When you enter the market for a house, there’s few things more disheartening than hearing that the beautiful split level you just fell in love with went “under contract.” The bedrooms were spacious, it had the perfect powder room, and just like that it’s gone?
What exactly does a home going under contract mean? Is there still some hope that the house can be yours?
The short answer is: it’s possible!
When a home goes under contract...
It means that a buyer and seller are at the very beginning of making a deal for the house. A buyer has put in an official offer, and the seller has accepted it. And while that might sound like a done deal, the home buying process is far from over.
You may hear this phase of the homebuying process also being referred to as being “Active Under Contract.”
Contingencies are one of the main sticking points that could prevent a home that’s under contract from closing.
It's worth mentioning that contingencies to a contract are not required. But they are there to protect the buyer's earnest money, and keep the seller from taking the home off the market.
Contingencies are one factor that could work against an offer going all the way through to a sale. Another possibility could be the seller’s inability to transfer the title because of liens against the property.
There are a number of different types of contingencies. Let’s take a peek at a few:
If a house is under contract, does that mean it’s too late?
No! It’s not! We just covered a number of reasons why an offer could fall through. All that is to say, if there’s a house you love, you can always put in a back-up offer, which is just what it sounds like. Putting in a back-up offer is a lot like being next in line for the house should anything fall through.
Admittedly, it’s rare, but it does happen. Historically, roughly 4% of homes have their offers and contracts fall through. But as recently as January, the national rate of contract cancellations was around 20%!
Pending vs. Under Contract
To over simplify things, pending is essentially the step after a home has gone under contract, but before the house is officially sold. There are still some reasons that a pending home sale could not pan out. For example, if the home inspection raises issues about the home's foundation or the buyer can’t close on his financing.
In short, the home buying and selling process can be a long, winding road full of lots of bumps. But here at Knock, we work every day to simplify the process, taking some of the stress out of the equation with our innovative lending solution, Knock Bridge Loan™, that let’s you do away with contingencies and buy your new home before selling the old one.