What does under contract mean?

What Does Under Contract Mean in Real Estate Today

You spot your dream home online, submit an offer, and the seller accepts—only to see the listing change to "under contract" the next day. The celebration feels premature because you know the deal isn't done yet.

"Under contract" means a buyer and seller signed a purchase agreement, but the sale won't close until both parties meet specific conditions written into the contract. This article walks through what happens during the under contract period, how often deals fall apart, and what buyers and sellers can do while waiting for closing day.

What does under contract mean

Under contract meaning in real estate explained

In real estate, "under contract" means a buyer and seller have signed a legally binding purchase agreement, but the sale isn't final yet. Both parties agreed on the price and signed paperwork, but certain conditions still need to be met before ownership actually transfers. It's the in-between stage—past the handshake, but not yet at the finish line.

Here's what makes this different from "sold." When a home is under contract, contingencies written into the purchase agreement give the buyer (and sometimes the seller) a way to back out without penalty if specific requirements aren't satisfied. A contingency is simply a condition that protects one or both parties—like securing financing, completing a home inspection, or getting an acceptable appraisal. Until those hurdles are cleared, the deal can still fall apart.

You'll see "under contract" labels on real estate listings, sometimes alongside phrases like "accepting backup offers" or "showings by appointment only." Each label signals where the home stands in the sales process and whether you still have a shot at making an offer.

Active under contract meaning and how it differs from pending

Active under contract means the seller accepted an offer but is still welcoming backup offers from other interested buyers. It's a safety net—if the current deal collapses, the seller already has a list of potential buyers ready to step in. You might see this status when the seller suspects the existing buyer's financing is shaky or when multiple strong offers came in at once.

Pending typically means all contingencies have been satisfied and the home is in the final stages before closing. Most pending listings don't accept backup offers because the sale is nearly guaranteed to close. The difference comes down to confidence: active under contract suggests caution, while pending signals the finish line is in sight.

Here's how the two compare:

Active under contract: Contingencies still in play, backup offers accepted, deal less certain Pending: Contingencies cleared, no backup offers, closing imminent

That said, terminology varies by region and MLS system. Some areas use "under contract" and "pending" interchangeably, so it's always worth having your agent confirm the actual status with the listing agent.

Key stages from offer to closing when a home is under contract

Once a seller accepts your offer, the home enters the under contract period—a structured timeline where both parties work through agreed-upon conditions. This phase typically lasts 30 to 60 days, though it can stretch longer depending on financing complexity or repair negotiations.

1. Offer accepted

The seller signs your purchase agreement, making the contract legally binding. At this point, you'll usually submit earnest money—a deposit (often 1% to 3% of the purchase price) that shows you're serious. This money goes into an escrow account and counts toward your down payment at closing.

2. Contingency period

This is when you complete inspections, finalize your mortgage application, and verify the home's condition. The contingency period protects you—if something major surfaces, you can renegotiate, request repairs, or walk away and get your earnest money back. Deadlines are strict, so missing a contingency deadline can cost you your deposit or your right to cancel.

3. Appraisal and financing approval

Your lender orders an appraisal to confirm the home's value matches the purchase price. If the appraisal comes in low, you'll need to cover the gap with extra cash, ask the seller to lower the price, or cancel the contract. Meanwhile, your lender finalizes your loan approval, verifying income, assets, and credit one last time.

4. Final walk-through

A day or two before closing, you'll tour the property to ensure agreed-upon repairs were completed and nothing changed since your last visit. This isn't a second inspection—it's a quick check that the home is in the condition you expected.

5. Closing day

You sign the final paperwork, transfer funds, and receive the keys. Ownership officially changes hands, and the home is no longer under contract—it's sold.

Common contingencies that can end an under contract deal

Contingencies are the safety valves built into a purchase contract. They protect buyers from unforeseen problems and give sellers clarity on what could derail the sale. If a contingency isn't met by the agreed deadline, either party can typically cancel the contract without penalty.

Inspection contingency

A professional home inspection uncovers issues with the roof, foundation, plumbing, electrical systems, and more. If major problems emerge—like a failing HVAC system or structural damage—you can ask the seller to make repairs, offer a credit, or reduce the price. If they refuse, you can walk away with your earnest money intact.

Appraisal contingency

Lenders won't loan more than a home's appraised value, so if the appraisal comes in below the purchase price, you're in a bind. You can pay the difference out of pocket, renegotiate the price, or cancel the contract. This contingency is especially common in hot markets where bidding wars push prices above true market value.

Mortgage financing contingency

This contingency gives you a set timeframe—usually 30 to 45 days—to secure final loan approval. If your lender denies your mortgage or offers unacceptable terms, you can exit the contract. Without this protection, you'd risk losing your deposit if financing falls through.

Home sale contingency

If you need to sell your current home to afford the new one, a home sale contingency gives you time—often 30 to 90 days—to close that sale. Sellers don't love this contingency because it introduces uncertainty, but it can prevent you from juggling two mortgages or scrambling for cash.

How often contracts fall through and why

Under contract doesn't guarantee a closed sale. In fact, 14.3% of home-purchase agreements fell through in January 2025, and it happens more often than you might think. The reasons vary, but they usually trace back to one of the contingencies we just covered.

Financing issues

Buyers lose loan approval due to job changes, credit score drops, or new debt. Lenders also sometimes tighten requirements mid-process, leaving buyers unable to meet updated criteria. This is one of the most common deal-breakers.

Inspection deal breakers

Major structural problems, mold, outdated electrical systems, or pest infestations can scare buyers off. If repair costs are high and the seller won't budge on price or fixes, buyers often walk.

Low appraisal

When an appraisal comes in below the agreed purchase price, buyers and sellers face a tough choice: renegotiate, pay the difference, or cancel. According to a 2024 Zillow survey, 23% of sellers said at least one offer fell through because the appraisal was lower than the purchase price. This issue pops up especially in competitive markets where offers exceed true value.

Buyer cold feet

Life changes—job loss, divorce, medical emergencies, or simply second thoughts—can derail a purchase. While less common, personal circumstances cause cancellations, often during the contingency period when buyers have legal outs.

Does under contract mean sold or still available

Under contract does not mean sold. It means the home is committed to a specific buyer, but the deal hasn't closed yet. The property is off the market in most cases, but there's still a chance it could return to active status if contingencies aren't met or the buyer backs out.

For buyers, this creates a gray area. You might not be able to tour the home or submit a formal offer, but if the seller is accepting backup offers, you can position yourself as the next in line. Some sellers even include kick-out clauses—provisions that let them accept a better offer if the current buyer doesn't meet certain deadlines.

The key takeaway: under contract means progress, not certainty. Until closing day, the home isn't truly sold.

How long a house stays under contract on average

Most homes stay under contract for 30 to 60 days, though the timeline varies based on financing type, contingency complexity, and local market norms. Cash buyers often close in as little as two weeks since they skip the mortgage approval process. FHA and VA loans, which require additional inspections and appraisals, can push the timeline to 45 or even 60 days.

Delays happen when appraisals come in low, inspection repairs take longer than expected, or lenders request additional documentation. In slow markets, sellers might agree to extended contingency periods to keep deals alive. In hot markets, buyers waive contingencies or agree to tighter deadlines to make their offers more attractive.

Can you make an offer on a house under contract

Yes, you can often submit a backup offer on a home that's under contract—if the seller is still accepting them. A backup offer puts you first in line if the current deal falls through.

Submit a backup offer

Your agent can reach out to the listing agent to confirm the seller is open to backups. If so, you'll submit a standard purchase offer with your own terms and contingencies. The seller won't formally accept your offer unless the primary buyer walks away, but having a backup in place gives the seller peace of mind and keeps you in the running.

Watch for a kick-out clause

Some contracts include a kick-out clause that allows the seller to accept a better offer if the current buyer doesn't meet certain milestones—like securing financing by a specific date. If you submit a strong offer and the primary buyer misses their deadline, the seller can "kick out" the first buyer and move forward with you.

Smart moves for buyers eyeing a home under contract

If you've found a home you love but it's already under contract, you can still stay in the game. A few smart moves keep you positioned to act quickly if the deal collapses.

Set automated status alerts

Most real estate platforms let you save listings and receive notifications when the status changes. If the home returns to active status, you'll know immediately—often before other buyers notice. Speed matters, especially in competitive markets.

Strengthen your financing early

Get pre-approved for a mortgage before you make an offer. Pre-approval shows sellers you're a serious buyer with verified income, assets, and creditworthiness. If the primary buyer's financing falls through and you're ready to close quickly, you'll have a significant advantage over other backup offers.

Explore Opendoor cash-backed offers

Opendoor's cash-backed offers let you make a non-contingent offer on your next home, even if you haven't sold your current one yet. This removes financing and home sale contingencies, making your offer far more attractive to sellers. Once your offer is accepted, Opendoor helps you sell your existing home on your timeline. Get a cash offer to see how much certainty you can bring to your next purchase.

Options for sellers while a property is under contract

Sellers don't have many choices once a contract is signed, but a few moves can protect you if the deal starts to wobble.

Accept backup offers

Keeping the door open to backup offers gives you a safety net. If your primary buyer backs out, you can move to the next offer without relisting and starting from scratch. This is especially valuable in slower markets where finding a new buyer could take weeks.

Negotiate a shorter contingency window

If you're nervous about a buyer's financing or you need to close quickly, you can negotiate shorter deadlines for contingencies. A 10-day inspection period instead of 14 days, or a 21-day financing contingency instead of 30, keeps the process moving and reduces the chance of surprises late in the game.

Consider a cash offer from Opendoor

Traditional sales come with contingencies, showings, and uncertainty. Opendoor's cash offers eliminate those variables—no financing contingency, no buyer backing out, and a guaranteed closing date you choose. You'll know your exact sale price upfront, with no surprises at closing. Request a free offer to see if a cash sale fits your timeline.

Move forward with certainty through Opendoor

The under contract period is where traditional home sales often stall or fall apart. Opendoor removes that uncertainty entirely. When you sell to Opendoor, there are no contingencies to clear, no buyer financing to worry about, and no last-minute renegotiations. You receive a cash offer within 24 hours, choose your closing date, and move forward with confidence.

Opendoor handles the inspection upfront and factors any needed repairs into the offer price—no surprises, no haggling. You'll know exactly what you're walking away with before you commit. Whether you're relocating for work, downsizing, or simply ready for your next chapter, Opendoor gives you control over your timeline and peace of mind through closing.

Get your free cash offer today and skip the stress of the traditional under contract process.

Frequently asked questions about homes under contract

Can a seller back out of an under contract deal?

Sellers can typically only withdraw if the buyer fails to meet contract terms or misses contingency deadlines. Breaking the contract without a valid reason can lead to legal consequences, including lawsuits for specific performance or damages. Some contracts include seller contingencies—like finding a new home—that allow the seller to cancel under specific conditions.

What happens to earnest money if a contract falls through?

Earnest money return depends on why the contract ended and what the agreement says. If the buyer withdraws due to an unmet contingency—like a failed inspection or denied financing—they usually get their deposit back. If the buyer backs out without a valid reason, the seller typically keeps the earnest money as compensation for taking the home off the market.

Can a buyer lose their earnest money deposit?

Yes, buyers risk losing earnest money if they withdraw outside of contingency periods or fail to meet contract obligations. Missing deadlines, refusing to close without cause, or backing out after contingencies expire can all result in forfeited deposits. Working closely with your agent and understanding your contingency deadlines is important during the under-contract period.