In the world of real estate, one term that you may see often is “under contract.” Whether you`re buying or selling a home, it`s important to understand what this term means and what it involves.
So, what does “under contract” mean?
In simple terms, when a property is under contract, it means that a buyer and seller have agreed to the terms of a sale. This agreement is legally binding and outlines the price, terms, and conditions of the sale. Essentially, it means that the property is no longer available to other potential buyers.
What happens when a property is under contract?
Once a property is under contract, a few things happen:
1. The buyer typically puts down a deposit, often referred to as “earnest money,” to show their commitment to the sale.
2. The buyer has a certain period of time, usually a few weeks, to complete an inspection and appraisal of the property.
3. If any issues are found during the inspection or appraisal, the buyer can potentially negotiate with the seller to have them addressed or adjust the price accordingly.
4. Assuming everything goes smoothly, the sale will proceed to closing, where all final paperwork is signed and the property officially changes hands.
Why is it important to understand “under contract” when buying or selling a home?
Understanding the concept of “under contract” is important for both buyers and sellers because it helps to avoid misunderstandings and confusion. As a buyer, you`ll want to know when a property is under contract so that you don`t waste time and effort pursuing something that`s no longer available. As a seller, you`ll want to make sure that you understand the terms of any offer you receive and be prepared to follow through on the agreed-upon terms if you accept.
Additionally, if you`re buying a home and you`re interested in a property that is under contract, it`s still worth keeping an eye on it just in case the sale falls through. While it`s important to respect the agreement between the buyer and seller, situations can arise where the sale doesn`t go through and the property becomes available again.
In conclusion, when a property is “under contract” in real estate, it means that a buyer and seller have agreed to the terms of a sale and the property is no longer available to other potential buyers. Understanding this term is important for both buyers and sellers to avoid misunderstandings and confusion throughout the process.