What Does It Mean to Be under Contract in Real Estate

If you`re in the process of buying or selling a property, you`ve likely heard the term “under contract.” But what exactly does it mean? Being under contract in real estate means that both the buyer and seller have agreed to the terms of the transaction and have signed a legally binding contract outlining those terms.

This contract typically includes the purchase price, any contingencies or conditions that must be met before the sale can be completed, the closing date, and any other important details relating to the transaction. Once both parties have signed the contract, they are legally obligated to fulfill their respective obligations as outlined in the agreement.

For the buyer, this means providing a down payment and securing financing for the property. They may also be required to complete a home inspection and obtain title insurance. The seller, on the other hand, must ensure that the property is delivered in the condition specified in the contract and address any issues that arise during the due diligence period.

It`s important to note that being under contract does not mean that the sale has been completed. There are many factors that can arise during the transaction process that can cause the sale to fall through, such as financing issues or discovery of property defects. However, if both parties fulfill their obligations as outlined in the contract, the sale should proceed and the property will be transferred to the buyer.

So why is being under contract important? For one, it provides both parties with a level of security and predictability during the transaction process. It also ensures that both parties are aware of their respective obligations and can work together to resolve any issues that arise.

Overall, being under contract in real estate is an important step in the buying or selling process. It provides both the buyer and seller with a clear understanding of the terms of the transaction and helps to ensure a smooth and successful sale.