What Does "Under Contract" Mean?

Crystal 

Walker

Content Writer

When a home is listed as "under contract," the seller has accepted an offer and both parties have signed a purchase agreement. The sale is not final. About 15% of signed contracts were canceled before closing in 2025, according to MLS transaction data, and the deal can fall apart at several points along the way.

How a Home Gets Under Contract

A buyer submits an offer with a price, a closing date, and any contingencies. What counts as a contingency and how each one works is worth understanding before you make an offer. The seller accepts, rejects, or counters. When both sides agree and sign, the home is marked under contract.

What Happens Next

Once the contract is signed, the closing process begins. Most financed transactions take 30 to 60 days to work through each of these steps. 

Inspections

The buyer hires an inspector to evaluate the property's condition. If significant issues come up, the buyer can request repairs, ask for a price reduction, or exit the contract depending on its terms.

Appraisal

The buyer's lender orders an appraisal to verify the property's value supports the loan amount. If the appraisal comes in low, the buyer and seller have to renegotiate or the buyer makes up the difference in cash.

Financing

The buyer works with their lender to finalize the mortgage.

Title search

A title company reviews the ownership history to confirm there are no liens or disputes on the property. Our guides, What Are Closing Costs? and What Is Escrow?, cover what happens at this stage.

Closing

Both parties sign the final paperwork, funds transfer, and ownership passes to the buyer.

Earnest Money

Buyers typically submit an earnest money deposit when they go under contract. It is held in escrow and applied to the down payment or closing costs at closing.

If the buyer exits under a valid contingency, they generally get the deposit back. If they walk away without one, particularly after contingency deadlines have passed, the seller may keep it. What happens in a dispute depends on the contract and state law.

How Long Does It Take?

Most financed transactions close in 30 to 60 days. The average for a conventional mortgage was 42 days as of mid-2025, per ICE Mortgage Technology. Cash purchases typically close in one to two weeks since there is no lender approval or appraisal requirement.

Can You Still Make an Offer?

About 15% of purchase agreements were canceled each month throughout 2025, according to MLS data reported by CNBC. Inspection disputes were the leading cause, followed by financing falling through. Even deals that reach the pending stage can collapse.

Some sellers accept backup offers. If a home you want is already under contract, ask your agent whether the seller is taking them.

For a breakdown of how contingent and pending differ from under contract, see Contingent vs. Pending: What's the Difference?

Working With an Agent

An agent can check on backup offer status and track listings that recently fell out of contract. If you are not working with one yet, find a PrimeStreet agent.

_{Disclaimer: This article is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Always consult a licensed professional before making decisions based on this information.}