustration. Under Contract, Sale Pending, Conditional Offers, and Contingency are just some of these key real estate terms, and today we’re going to explain them.

Key takeaways

  • “Under Contract” means the sale of a house is being negotiated and terms have been agreed, but the sale is not final.
  • A “cooling off” period allows buyers to cancel the contract on the property without penalty within a certain number of days.
  • A “conditional offer” means an agreement has been made with certain conditions that must be met for the sale to go through.
  • “Under Contract” means there are certain conditions that need to be met, while “Sale Pending” means the sale is much closer to being finalized.
  • “Contingent” status means the property has an offer but is still being marketed and shown to other buyers, while “Under Contract” has an offer and is not being marketed.

Signing document


What does under contract mean?

When you see the words “Under Contract,” it means that the sale of the house is currently being negotiated and the seller and buyer have come to some terms such as the sale price of the house, a closing date, personal property, earnest money, and more. However, the sale of the home is not final and anything could happen. The buyer could change their minds, the seller could back out, something could go wrong with the paperwork or loan approval, or an appraisal could come back that requires a price change. “Under Contract” basically means that a sale is pending but that the home hasn’t been sold yet.


Cooling off period

There is a real estate term that is often included in the sale contract called “cooling off”. Much like we need a “cooling off” period when something has made us angry, the same concept applies to buying property. This period of “cooling off” gives a certain amount of days, which varies from state to state, to cancel the contract on the property — to change your mind and back out without penalty. This allows any decisions that were made in the moment of excitement to be thought-out better.


Conditional offers

So, what does it mean when a house is under contract with conditional offers? A conditional offer means that an agreement has been made with conditions attached. For example, the buyer could say that he’ll buy the house if it’s painted or it passes inspection. Certain conditions must be met for the sale to go through.


How is “under contract” different from “sale pending”

The difference between “under contract” and “sale pending” is basically that there are certain conditions that need to be met when it comes to “under contract” and the sale is much closer to being finalized with “sale pending.” All of the conditions “under contract” have been met and now the property is pending, the sale close, with maybe a few loose ends to tie up.


House under contract


How is “under contract” different from a “contingent” status?

The difference between “under contract” and a “contingent” status is that “under contract” has an offer for the property and it is not being marketed or shown to other buyers. It’s not finalized, and others can put in a bid but an agreement has been reached. However, a “contingent” status means that the property has an offer on the property, but it is still being marketed and shown to other buyers while it is under contract. “Contingent” also means that the deal has conditions that must be met before the deal can be finalized. Let’s look at a few of these contingency conditions.


Home inspection contingency

When a Home Inspection Contingency is involved in the listing, that is basically a condition that the buyer has the right to have the property inspected within a particular time period before the sale can be finalized. It also gives the buyer the right to cancel the contract or negotiate repairs on the property based on the report of the home inspection. It gives the buyer more security for the sale, as they can identify any major issues before the deal is closed. For instance, a home inspection finds that the roof of the home is in disrepair and should be replaced. The buyer can then ask the seller to replace the roof, reduce the home price based on the roof’s condition, or walk away from purchasing the home completely.


Appraisal contingency

An Appraisal Contingency protects the buyer and assures them that they aren’t buying over the appraised value of the property. If the appraisal isn’t for a specific amount, the buyer has the right to withdraw their contract bid without any repercussions or consequences and in most cases, if the contract is terminated, the earnest money paid by the buyer in the beginning stages of negotiating terms is returned.


Mortgage contingency

A Mortgage Contingency is another way that the buyer is protected. This contingency handles the mortgage aspect, and the sale is contingent on the buyer getting financing for the purchase amount. If the financing falls through, the buyer won’t be faced with legal actions for breaking the contract. The buyer has a specific amount of time to obtain financing from the start of term agreements before the sale can be finalized and if the buyer can’t secure financing, the contract can be terminated without penalty.


Home sale contingency

The Home Sale Contingency is yet another way the buyer is protected. With this contingency in place, the sale of the new property is dependent on the buyer’s home or property being sold within a specific amount of time. If the buyer’s property sells, the purchase of the new property and contract move forward. However, if the buyer’s home does not sell within a specific amount of time, the contract on the new property may be terminated without repercussions and all money returned to the buyer.


Can you still make an offer on an under-contract property?

You can still make an offer on a property listed as “Under Contract.” If the sale falls through—regardless of the reason— you would have your bid for the home in place already, a bit like waiting in line.


Contact us today!

Buying a home isn’t always an easy task but the specialists at Hero Home Programs™ want to help make it less stressful. They are ready to help you find the right lender, the right grants and rebates, and the right savings for your new home purchase. Contact us today to get started down the path to homeownership tomorrow.

Jacquelyn Sublett
Jacquelyn Sublett

I love teaching and writing on real estate, finance and mortgage topics. I find it fulfilling hearing stories of first time home buyers who we have helped with the home buying process. Writer for the Hero Homebuyer Programs™

Connect with the Author:

Recommended Posts

What Our Buyers Think

Jules S.
Read More
"5 star service is what you will get when you work with him!ᅠ Not only does he know his product like no other, he makes a special point of communicating throughout each transaction and his follow up skills are unparalleled. Perhaps most importantly, he delivers on his promises!ᅠ Give him a try for your mortgage needs.ᅠ You will not be disappointed!"
Jeremy H.
Read More
"An outstanding job handling refinances.  One of those knowledgeable, straight-shooters - which is really appreciated when you're shopping for a home loan. He can answer a million of questions with ease.  Looking back at the responsiveness, he was outstanding and you can do everything he suggested."
Jaina D.
Read More
"You can rely on them, very professional and quick in responding to your queries. He is very friendly and makes sure we understand the process and keeps us posted on the status of our loan. His efforts are greatly appreciated."
Eshawn W.
Read More
“By far the best lender we’ve worked with. Got us the best loan amount than any other lender. He worked with us hand in hand, he is professional, and he made the process enjoyable.”
Jaina D.
Read More
"You can rely on them, very professional and quick in responding to your queries. He is very friendly and makes sure we understand the process and keeps us posted on the status of our loan. His efforts are greatly appreciated."
Cass Z.
Read More
“I called looking for information about the process of applying for a mortgage/refinance and am just blown away with how helpful the information I received was!”
Stephanie F.
Read More
“I have hope because of you for making my home ownership dream come true. I feel such a connection with you and am excited to work with you. Have an amazing day!”
Rachel S.
Read More
"Highly ethical, attentive and helpful! A fantastic combination of personable and hard working. He makes everyone feel important and understood."
Cliff S.
Read More
“Hands down the best mortgage professional I’ve worked with in 20 years. Knowledgeable, honest, reliable and above all an outstanding communicator.”
Jose A.
Read More
"He worked on getting the lowest rate and kept me informed on each step of the process from the beginning to closing. Thank You!"
Nicholas H.
Read More
“Thank you for your prompt help and AMAZING assistance. Hands down, best lender I have ever worked with. Top notch!”
Read More
“I would be 100% interested in working more with you! You have proven to be an amazing lender”
Sandy C.
Read More
“Absolutely the most knowledgeable, friendly and honest expert I’ve ever worked with!”
Steve R.
Read More
"A pleasure to work with. He was very prompt and courteous with his responses and genuinely cares about the clients he works with."
Kevin H.
Read More
"Professional, responsive and honest assistance with the whole refinancing process from beginning to end."

We help you reach home ownership.

No catch. No hidden fees.

Have you served in the military or your community as a healthcare provider, teacher, or first responder? Are you a member of your local union or work for your city government?

Are you looking to buy a home but don’t know where to start when it comes to finding your best home financing options?

At Hero Home Programs™, our teams are dedicated to helping community heroes like you through the home purchasing process by finding the best grants, rebates, and loans in your area in order to maximize your savings and help you achieve homeownership.

Contact our team today to learn how we can and mortgages can change your life.

Resource Guides

Complete A to Z guides on your home purchase journey.

Learn about the process for getting a home loan

What steps you can take to improve your credit score

Tips and tricks for moving into your new home

Your step-by-step guide for buying a new home

Scroll to Top