When searching for a new home, you may come across a property that is listed as „active under contract“. This terminology can be confusing for many homebuyers, especially those who are new to the real estate market. In this article, we will discuss what it means when a house for sale says active under contract.
Active Under Contract Explained
Active under contract, sometimes referred to as „pending“, means that a home seller has accepted an offer from a buyer, but the sale has not yet been completed. Essentially, the buyer and seller have agreed on a contract but certain conditions must be met before the sale can be finalized.
During this time, the status of the property remains active on the Multiple Listing Service (MLS) and other real estate websites. This means that other potential buyers can still view the property and submit their own offers, but they must be aware that there is already an existing contract in place.
Conditions to Finalize a Sale
There are several conditions that must be met before a sale can be finalized, including:
1. Home inspection: The buyer has the right to conduct a home inspection within a set timeframe. If issues are discovered during the inspection, the buyer may request repairs or credits from the seller.
2. Appraisal: The lender may require an appraisal to ensure that the home is worth the amount the buyer has agreed to pay.
3. Financing: The buyer must secure financing for the purchase, and the lender will typically require an appraisal and other documentation before approving the loan.
4. Title search: A title company will search the property`s title to ensure that there are no liens or other issues that could impact the sale.
If the conditions are not met within the specified timeframe, the buyer or seller may have the option to terminate the contract. If all conditions are met, the sale will proceed to closing, and the property will be officially off the market.
Benefits and Drawbacks of Active Under Contract Listings
As a homebuyer, there are pros and cons to considering properties listed as active under contract. Some benefits include:
1. Opportunity for backup offers: If the contract falls through, backup offers may be considered, and having your offer already on file puts you in a good position to be considered.
2. Clearer picture of the property: Since the buyer has already completed the inspection and appraisal, you may have access to that information and can make a more informed decision.
On the other hand, there are also some drawbacks to consider:
1. Uncertainty: Since the sale is not yet final, there is always the risk that the contract may fall through, leaving you back at square one.
2. Limited negotiating power: Since the seller has already accepted an offer, you may have less negotiating power in terms of price or other terms.
In conclusion, active under contract means that a home seller has accepted an offer from a buyer, but certain conditions must still be met before the sale can be completed. As a homebuyer, it`s important to consider both the benefits and drawbacks of properties listed as active under contract to determine if it`s worth pursuing.