Under Contract: The Offer Process

Making it through the process of preparing to close on your home is an exciting time, no matter if it’s your very first property or your 100th! Whether it’s a buyer’s or seller’s market, it can be confusing and, at times, a stressful process when figuring out how to get a property under contract. You may ask yourself, “What is the difference between under contract vs pending?” Don’t fear; the home buying process offers a lot to learn!

To help you fully understand what comes with the offer process, we have some information that will benefit your preparation.

In this article:

  • House Under Contract Meaning
  • The Offer: How to Get a Property Under Contract
  • The Offer Letter
  • Under Contract FAQs

House Under Contract Meaning

An accepted offer is in progress on the house under contract, meaning the potential buyers have submitted a formal offer to the sellers, and the sellers have accepted the offer. In this initial stage, contingencies remain, and the contract has not been completely satisfied. A home sale is not guaranteed when a home goes under contract.

Under Contract vs Pending

There are many statuses for homes on the market. You may see a house “under contract,” meaning the sellers have accepted an offer. Or you may see “pending,” meaning the sellers have accepted an offer, and no further contingencies exist.

 

Pending means that the home is much further along the closing path. The chances of a home sale falling through are greater when it’s under contract vs pending, though only 5% of contingent offers fall through according to NAR.

 

We’ll review how to get a property under contract so you can snag your dream home.

people meeting about the offer process

The Offer: How to Get a Property Under Contract

Step One: The first step is to obtain a mortgage preapproval letter from one lender or more. The mortgage preapproval letter determines what you can and cannot afford. This is ideal before you even begin to start looking for a home.

 

Step Two: Once you find a home within your price range, you want to make a competitive offer. Your real estate agent can assist you in creating a competitive offer based on market conditions. The offer is especially important in the current market. As we know, the competition is high, but it is still very possible to find your perfect home. Looking for homes slightly below your preapproval amount may be a good strategy as it gives you some wiggle room during negotiations.

The Offer Letter

When you are ready to make an offer, many things in the offer letter can be adjusted and negotiated. A written offer may contain these items and many more real estate terms:

 

  • Address: The legal address for the home and perhaps a legal property description.
  • Price: Information on the purchase price and terms.
  • Earnest money: The amount, terms, and disposition upon accepting the offer.
  • Title: A condition that the seller will provide a clear title to the property being purchased.
  • Closing costs: Fees, taxes, and any other expenses between the seller and buyer at closing.
  • Tentative closing date: This is usually 30 to 60 days.

 

The offer you place can be accepted, countered, or denied. Be prepared to negotiate and possibly do more research on the market.

 

Step Three: Verify your down payment and earnest money funds. Guarantee that you have easy access to the money needed. The earnest money will be between 1% and 3% of the total purchase price. It will be held in escrow as good faith money.

 

There are also some differences between closing and the various types of homes. If you are preparing to close on a rehabilitation home, the down payment will only be 3.5%. When it comes to new construction, most fees paid for by the seller for a resale home are paid off by the buyer for a new construction property.

 

Step Four: Considering inspections and repairs on a previously owned home, there will be a period for the buyer to complete all inspections and appraisals. As the buyer, you will decide what to request from these findings at closing, if anything. If the home is newly built, inspections have been continuous. Therefore it’s rare that the inspection will return any negative findings.

Step Five: A final walk-through will occur near the closing date to ensure that the home is as expected based on the contract conditions and requested repairs.

 

Under Contract FAQs

Is under contract the same as pending? What does pending VS under contract mean on Zillow?

There is a difference in under contract vs pending.

  • Under contract: A buyer has submitted an offer, and the sellers have accepted it. Contingencies or other contract terms exist.
  • Pending: A buyer has submitted an offer, and the sellers have accepted it. No contingencies exist.

 

Does under contract mean the offer is accepted?

An offer has been accepted on a house under contract, meaning the sellers have agreed to the buyer’s offer and terms. However, some contingencies or other contract terms exist. Once the home is marked as pending, no further contingencies exist.

 

When searching for your new home, remember that the right property will be yours! Trust the process and use this information to better prepare for your journey to homeownership. If you need help along the way, we are here for you! Get in touch with our team to find your dream home in the best neighborhoods in Georgia and Florida.