What Does Under Contract Option Pending Mean?

When navigating the real estate market, homebuyers frequently encounter various property statuses. Understanding these classifications is important for effectively searching for a home, as each status signifies a property’s availability and stage of sale.

Understanding “Under Contract”

A property listed as “under contract” means a seller has accepted a buyer’s offer. The sale is not yet final, as it remains subject to conditions known as contingencies. These must be satisfied before closing. Common contingencies include buyer financing, a satisfactory home inspection, and the property appraising for the agreed-upon price.

During this phase, the property is generally off the active market, indicating a deal is in progress. Some listings might show “active under contract,” meaning the seller is open to backup offers. The period from accepted offer to closing typically spans four to eight weeks, depending on contingency complexity.

Understanding “Option Pending”

“Option pending” is a specific status within the “under contract” phase, common in certain markets. It indicates the property is in an “option period” or “due diligence period.” During this time, the buyer pays a non-refundable option fee for the exclusive right to terminate the contract for any reason. The fee can vary, often from a few hundred dollars to a small percentage of the purchase price, or around $25 to $50 per day.

The option period provides buyers a window, typically 1 to 10 days, to conduct thorough due diligence. This involves professional home inspections, reviewing disclosures, and assessing the property’s condition. If issues arise or the buyer decides not to proceed, they can terminate the contract, forfeiting only the option fee while their earnest money deposit is generally returned.

Implications for Homebuyers

When a property is listed as “under contract option pending,” it signals a primary offer has been accepted, but the buyer has a temporary right to withdraw. For other homebuyers, this means the property is not actively available for showings like an “active” listing. However, the opportunity is not entirely lost.

Homebuyers can submit a backup offer, a legally binding contract that positions them next in line should the initial deal fall through. While only 6% to 7% of contracts are terminated, often due to financing, appraisal, or inspection issues, a backup offer can be a viable strategy. Consulting a real estate agent is advisable to understand market conditions and the likelihood of a deal falling through, and to navigate making a backup offer.