What Does “Under Contract” Mean in Real Estate?

Nikita R.

Media-savvy content creator, with a curiosity for all Salesforce experiences.

Updated: Jan 13th, 2025

This is a common question that we receive from readers. If you want to learn what this term means, too, join us in our article below.

We will cover the meaning of “under contract”, take on interesting topics like contingencies, and explain other common real estate terms.

But back to the question at hand, “What does a house under contract mean?”

“Under Contract“ in the real estate industry means that a property is in a sales process between a buyer and a seller.

The term “Under Contract“ is also used to let all parties inside and outside of the purchase agreement know that the buyer and seller both agree to the terms and conditions of the sale. The “Under Contract“ stage starts when a buyer places an offer on a property, and the seller accepts it.

How Contingencies Affect a House Under Contract?

Now that we have a comprehensive view of the “under contract“ term, let’s cover the contingencies that can affect the sale of a house.

Real estate documents that are in the “under contract“ phase include different types of contingencies. These conditions are added to contracts to give buyers more options in the property agreement.

For starters, buyers have the option to withdraw themselves from a deal if a condition is not met. However, this would be the most extreme case in a property agreement.

Contingencies are often added to contracts to empower the buyer to request modifications to agreements or ask the seller to repair damages to a house before the sale is finalized.

Let’s dive deeper into a few contingencies that can affect a property that has an “under contract“ status.

1. Financing Contingencies

A financing contingency can be added to a contract to give the buyer a set amount of time to find funding to support the purchasing of a house. This contingency lets a buyer withdraw from a contract if they cannot find funds or a loan in the agreed timeline to complete the sale process.

The result of this contingency is that the seller will not be able to sell the house to the buyer and will have to keep it on the market for longer.

2. Appraisal Contingencies

An appraisal contingency is another common condition that can appear in a purchase agreement. It lets the buyer get an objective evaluation of the property. If the appraisal of the property is lower than the seller’s asking price, the buyer has a few options:

• They can request to re-negotiate the price of the property.
• They can ask the seller to match the price to the property’s appraisal.
• They can withdraw from the property agreement without facing any penalties.

3. Home Sale Contingencies

This contingency is added to a contract when the buyer needs to sell their home before the deal can be finalized. This is a common practice that buyers employ to acquire funds to purchase a new property.

The home sale contingency protects buyers and gives them the power to withdraw from a purchase agreement if they cannot sell their current house. There will be a specific timeline agreed upon by the seller and the buyer that will dictate how much time the buyer has to sell their property.

4. Home Inspection Contingencies

There are many more contingencies, but the final one we are discussing in this article is a home inspection. This contingency is added to a contract to let the buyer objectively scan the house they are interested in purchasing.

During the examination of the property, the buyer could find that the house is damaged and needs repairs. In this instance, the buyer can ask the seller to mend the damages or ask for a lower purchasing price on the property.

If the buyer and seller cannot come to an agreement, the home inspection contingency gives the buyer a chance to back out of the contract.

Pending Vs. Under Contract 

Moving on to another common real estate term used for contract management, i.e., pending contracts.

Pending and “under contract“ are two terms used to describe the status of agreements in the real estate industry. These terms or statutes are quite similar as they both let people know which stage a property is when it comes to a purchase agreement.

For example, a property that has an accepted offer from a buyer but the sale has not been finalized yet can refer to both a pending or under contract status.

However, these two statuses can mean different things depending on the location where the house is sold. Let’s take a look at a few details regarding these two popular contract statuses.

A Pending Contract Status

During the pending phase, even though the sale has not been finalized, the property has been removed from the market. The buyer will examine the property and ensure they have enough funds to purchase the house.

If there are any other tasks that need to happen before the house is sold, they will be performed during the pending stage of the sale. In certain locations, the pending status informs all parties that the contingencies listed in a contract have been addressed. It is considered to be the final stage of the sale, and all parties are just waiting for the deal to be closed.

An Under Contract Status

When it comes to the “under contract” status, the offer provided by the buyer to purchase the house has been accepted by the seller. There will also be a signed contract using a swift electronic signature if it’s a digital document as evidence that the buyer and seller are in a purchase agreement. At this time in the sales process, the house will be taken off the market even though the transaction has not been finalized.

During this phase, the buyer will make sure to inspect the house properly and find funding to pay for it.

How Long can a Home Sale be Active Under Contract?

The time that the sale of a house can sit in the “under contract” phase depends on many factors. Some of the components that delay the progress of a home purchase can be the terms listed in the property agreement or the laws in the country in which the house is sold.

Generally speaking, though, the average time that it takes to to sell a house can be between 30 – 60 days.

Does a ‘Under Contract’ House Mean It’s Already Sold?

The short answer is no. The status of “under contract” in real estate means that there is an agreement between a buyer and seller on the sale of a house. The “under contract” status also informs people that the sales deal has not been finalized due to outstanding contingencies.

Manage Real Estate Contracts with Titan CLM

If you are ready to explore your digital options for contract lifecycle management to streamline sales processes, we suggest you check out Titan CLM.

Our contract management software can help your agents make the biggest contracts in minutes with Salesforce. When creating contracts, you get to redline, edit, and comment on any document while tracking every step inside Salesforce.

Let’s take a look at Titan CLM’s features that change the way you collaborate with colleagues, clients, and partners.

Titan CLM has no code solutions, so you can create, approve, and reject contracts with automated emails that require zero coding knowledge.

Use Titan to mitigate risks and get purchase agreements electronically signed collaboratively by bringing buyers, sellers, and agents to the same table.

Manage, review, and track every change made to your agreement directly in Salesforce for a 360° view of the contract lifecycle.

You get complete visibility over every piece of content that is inserted or deleted into the contract in real-time, thanks to our deep Salesforce integration and automated collaboration rounds.

Multiple parties and teams can collaborate online or locally on your document in real time so you can cut deals faster.

Negotiations can be simple and take place in Microsoft Word using our redlining and commenting tools.

You never need to feel stuck or restricted because you can also add new collaborators at any stage of the contract management process.

With Titan CLM, the entire contract lifecycle is digitized and automated in Salesforce, so you can reduce time spent in the office or making calls for feedback from buyers and sellers.

Titan processes are secure and slash manual administration work to close deals faster.

Titan CLM is more competitively priced than leading alternatives on the market!

We hope to see you soon!

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Disclaimer: The comparisons listed in this article are based on information provided by the companies online and online reviews from users. If you found a mistake, please contact us.