What Does Under Contract Mean in Real Estate
The definition of “under contract” is: a written agreement between a buyer and seller stating that the property will be sold and completed on or before a specific date for an agreed upon price. To further explain, the term “under contract” means that your offer to purchase on the home has been accepted and you and the seller have a legally binding contract.
The term “under contract” is not used to convey meaning that the sale of your property is complete or final, so if you are under contract for the home it does not mean that you are conclusively buying the home. It also does not mean that your offer was conditional on the sale of your home. It is common for a seller to accept an offer, but then put their home back on the market in case they receive a higher offer.
It’s important that if you are under contract on a home, that you continue to follow through with the process and meet all of the deadlines in order to close on the property. If you do not close on the property, then the seller may be able to keep your earnest money deposit.
There are a few things that can happen when you’re under contract on a home:
– The seller can pull out of the deal at any time before closing. This is called a “breach of contract”.
If the seller breaches the contract, you generally have a few options:
– You can hire an attorney and sue the seller. If you win your lawsuit, then you may get all or part of your earnest money back. You also may be responsible for paying the seller’s legal fees if the lawsuit fails.
– The seller may fix the problem that led to the breach and continue with the sale.
– You can terminate the contract and get your earnest money back.
– The seller may sell the home to someone else. If this happens, you are out of luck and will not get your earnest money back.
– The seller may close on the home with the new buyer. If this happens, you will not get your earnest money back, but you may be able to sue the seller for damages.
– The seller may give you a credit at closing. This is called a “credit against the purchase price”.
If the seller gives you a credit at closing, it will reduce the amount of money you have to pay the seller. However, if the original purchase price was $625,000 and the credit is for $15,000, then your total cost will be only $610,000.
The good news about this situation is that it’s relatively common when buying a home. The bad news is that it may create tension between you and the seller.
If you are under contract on a home, it’s important to make sure that you continue to follow through with the process. If you do not close on the property, then you may be able to keep your earnest money deposit. However, if the seller sells the home to someone else, you will not get your earnest money back under any circumstances.
If you are buying a home in New York, it is recommend that you have an attorney review the contract to ensure that your rights are protected. An attorney can also help you negotiate terms of the contract, such as when closing will take place.
You should also continue with your efforts to sell your home. If you do not close on the home that you are under contract for, then you may lose your earnest money deposit.
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Conclusion
The term “under contract” means that a buyer has made an offer on the property and is waiting for it to be accepted. Once the deal goes through, you will have successfully closed on your purchase! If you’re not sure what else this phrase could mean, contact us with any questions or concerns. We are happy to help answer them so that you know exactly where everything stands before making such a big decision. Have you ever been under contract? What was the process like for you? How did it feel when all of your hard work finally paid off in closing on the property?
