Decoding Real Estate Terminology: Understanding the Meaning of 'Active Under Contract'

What Does Active Under Contract Mean in Real Estate?

Real estate is an industry that involves buying and selling properties. When you decide to buy a property, you may come across a term known as active under contract on various real estate listings. But what does active under contract mean in real estate?

Active under contract means that the property is currently under contract, but the contract has certain contingencies that need to be fulfilled before the sale can close. However, the property is still available for backup offers in case the current contract falls through.

So, why is it important to understand what active under contract means in real estate? Let's find out.

The benefit of understanding active under contract

When you're in the process of buying or selling a house, it's essential to know the status of the property. If you're buying a home that's active under contract, it can help you determine the likelihood of securing the property. On the other hand, if you're selling your property, understanding active under contract can help you gauge the level of interest in your property.

Types of contracts

There are two types of contracts in real estate: contingent and non-contingent. A contingent contract means that the sale is dependent on certain conditions, such as a home inspection, appraisal, or financing. In contrast, a non-contingent contract means that the sale is not subject to any conditions and will close regardless.

It's essential to understand the type of contract when a property is listed as active under contract. If the property is under a non-contingent contract, you may not have much of a chance of purchasing the property.

The timing of active under contract

The timing of the active under contract status is essential. If a property is listed as active under contract shortly after going on the market, it could indicate that the seller has accepted an offer quickly. It could also demonstrate that the property is highly desirable and attracting multiple offers, driving the price up.

Conversely, if a property has been active under contract for an extended period, it may indicate that there are issues with the contract or contingencies that have not been adequately addressed.

How to proceed if interested in an active under contract property

If you're interested in buying a house that's actively under contract, it's essential to reach out to the listing agent to find out more information. The agent can provide you with details about the contingencies, whether any backups have been received, and when the contract is expected to close.

It's crucial to be patient but persistent in these situations. While it's always possible that the current contract will fall through, there could be other offers lined up behind you, so you want to stand out.

The bottom line

In summary, understanding what active under contract means in real estate is critical, whether you're buying or selling a house. Knowing the status of the property can help you determine the level of interest in the property and whether it's worth pursuing. If you want to buy a property that is active under contract, make sure to reach out to the listing agent and get more information. And, most importantly, be patient but persistent!

So, the next time you come across an active under contract property, take the time to understand what it means and proceed accordingly. Your dream home might be right around the corner!

"What Does Active Under Contract Mean In Real Estate" ~ bbaz

When it comes to buying or selling a house, there are plenty of terms that might sound confusing. One of these terms is active under contract, which can be found in many real estate listings online or in person. But what does active under contract mean in real estate? And how does it impact the buying or selling process?

Understanding the Basics of Active Under Contract

Active under contract, or AUC, refers to a property listing that is currently under a contract with a buyer, but the sale has not yet been finalized. In other words, the seller has accepted an offer from a buyer, but there are still contingencies and conditions that need to be met before the sale can be completed. As long as these contingencies remain unresolved, the listing will remain under AUC status.

In some cases, active under contract listings may still be available for showings or offers from other buyers. However, this can vary depending on the specific terms of the contract and the preferences of the seller and their real estate agent. It's always best to check with the listing agent first before scheduling a viewing or submitting an offer.

Common Contingencies in Active Under Contract Listings

There are several common contingencies or conditions that may need to be met before an active under contract property can be sold. These may include:

Home Inspection Contingencies

Many real estate sales contracts include a contingency that allows the buyer to hire a professional home inspector to evaluate the property and identify any issues or defects. Depending on the results of the inspection, the buyer may have the right to back out of the sale or negotiate repairs or improvements with the seller.

Mortgage Approval Contingencies

If the buyer is financing the purchase through a mortgage lender, the sale may be contingent on their ability to obtain loan approval. This can include verifying the buyer's credit score, income, and debt-to-income ratio, as well as appraising the property to ensure its value matches the loan amount.

Appraisal Contingencies

Even if the buyer is not getting a mortgage, the sale may still be contingent on an appraisal that verifies the value of the property. If the appraisal comes in lower than the sale price, the buyer may have the right to back out of the sale or negotiate a lower price with the seller.

Pros and Cons of Active Under Contract Status

For both buyers and sellers, there are potential advantages and drawbacks to consider when dealing with active under contract listings.

Pros for Buyers

One potential benefit for buyers is that they may be able to place backup offers on AUC listings, in case the primary buyer backs out or fails to meet their contingencies. Additionally, seeing a property listed as active under contract may signal that it is in high demand and thus, could be a desirable investment.

Cons for Buyers

The main disadvantage for buyers is that AUC listings can be frustrating, as they may seem available at first glance only to be found out later that the property has been taken off the market entirely. It can also be difficult for buyers to compete with other buyers and get their offer accepted in such a competitive environment where multiple buyers are likely vying for the same property.

Pros for Sellers

The most significant advantage for sellers is that going active under contract puts momentum behind the purchase which makes it more likely the sale will go through. It can also encourage offers from other buyers who want to get in on the action, should anything fall apart with the first offer.

Cons for Sellers

One downside for sellers is that AUC listings may turn off potential buyers who don't want to compete with other bidders or wait until the contingencies are met to make an offer. Additionally, until the contingencies have been satisfied, the seller must keep the property in a condition that is “show ready” which can be trying on some sellers.

Relevance of Active Under Contract Status in Today’s Market

Active under contract status is more common today than ever before because today’s real estate market is highly competitive, and the status inspires multiple offers. The world experienced a shift in March 2020 when the COVID-19 pandemic caused physical-level lockdowns. This shift in perspective later translated into the housing market, which unsurprisingly flourished with low-interest rates and increasingly more people spending time in their homes. Demand for housing greatly spiked, causing aggressive competition among buyers, leading to the adoption of the active under contract status.

In Conclusion

The active under contract status is merely an intermediate phase of the whole buying or selling process. It ensures that the real estate transaction progresses smoothly with transparency, reducing hiccups along the way. Although this barrier for an interested buyer may appear daunting, it often facilitates productive negotiations that result in success. When putting down an offer on an AUC listing, it's essential to work with an experienced and reliable real estate agent to navigate any snags in the process and potentially seal the deal.

What Does Active Under Contract Mean In Real Estate

Introduction

The real estate industry is full of jargons and technical terms, which can be daunting for anyone who is not familiar with the industry. One such term that you might come across is active under contract. This term is often used when a property is still on the market but has an accepted offer from a buyer. In this article, we will explore what active under contract means in real estate and how it differs from other terms used to describe properties that are in the process of being sold.

Active Under Contract vs. Pending

One of the most common terms used to describe a property that is in the process of being sold is pending. However, there is a significant difference between a property that is pending and one that is active under contract. When a property is pending, it means that all contingencies have been met, and the sale is expected to close soon. In contrast, when a property is active under contract, there may still be contingencies and conditions that need to be fulfilled before the sale can be finalized.

Contingencies and Conditions

When a property is active under contract, there are usually several contingencies and conditions that need to be met before the sale can proceed. These may include a home inspection, an appraisal, and financing contingency. The home inspection will involve a professional inspector who will check the property for any defects or issues that could affect the value or safety of the property. The appraisal will determine the fair market value of the property, and the financing contingency will ensure that the buyer can obtain financing to purchase the property.

Seller's Obligations During Active Under Contract

When a property is active under contract, the seller has specific obligations that they need to fulfill. The seller must provide all necessary documents and disclosures to the buyer, including the seller's property disclosure statement. The seller must also allow the buyer to conduct a home inspection and provide access to the property for any other inspections that may be required. Additionally, the seller must continue to maintain the property until closing, ensuring that it is in the same condition as when the offer was accepted.

Active Under Contract vs. Contingent

Another term that you might come across when looking at properties that are in the process of being sold is contingent. A property that is contingent means that there is a contingency clause in the purchase contract that needs to be fulfilled before the sale can be finalized. For example, a sale might be contingent on the buyer selling their current home or obtaining financing. In contrast, a property that is active under contract has already passed the contingency stage and is now waiting for the fulfillment of other conditions before the sale can proceed.

Pros and Cons of Active Under Contract

For buyers, the advantage of looking at properties that are active under contract is that there may still be an opportunity to make an offer and enter into a bidding war with another buyer. On the other hand, one downside of looking at properties that are active under contract is that there is no guarantee that the sale will go through, even if all the contingencies and conditions are met. For sellers, the advantage of accepting an offer that is active under contract is that they can keep their property on the market in case the sale falls through. However, the downside is that they may miss out on potential buyers who are not willing to wait for the sale to be finalized.

Active Under Contract vs. Back-up Offers

A back-up offer is an offer that is made on a property that already has an accepted offer. If the first offer falls through, the seller will have the option to accept the back-up offer instead. In contrast, a property that is active under contract has already accepted an offer, and the sale is in progress. However, a seller may still accept back-up offers in case the first offer falls through.

Conclusion

In conclusion, active under contract is a term used in real estate to describe a property that has an accepted offer but still requires certain conditions to be met before the sale can be finalized. Although similar in some ways to other terms such as pending and contingent, there are significant differences between them. Whether you are a buyer or a seller, it is essential to understand what each term means to make informed decisions during the buying and selling process.

What Does Active Under Contract Mean In Real Estate?

Introduction

As a potential home buyer or seller in the real estate market, you may come across various terms that may be confusing and overwhelming at first. One such term is Active Under Contract. In this article, we will discuss what Active Under Contract means and how it affects both buyers and sellers in the real estate market.

Definition of Active Under Contract in Real Estate

Active Under Contract is a status given to a property that is still listed for sale on the Multiple Listing Service (MLS) but has an accepted offer. It means that the seller has accepted an offer from a buyer, but the transaction is not yet complete.

Why is a Property Listed as Active Under Contract?

A property is listed as Active Under Contract because the seller has accepted an offer, but the transaction is still in progress. The home is not yet sold, and there are conditions that need to be met before the sale can be finalized.

What Happens After a Property is Listed as Active Under Contract?

Once a property is listed as Active Under Contract, the seller cannot accept any more offers. However, the listing agent may still show the property to other potential buyers until all contingencies have been met.

Contingencies in Active Under Contract

Contingencies are conditions that must be met before the sale can be finalized. These conditions are usually outlined in the purchase agreement. Some common contingencies include:- Financing: The buyer must secure financing for the purchase.- Inspection: The buyer may need to have a professional inspection done on the property and may request repairs.- Appraisal: The lender may require an appraisal to ensure the property's value matches the purchase price.- Title search: The title to the property must be free and clear of any liens or encumbrances.

How Long Does a Property Stay Active Under Contract?

The length of time a property stays Active Under Contract varies depending on the contingencies outlined in the purchase agreement. Once all contingencies are met, the property will move to a pending status.

What Does Pending Mean?

Pending means that the sale is in its final stages, and all contingencies have been met. The home is no longer available for showings, and the sale is about to close.

Conclusion

In conclusion, understanding what Active Under Contract means in real estate is crucial for both buyers and sellers. It means that while the property has an accepted offer, the transaction is not yet complete due to certain contingencies. Knowing this information can help guide your decision-making process when buying or selling a home.

What Does Active Under Contract Mean In Real Estate

If you are a seasoned real estate professional, you might be familiar with the term active under contract. However, if you are new to the industry or a homebuyer or seller, the phrase might be confusing and unclear. In this article, we will go over what active under contract means in real estate and how it affects homebuyers and sellers.

Active under contract is a real estate term used to describe a property that is still listed on the MLS (Multiple Listing Service) while it is under contract. A seller can accept an offer from a buyer, and once both parties sign the contract, the property is considered to be under contract.

The status of the property changes from active to active under contract, which indicates that there is an existing contract for the property. However, the home is still visible on the MLS, and real estate agents can show the property to potential buyers, although these visits usually result in backup offers.

An active under contract property can still fall through if the buyer is not able to secure financing, if the property inspection reveals serious issues, if the seller backs out of the contract or if other contingencies are not met. Because of this, some real estate professionals may caution buyers and sellers alike that active under contract listings should be considered cautiously.

Another important thing to note is the duration that an active under contract status lasts on the MLS. The standard time period differs by state and region, but in general, properties remain active under contract for an average of 30 to 60 days. If the sale is not completed within this timeframe, the property will return to active status.

It is also essential to understand that the availability of an active under contract property for viewing is entirely up to the seller's discretion. While the home is still officially under contract, some sellers may decide to halt showings to avoid complications or hassles.

Moreover, some listing agents may choose not to advertise the property as active under contract. Why? If they are afraid that potential buyers will avoid a property that is already under contract or if they don't want to encourage backup offers.

For homebuyers in a competitive market, an active under contract listing can seem frustrating, but it can also be an opportunity. If you are a buyer and find a home that you love that is under contract, it’s still worth discussing with your agent. After all, there is always a chance that the deal might fall through, or the seller might consider alternative offers.

Nevertheless, there are some risks associated with putting an offer on an active under contract property. For instance, if the previous buyer backs out of the deal, you may have missed out on other potential options while waiting for the first deal to fall through.

Furthermore, some states allow for what is called a kick-out clause. This clause permits the seller to back out of the current contract if they receive a better offer from another buyer. If the seller decides to exercise this clause, the initial buyer will have to release the property, even if they are still in the midst of the buying process.

In conclusion, an active under contract status in real estate signifies a property that has already received an offer but is yet to close. It's essential to understand the opportunities and the risks associated with such listings as a homebuyer or seller. You should always do your research before considering placing an offer on any property, including those that are under contract.

Whether you're a buyer or a seller, while dealing with an active under contract property, it's crucial to stay in touch with an experienced real estate agent. They can help you navigate the potential pitfalls and guide you through the entire process.

We hope that this article has shed some light on what active under contract means in real estate. Thank you for reading, and happy house hunting!

What Does Active Under Contract Mean In Real Estate?

People Also Ask:

1. What is an active under contract status in real estate?

An active under contract status in a real estate listing indicates that the seller has accepted an offer from a buyer, but the sale has not yet been completed. This means that the property is still technically available, but it is not actively being marketed.

2. How long does a property stay active under contract?

The length of time that a property stays active under contract can vary depending on a number of factors, including the terms of the contract, the financing involved, and any contingencies or inspections that need to be conducted. Typically, this period lasts anywhere from 30 to 60 days, although it can be longer or shorter depending on the specific circumstances of the sale.

3. Can you make an offer on a property that is active under contract?

Technically, you can make an offer on a property that is active under contract, but the likelihood of your offer being accepted is slim. The seller has already accepted an offer from another buyer, so they may not be interested in entertaining additional offers at this time.

4. What happens if the sale falls through?

If the sale falls through during the active under contract period, the property will typically go back on the market as active and the seller will start accepting new offers again. Alternatively, the seller may choose to negotiate a new contract with the existing buyer, or the two parties may decide to terminate the contract altogether.

5. Is there any way to speed up the active under contract process?

In some cases, it may be possible to speed up the active under contract process by being flexible with your financing, completing any necessary inspections or appraisals quickly, and responding promptly to any requests from the seller.