Table of Contents

7 min read Feb 20, 2023

What Does Under Contract Mean in Real Estate?

What Does Under Contract Mean in Real Estate

Almost 60% of the ‘under contract’ homes are being sold within two weeks making it a seller favorable market. That means the buyers are aware of and prepared for the house contingencies to confirm their house deal faster.

What Does Under Contract Mean in Real Estate?

“Under contract” means the seller has agreed to the buyer’s offer price but is still considering a backup offer for his house.

Buyers or their real estate agents can try purchasing the seller’s ‘under contract’ home. While the sellers are free to accept offers from multiple buyers till the contingencies are met.

Let’s say! A buyer offers his best purchase price to the seller at $300,000. Both parties enter into a basic agreement with a down payment of $30,000 and a contingency clause. Here, the seller may still look for potential buyers until the contingencies are met.

What Does Contingent Mean in Real Estate?

Contingencies are the conditions that could be the reason to terminate the real estate transaction.

  • If the contingencies are met, then the deal can be closed.
  • If the contingencies are not met, then the buyer can withdraw the deal without any financial loss.

As per the NAR Research Group January 2022 report, 7% of the total real estate transactions are terminated due to contingencies not being met. Almost 44% of real estate transactions were delayed while 56% of the transactions were canceled.

Below are the types of contingencies:

Home Inspection

The home inspector conducts a home inspection to find any defects such as electrical issues, water leaks, etc. The buyer can ask the seller to fix the repairs based on the home inspection report if any. In this situation, the seller can either agree to repair or offer a discount on the asking price.

If the seller does not agree to fix the repairs then the buyer can terminate the contract.

Home Appraisal

The home appraiser determines the best value for the house. The appraisal value is derivated based on various factors like location, age of the property, etc.

After reviewing the home appraisal report, the lender will determine the loan amount that can be approved for the borrower.

Mortgage Contingency

The buyer needs to submit all the relevant documents to the lender for his mortgage approval. This contingency is cleared after the buyer’s document and the credit check have been conducted.

Almost 21% of the ‘under contract’ transactions fail due to mortgage contingency.

Financial Contingency

In a real estate transaction, the buyer is required to have some cash on hand for the home’s down payment. The down payment may be somewhere between 6% to 10% of the home’s value.

The buyer will need to make additional finances if the bank approves a lesser valuation for the home. If the amount payable is higher then the buyer may even decide not to purchase the property.

Other Contingencies

There can be other unforeseen reasons like:

  • Loss of income.
  • Either the buyer or the seller wants to wait for the best deal.
  • Buyers are unable to sell their current homes.

To avoid the contingencies to some extent the seller can even put a condition of looking for a bumpable buyer.

What Does Bumpable Buyer Mean?

A buyer who has already processed the sale for his current house is called a bumpable buyer. These buyers are viewed as the best prospects for the sellers.

Sellers may mention in their MLS listing about accepting offers from bumpable buyers only. This can help sellers sell their houses fast.

What Does Pending Mean in Real Estate?

A house on pending means it has cleared all the contingencies like the home mortgage, home inspection, etc. Both parties can close their house deal after the contingencies are met.

House Under Contract vs Pending

The period between the ‘house under contract’ and ‘house pending’ is the transitional phase of the home sales process.

In “under contract”, the seller may accept the buyer’s offer but will still be on the lookout for a better deal. The seller keeps looking for potential purchasers until the contingencies are satisfied.

Whereas in “pending status”, all contingencies are met and the deal may now be processed for closure. However, unexpected events like a death in the family or a loss of income, etc. could cause termination.

How Long Can a House Be Under Contract?

The house can be ‘under contract’ for approximately 2 months. The ‘under contract’ period can be extended based on the joint decision of the buyer and the seller.

Can You Make an Offer on a Contingent House?

Yes, definitely you can make an offer on a contingent house. A house under contract is open to multiple offers until all the contingencies are cleared.

If you find an attractive house that is titled “under contract” or “active under contract”, then you may still get the deal. Ask your real estate agent to send an offer to the seller on your behalf with the best purchasing price.

Can the Seller put the House Back on the Market While Under Contract?

Yes, the seller can put the ‘under contract’ house back on market.

For example, you listed your house as an FSBO. You accepted an offer from a buyer but you are very skeptical about meeting the contingencies.

In this case, you can put the house back on the market to get a better deal.

To get the best selling experience you can list your home on the MLS for a one-time, small fee starting from $249.  Unlike other MLS listing services, Houzeo offers additional features like Houzeo ShowingsHouzeo Offers, etc. that would help you in your home-selling journey.

Why Houzeo is the Best Flat Fee MLS Company?

#1 Flat Fee MLS Service

Houzeo Logo
  • Listing Fee: $349
  • Available nationwide
  • Houzeo has 4.9 out of 5 stars 4.9/5 (4,521 reviews)

Houzeo offers 4 Flat Fee MLS packages.

  • Bronze Package – FREE: This package offers Houzeo listing only for 6 months with maximum photos. You pay a $49 refundable fee for a yard sign and receive your refund after sending a selfie with it.
  • Silver Package – $349+: This includes everything that home sellers typically look for.
  • Gold Package – $399+: It is Houzeo’s signature MLS package and includes all the technology Houzeo is known for Houzeo Showings, Houzeo Offers, and DigiTransact.
  • Platinum – $999+: It includes the assistance of a licensed broker to help you with negotiations, disclosures, and closing.

👉 Our Take: We recommend the GOLD plan. You’ll have all the access to Houzeo tech, making managing showings and offer negotiations easy!

» Houzeo Reviews: Houzeo is 100% online. You can finish listing formalities in less than 60 mins.

Houzeo is America’s #1 Flat Fee MLS service because of 4 reasons:

  1. Max Exposure: Houzeo MLS packages give you access to the MLS, Zillow, Trulia,, Redfin, and 100s of other websites.
  2. 5-star Customer Service: Houzeo has a fully staffed customer service desk available 6 days a week. Chats and emails are open 7 days a week. This is rare in today’s world.
  3. 100% Online: Houzeo is high-tech. For you, this means easy listing, fast changes, online showings, and online offers Houzeo Mobile App is also very powerful.
  4. No Listing Commission: In most states, you’ll be paying just a small flat fee to list on MLS. Houzeo covers 47 states + DC!. And remember, all fees are disclosed upfront, so there are no Houzeo hidden fees.

There are no dealbreakers with Houzeo.

» Houzeo Reviews: Houzeo is rated “Excellent” with a 4.9 out of 5 star rating by 4,521 home sellers on Google Reviews and Trustpilot!

Houzeo is rated 4.9 out of 5 stars by thousands of home sellers on Google & Trustpilot.

» Houzeo Reviews: Check out how Team Houzeo has addressed all Houzeo complaints from home sellers.

List with

Houzeo gets you on the MLS within 2 business days or even faster. Houzeo is 100% online, so you can make fast listing changes. Here’s how you can manage your home selling process with Houzeo in 4 simple steps:

  1. List your property on the MLS with within 2 business days
  2. Manage Showings effectively with Houzeo Showings
  3. Review, Compare, and Negotiate Cash Offers with Houzeo Offers
  4. Opt for the “Contract to Close Coaching Package” and get a licensed broker to assist you during the closing

Eager to Know How Houzeo Works?

We’ve got you covered. Check out the following video to understand how Houzeo works and why it is one of the best For Sale By Owner websites in the U.S.

What is Houzeo?

An overview of what the platform is all about

Start Your FREE Listing NOW!

» NEED MORE CLARITY? Read these exclusive Houzeo reviews and learn why the platform is the best in America’s competitive housing market.


To conclude it all, the house under contract keeps attracting new buyers. The seller does this to protect his interest in the event of any cancellation due to contingency.

In the pending phase, the house deal is almost ready to complete with some paperwork like title transfer, etc. Still, there could be other reasons for the contract termination.

Frequently Asked Questions

1. What does it mean when a house is under contract?

"Under Contract" means the buyer and the seller enter into an agreement while the seller still considers accepting new offers.

2. What does active under contract mean?

Active under contract means the seller signs the sale contract with the buyer. The seller continues accepting offers till all the contingencies are met.

3. What does pending in real estate mean?

House on 'pending' means it has cleared all the contingencies and is ready to close the deal. After fulfilling all the conditions on the home mortgage, home inspection, etc, your house will be on pending status which means ready to close.

Related: contingent house meaning, contingent meaning in real estate, under contract, pending vs under contract, contingent meaning real estate, contingent real estate meaning, contingent meaning on a house, in real estate what does contingent mean, what does contingent mean on a house,
under contract versus pending, active under contract meaning


Save $20

On Silver & up plans

Use Coupon Code:

Need help? Call us on
(844) 448-0110