Purchasing or selling a home can feel confusing if you don’t know what all the terminology means. In this post, I’ll be sharing some commonly asked questions about stages in the home selling process to demystify this exciting time period.
What does under contract mean?
If you’ve gotten excited after driving by a “Home for Sale” sign only to notice a smaller “Under Contract” sign, you may be wondering what exactly it means.
In real estate, “under contract” means that the sellers have accepted an offer on their property. Unfortunately, passersby will not receive any additional information regarding how close to closing the home is.
How long is a home under contract before it is sold?
The time that a property is under contract before it is officially sold varies based on the agreement between the seller and the buyer and the needs of both parties. A home can be under contract for a couple of weeks or a couple of months.
Can an offer be made on a house that is under contract?
Yes, if the seller is willing to accept backup offers, you can make an offer on a house that is technically under contract. A seller’s willingness to accept backup offers may depend on whether the home has only recently gone under contract or whether there are certain contingencies in place that could jeopardize the sale.
What does contingent mean in real estate?
A contingency is a contractual amendment on an offer that, depending on the contingency, allows either the seller or the buyer to back out if it is not met. The contingency must be met for the offer to be considered binding. For example, many home sales are contingent on a successful home inspection. If buyers identify an issue — like extensive water damage that was not previously disclosed — they can pull their offer without being subject to financial penalties as long as they do so within the specified time period.
Other possible contingencies include:
- Appraisal contingency: A buyer can ask for an appraisal contingency to ensure that their sales price meets or exceeds the appraised value.
- Financing contingency: A buyer can ask for a financing contingency that would hinge on their ability to secure a mortgage.
- Home sale contingency: A buyer can ask that their offer be contingent upon the sale of their home.
Can a seller back out of an offer when it is under contract?
Yes, a seller can back out of an offer for a variety of reasons. Of course, that does not mean that there are no strings attached.
If the seller has a contingency in place and that contingency is not met, they may be able to back out of the contract without consequences. For example, because of the hot market, I have seen some sellers include a new home contingency that would help ensure they’re able to find a suitable place to live. If not, they can invoke their contingency and cancel the sale without repercussions — unless there is an associated penalty outlined in the contract.
If an issue arises that is not covered by a contingency and the seller must back out of the contract, they can be sued for breach of contract by their Realtor or the buyer.
Can a buyer back out of an offer when it is under contract?
Yes, a buyer can back out of an offer when it is under contract. However, depending on when or why they back out, they may be subject to financial penalties.
For example, if a homeowner backs out of a contract because they have not been able to sell their home and the contract included a home sale contingency, they would not be subject to penalties unless such a penalty is included in the contract.
However, if a buyer backs out of a sale without a contingency or near the closing date, they may be subject to a financial penalty, such as losing their earnest deposit. Ultimately, the contract itself will detail when and why a buyer can back out of a sale and list any potential penalties.
Because of this, it is crucial that both parties read and understand the contract so they can request and negotiate changes if needed.
Have more questions about Tampa real estate?
If you have questions about Tampa real estate or need help selling or buying a home, let’s chat. As a lifelong Tampa resident, I have enjoyed helping my clients find the right homes in the neighborhoods that meet their needs, and I would love to help you do the same!