What Is Active Under Contract in Real Estate?

“Active under contract” is a common term in real estate listings that signals a property has an accepted purchase offer, yet the transaction is not complete. This status means the home is not fully sold, as specific conditions must be met before the ownership can transfer. It provides transparency to potential buyers that while an offer is in place, the opportunity to acquire the property has not entirely passed.

Understanding “Active Under Contract”

A property listed as “active under contract” indicates a legally binding agreement between a buyer and seller for its purchase. While an offer has been accepted and a contract signed, the sale remains conditional. The “active” component signifies that the property is still being marketed, often because the seller is open to receiving backup offers. This allows the seller to maintain options if the initial agreement fails.

The conditional nature of this status stems from various stipulations, known as contingencies, that must be satisfied before the deal can finalize. For instance, the buyer might be waiting on a home inspection to ensure there are no major structural problems. This period typically lasts between 30 and 60 days, during which time the property may still be shown to other interested parties.

Key Contingencies in the Contract

Contingencies are specific conditions embedded in a real estate contract that must be fulfilled for the agreement to become fully binding and proceed to closing. These clauses protect both the buyer and seller, providing an avenue to terminate the contract without penalty if the conditions are not met.

A common condition is the inspection contingency, which grants the buyer a specified period to conduct a professional home inspection. If significant issues are discovered, the buyer can negotiate repairs, a price reduction, or withdraw from the contract. Another important clause is the financing contingency, which protects the buyer if they are unable to secure the necessary mortgage loan. The appraisal contingency ensures the property’s appraised value meets or exceeds the agreed-upon purchase price, safeguarding both the buyer and their lender. A sale of current home contingency allows a buyer to complete their purchase only if their existing property sells by a certain deadline.

Roles and Actions During the “Active Under Contract” Period

During the “active under contract” phase, both the buyer and seller have distinct responsibilities and actions to undertake to move the transaction forward. The buyer typically initiates due diligence, which includes scheduling professional home inspections and ordering appraisals. They also work closely with their lender to secure final financing approval, providing all required documentation. The buyer must also respond to any inspection findings, potentially negotiating with the seller for repairs or credits, and adhere to all contractual deadlines for contingency removal.

The seller, in turn, must facilitate access to the property for inspections and appraisals. They consider and respond to buyer requests for repairs or credits arising from inspection reports. Sellers also continue to maintain the property’s condition throughout this period. Effective communication among all parties, including real estate agents and lenders, is important during this period.

Moving Towards Final Sale

Once all contingencies outlined in the contract are either satisfied or waived, the property’s status often transitions from “active under contract” to “pending,” indicating a higher probability of the sale closing. At this stage, the final steps toward transferring ownership commence. These typically include obtaining final loan approval, conducting a thorough title search to ensure clear ownership, and securing title insurance.

As closing approaches, final documents are prepared, and the buyer usually performs a final walk-through inspection of the property to confirm its condition. The culmination of this process is the closing appointment, where all parties sign the necessary paperwork, funds are exchanged, and the deed is officially transferred to the new owner.