Understanding Real Estate Listing Statuses
Before diving into the specifics of "active under contract," it’s helpful to understand the common statuses used in real estate listings. These statuses inform buyers and agents about where a property stands in the sales process.
Common Listing Statuses
- Active: The property is available for sale and can be viewed and purchased by interested buyers. It is open to multiple offers unless specified otherwise.
- Active Under Contract: The property is under a contractual agreement but remains available for backup offers. It indicates that an initial contract has been accepted, but the sale has not yet closed.
- Under Contract: Similar to "active under contract," but sometimes used interchangeably depending on regional terminology. It generally means the property is in a binding agreement, with contingencies still in place.
- Pending: The contract is nearly finalized, and most contingencies have been waived or removed. The sale is close to closing, and the property typically isn't available anymore.
- Sold: The property has successfully closed, and ownership has transferred to the buyer.
- Withdrawn or Cancelled: The seller has withdrawn the listing or canceled the contract, and the property is no longer under consideration for sale.
Understanding these statuses helps buyers gauge the availability and likelihood of securing a property at different stages of the selling process.
What Does "Active Under Contract" Mean?
Definition of "Active Under Contract"
"Active under contract" is a real estate listing status indicating that the seller has accepted an offer from a buyer, and both parties are working through the terms of the sale. Despite this binding agreement, the property remains listed as "active" on the multiple listing service (MLS), meaning it is still visible to potential buyers.
This status signals that the property is in a transitional phase: an offer has been accepted, but the sale has not yet been finalized. It often includes contingencies that need to be satisfied before closing, such as inspections, financing, or appraisal approvals.
Key Characteristics of "Active Under Contract"
- Sales agreement has been signed by both buyer and seller.
- The property remains listed publicly on the MLS.
- Contingencies are typically in place, allowing either party to back out under specified conditions.
- The seller may still entertain backup offers or other negotiations.
Differences Between "Active Under Contract" and Other Statuses
Understanding how "active under contract" differs from similar statuses can prevent confusion and help set realistic expectations.
"Active" vs. "Active Under Contract"
- Active: The property is completely available for purchase; no contractual obligations are in place.
- Active Under Contract: The seller has accepted an offer, but the property remains available for backup offers or negotiations, and contingencies are likely in place.
"Under Contract" vs. "Active Under Contract"
- Under Contract: Sometimes used interchangeably with "active under contract," but in some regions, it signifies the sale is progressing, and contingencies are being removed.
- Active Under Contract: Emphasizes that the property is still technically available and the sale isn't finalized yet.
"Pending" vs. "Active Under Contract"
- Pending: Usually indicates that most contingencies have been waived, and the sale is nearing closure; the property is often no longer available for backup offers.
- Active Under Contract: Typically used earlier in the process, with contingencies still in place, and potential for additional offers or negotiations.
Implications for Buyers and Sellers
Understanding the status "active under contract" has important implications for both buyers and sellers involved in real estate transactions.
Implications for Buyers
- If you're interested in a property listed as "active under contract," it’s prudent to discuss with your agent whether backup offers are accepted. If so, submitting a backup offer could secure the property if the primary deal falls through.
- Contingencies are often in place, so review them carefully. They can include inspections, financing, appraisal, or other conditions that, if not met, might allow the buyer or seller to exit the contract.
- Stay in touch with your real estate agent to monitor the status, as properties under "active under contract" can sometimes become available again if the current deal doesn't close.
Implications for Sellers
- Selling a property "active under contract" means you are in a binding agreement, but the sale isn't final. You should adhere to the terms and contingencies to avoid jeopardizing the deal.
- Remaining "active" on the MLS allows you to entertain backup offers, which can be advantageous if the primary deal falls through.
- It's essential to communicate clearly with your agent about the status and expectations during this phase.
What Happens After "Active Under Contract"?
Once a property moves beyond the "active under contract" stage, it typically advances to pending status, indicating that most contingencies have been satisfied or waived, and the closing process is underway. If all goes well, the sale will eventually close, transferring ownership to the buyer.
However, if issues arise—such as failed inspections, appraisal problems, or financing issues—the deal may fall through, and the property could return to an "active" status or be relisted.
Why Sellers Choose to Keep Listings "Active Under Contract"
Sellers often prefer to keep their property listed as "active under contract" for strategic reasons:
- To attract backup offers in case the primary deal collapses.
- To maintain transparency with other potential buyers who might be interested.
- To keep the listing visible on MLS, which can sometimes influence market perception.
Sellers and agents weigh the benefits of keeping a property listed this way to maximize their chances of closing the sale successfully.
Summary
"Active under contract" is a nuanced real estate term indicating that a property has an accepted offer and is in the process of a sale, but the deal is not yet finalized. It sits somewhere between the listing being available for purchase and the sale being completed. Recognizing this status helps buyers understand the likelihood of the property becoming unavailable and the potential for backup offers, while sellers can manage expectations and strategize accordingly.
Whether you're a prospective buyer, a seasoned investor, or a seller, understanding what "active under contract" entails empowers you to navigate the real estate market more effectively. Always consult with your real estate agent to get the most current and relevant information tailored to your local market conditions.
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In conclusion, "active under contract" is an important status that signifies a property is in a transitional phase—bound by a contract but still potentially available for backup offers or negotiations. By understanding this term and its implications, you can better strategize your next move in the dynamic world of real estate.
Frequently Asked Questions
What does 'active under contract' mean in real estate listings?
'Active under contract' indicates that a property has an accepted offer but is still in the process of completing the necessary steps before closing, such as inspections or financing approval.
Can I still view or make an offer on a home labeled 'active under contract'?
Typically, properties marked 'active under contract' are not available for viewing or offers, but some are still open for backup offers if the current deal falls through.
How is 'active under contract' different from 'pending' in real estate?
'Active under contract' usually means the property is in the process of sale but may still allow backup offers, whereas 'pending' indicates the sale is almost finalized with minimal chances for backup offers.
Does 'active under contract' affect the property's market value?
Being 'active under contract' can influence perceptions of a property's market value, indicating strong demand, but the final sale price depends on negotiations and market conditions.
What should buyers know about properties marked 'active under contract'?
Buyers should be aware that these properties are in the process of sale and may not be available, but they can inquire if backup offers are accepted or if the deal falls through.
