Last Updated: January 2026

When you're searching for a home and see a listing marked as "under contract," it means a seller has accepted a buyer's offer, and both parties have signed a purchase agreement. However, the sale isn't final yet, the property must still go through various contingencies and inspections before closing. Understanding what under contract means in real estate can help you navigate the home buying process more confidently, whether you're a buyer hoping to make a backup offer or a seller weighing multiple offers.

In this comprehensive guide, we'll explain exactly what happens when a home goes under contract, how long this phase typically lasts, and what it means for all parties involved in the real estate transaction.

What Does "Under Contract" Mean?

Under contract is a real estate term indicating that a buyer and seller have mutually agreed to the terms of a purchase agreement and have both signed the contract. At this point, the home is no longer actively available for sale, but the transaction isn't complete. The property must still pass through contingency periods, inspections, appraisals, and financing approval before the deal officially closes.

When a property is under contract, the seller has typically agreed to stop accepting new offers (though they may accept backup offers). The buyer, in turn, has submitted an earnest money deposit to demonstrate their commitment to purchasing the home.

Key Characteristics of Being Under Contract

• Binding agreement exists: Both parties have signed a legal contract
• Contingencies are active: Conditions must be met before closing
• Earnest money is deposited: The buyer has put down a good faith deposit
• Timeline is set: Specific deadlines exist for inspections, financing, and closing
• Sale is not guaranteed: The deal can still fall through

Under Contract vs. Pending: What's the Difference?

You may see listings marked as either "under contract" or "pending", and the distinction matters. While both indicate a sale is in progress, they represent different stages of the transaction.

Under Contract

A property is "under contract" when contingencies are still in place. The buyer may still need to complete their home inspection, secure financing, or sell their current home. During this phase, there's a reasonable chance the deal could fall apart if a contingency isn't satisfied.

Pending

A "pending" listing typically means all contingencies have been waived or satisfied, and the sale is proceeding toward closing. At this stage, the deal is much more likely to close successfully. Some Multiple Listing Services (MLS) use "pending" and "under contract" interchangeably, so check with your real estate agent about local conventions.

What Happens When a House Goes Under Contract?

Once both parties sign the purchase agreement, a series of steps must be completed before closing. Here's the typical timeline and process:

1. Earnest Money Deposit

Within 1-3 days of contract signing, the buyer submits their earnest money deposit (typically 1-3% of the purchase price) to an escrow account. This deposit shows the seller the buyer is serious and provides financial protection if the buyer defaults without a valid contingency.

2. Home Inspection Period

The buyer arranges a professional home inspection, usually within 7-14 days of contract signing. The inspector examines the property's major systems, foundation, roof, plumbing, electrical, HVAC, and provides a detailed report. Based on findings, the buyer can:

• Accept the home as-is
• Request repairs from the seller
• Negotiate a price reduction
• Walk away using the inspection contingency

3. Appraisal

The buyer's lender orders an appraisal to ensure the home's value supports the loan amount. If the appraisal comes in lower than the purchase price, negotiations may be needed, the buyer may need to pay the difference in cash, the seller may lower the price, or the parties may meet somewhere in the middle.

4. Financing Approval

The buyer works with their mortgage lender to finalize loan approval. This involves verifying income, employment, assets, and credit. The lender reviews all documentation before issuing a clear-to-close, confirming they're ready to fund the loan at closing.

5. Title Search and Insurance

A title company researches the property's ownership history to ensure there are no liens, claims, or other issues. Title insurance protects the buyer and lender against any title defects discovered after closing.

6. Final Walkthrough

Shortly before closing (often the day before or morning of), the buyer conducts a final walkthrough to verify the home's condition matches what was agreed upon and that any negotiated repairs have been completed.

How Long Does a Home Stay Under Contract?

The under contract period typically lasts 30 to 60 days, though this varies based on several factors:

Can a House Under Contract Fall Through?

Yes, deals do fall through during the under contract phase. According to the National Association of Realtors, approximately 4-7% of real estate contracts fail to close. Common reasons include:

Common Reasons Deals Fall Apart

• Financing falls through: The buyer's mortgage application is denied or they can't meet lending requirements
• Home inspection issues: Major problems are discovered that the seller won't fix and the buyer won't accept
• Appraisal gap: The home appraises for less than the purchase price and parties can't agree on a solution
• Title problems: Liens, easements, or ownership disputes are discovered
• Buyer's home doesn't sell: If contingent on selling their current home, and that sale falls through
• Cold feet: Either party simply changes their mind (though this may forfeit earnest money)

What Does Under Contract Mean for Buyers and Sellers?

For Buyers

If you're a buyer and the home you want is under contract, you have a few options:

• Submit a backup offer: Ask your agent to present a backup offer. If the current deal falls through, your offer would be next in line.
• Keep searching: Don't put all your hopes on one property. Continue viewing other homes while monitoring the situation.
• Ask your agent for updates: A good listing agent will inform backup offer buyers if the primary contract fails.

For Sellers

When your home goes under contract, you should:

• Respond promptly: Meet inspection and document deadlines to keep the process moving
• Consider backup offers: Accepting a backup offer provides security if the primary deal falls through
• Avoid major changes: Don't start renovations or remove fixtures that were included in the sale
• Stay flexible: Be prepared to negotiate if inspection or appraisal issues arise

Frequently Asked Questions

The Bottom Line

When a home is under contract, it means the buyer and seller have agreed on terms and signed a purchase agreement, but the sale isn't final. The property must still pass through inspections, appraisals, and financing approval before closing. Understanding this critical phase helps both buyers and sellers set realistic expectations and navigate the process successfully.

If you're buying a home, work with an experienced real estate agent near you who can explain local market conventions, help you submit competitive offers, and guide you through the under contract period. Their expertise can make the difference between a smooth closing and a deal that falls apart.