How Long Can a House Be Active Under Contract?

A house listed as “active under contract” signifies a specific stage in the real estate transaction process. It means a seller has accepted an offer from a buyer, but the sale is not yet finalized. This status communicates that while a deal is in progress, it still requires certain conditions to be met before ownership can officially transfer.

Understanding Active Under Contract

When a property is “active under contract,” it indicates that a legally binding purchase agreement is in place between a buyer and a seller. This status means the property is not available for new primary offers, although sellers may still entertain backup offers. The period between offer acceptance and final closing is dedicated to fulfilling various contractual obligations.

Buyers usually conduct a home inspection to assess the property’s condition and may negotiate repairs or credits based on the findings. An appraisal is also common, where a professional evaluates the home’s value to assure the lender that the loan amount aligns with the property’s worth. Buyers also work on securing their financing, which involves loan underwriting and final approval from a mortgage lender. If any of these agreed-upon conditions, known as contingencies, are not met, either party may have the right to terminate the contract without penalty, often resulting in the return of the buyer’s earnest money deposit.

Common Factors Determining Contract Length

The duration a house remains “active under contract” is largely influenced by various contingencies included in the purchase agreement, which typically range from a few days to a few months. Each contingency provides a specific timeframe for certain conditions to be met, and their individual durations collectively determine the overall contract length. The most common contract periods for real estate transactions span between 30 and 60 days.

A financing contingency is often the longest, generally lasting between 20 and 60 days. This period allows the buyer sufficient time to secure a mortgage, including the processing of loan applications and final underwriting approval. If the buyer is unable to obtain the necessary loan within this timeframe, they typically have the right to withdraw from the contract without forfeiting their earnest money.

The home inspection contingency usually provides a shorter timeframe, commonly around 7 to 10 days. During this period, the buyer arranges for a professional home inspection to identify any significant issues with the property. Based on the inspection report, the buyer can negotiate with the seller for repairs, a price reduction, or credits, or may choose to terminate the contract if major problems are found.

An appraisal contingency typically ranges from 7 to 20 days, though it can align with the financing timeline, sometimes extending to 30 to 45 days. This contingency ensures that the property’s appraised value meets or exceeds the agreed-upon sale price. If the appraisal comes in low, the buyer may renegotiate the price, pay the difference, or, if stipulated, terminate the contract without losing their earnest money.

A home sale contingency, which occurs when a buyer needs to sell their current home to purchase the new one, can significantly extend the contract period, often ranging from 30 to 90 days. This type of contingency is considered higher risk for sellers, and they may include a “kick-out clause” allowing them to accept another offer if the buyer’s home does not sell within a specified time. Additionally, title and survey issues, such as undisclosed liens or property line discrepancies, can cause delays. Addressing these often requires legal work and can add unpredictable time to the process.

In some areas, an attorney review period is a standard part of the process, typically lasting 3 to 5 business days after the contract is signed. During this time, attorneys for both the buyer and seller review the contract and can propose modifications. This period allows for legal scrutiny and negotiation of terms before the contract becomes fully binding.

Navigating Potential Contract Changes

Real estate transactions under contract frequently encounter unforeseen challenges that necessitate adjustments to the original timeline. When the initial contract terms cannot be met, parties often consider contract extensions. An extension is a formal agreement between the buyer and seller to prolong a contractual due date, such as the closing date or a contingency period. These extensions are typically granted due to delays, including prolonged financing approval, complex inspection issues requiring further negotiation or repairs, or unexpected title problems. All parties must agree to the extension in writing, usually through an addendum to the original contract, ensuring the new terms are legally binding.

A contract may terminate before closing for several common reasons. A buyer might back out if significant issues are revealed during the home inspection and satisfactory resolutions cannot be reached with the seller. Financing falling through, such as a loan denial or a low appraisal that cannot be resolved, is another frequent cause for termination. If a buyer fails to meet a contingency deadline without a valid extension, they may risk losing their earnest money deposit, which is typically 1% to 10% of the sales price, depending on market competitiveness and local practice. The earnest money is generally returned to the buyer if the termination is due to a contingency not being met, but it may be forfeited to the seller if the buyer backs out without a contractual reason.

During the “active under contract” period, sellers may accept backup offers. A backup offer is a legally binding contract that positions a second buyer to purchase the home if the primary offer falls through. This provides a safety net for the seller, ensuring they have an alternative buyer without needing to relist the property and restart the marketing process. If the initial contract terminates, the backup offer automatically moves into the primary position, allowing the sale to proceed with minimal delay.