Updated on March 31, 2022
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The process of selling a house isn't a one-and-done transaction. It's a progression of steps. You'll have to deal with state laws that govern certain types of purchases that could affect the finality of the sale. But certain steps in the process of selling a house are pretty standard.
Signing a Contract
Coming to an agreement on price and terms between the seller and the buyer is the first step. The typical home spent 58 days on the market in November 2020, 13 days less than the same time last year nationwide.
The seller will either accept the offer, reject it outright, or issue a counteroffer. The procedure can involve just one counteroffer, or it might evolve into a multitude of counteroffers going back and forth between buyer and seller for a period of time.
At some point, ideally, there's a meeting of the minds. The listing status then changes from an active listing to a pending sale.
Note
Some agents put a sign up in the yard that says "pending" or "in escrow" or "under contract," but a house isn't yet sold just because the seller has accepted an offer.
Time for Inspections
It's critical for buyers to get a home inspection prior to closing. Other types of inspections might be advisable as well, depending on the age, condition, and location of the property.
A buyer might further negotiate with the seller if an inspection turns up an unexpected defect. This is particularly the case if the defect is one that will cost a great deal to repair.
Note
The buyer might threaten to cancel the transaction when an inspection turns up a serious problem unless the seller agrees to a request for repairs.
Then, of course, the repairs take time, and the house isn't sold yet when they're accomplished. It's not even considered sold when and if the buyer is satisfied with the results of the inspections.
The Buyer's Loan Is Approved
The buyer's mortgage file goes to underwriting after all the buyer's supporting documents have been received by the lender, and after an appraisal has been completed. This underwriting process can take anywhere from a few days to a few weeks.
The appraisal must support the agreed-upon purchase price. More negotiations will take place or a new appraisal might be ordered if the appraiser submits a low appraisal.
The home still isn't considered sold yet after the loan is approved.
Note
Expect an average of about 50 days—almost two months—to pass between the time the buyer first applies for a mortgage and the closing date.
A Contingency Sale
A buyer might have to close escrow on an existing home before moving forward with the purchase of the new home. This is known as a contingency sale and the contingency must usually be satisfied or released in order to move forward with the contract.
One way to satisfy a contingency is to sign a release of contingencies or perform some other act, such as depositing all funds to close escrow. But even if the buyer deposits the entire purchase price in cash, the home might not be completely sold yet, especially if the buyer can only be held liable for liquidated damages in the event of default.
When Is a House Considered Sold?
A home isn't technically sold until the seller no longer legally owns it. It's sold when the deed has changed hands or is recorded, and when the funds have been disbursed.
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Under Contract Definition
What does it mean when a house is ‘active under contract’? When a home is active under contract it means that a buyer has made an offer on the home and the seller has accepted, but the sale is not yet final. When the transaction is complete, the status of the home will show that it has sold.
While the property is still under contract, all contingencies must be met before the sale is finalized. That may mean the buyer must secure financing, the home inspection still needs to be completed to confirm the property is free of serious defects, or other conditions that still need to be met in order for the sale to be finalized. Real estate contracts outline many conditions that must be met by both the buyer and seller. If either party fails to meet one of these conditions, the contract is breached and one party may back out of the sale.
Under contract vs. pending - what’s the difference?
When a property is pending, that means that all of the contingencies are removed, requirements are met, and the home is about to close. Basically, a pending property is much closer to being sold than an under contract property.
Is an under contract house off the market?
If you find the property of your dreams but it is listed as under contract, it doesn’t necessarily mean that you’re out of options since it is still possible that the buyer or seller may fail to meet one of the conditions needed for the sale to be final.
Most properties that are under contract are considered off the market, but the buyer has a specified period of time to fulfill their obligations. During this time, properties continue to be marketed but maintain the active under contract status until the sale is finalized, or the transaction is cancelled.
Can a seller accept another offer while under contract?
During this time, the seller may be willing to accept backup offers. A backup offer with especially favorable terms, such as a generous offer or waiving certain contingencies. Many things can go wrong during the under contract period and a fair number of homes will go back on the market. By putting in a backup offer, you’ll be positioned as the next buyer in line should the current contract fall through.
What is a backup offer?
A backup offer is when a home seller has accepted an offer from a buyer, but is still accepting offers from other buyers. Sellers state that they are accepting backup offers if they think the current offer may fall through. If you've fallen in love with a home that is under contract, you should get in touch with a Redfin real estate agent right away to explore your options for making an offer.