Short Answer
Complete Explanation
Active Under Contract is a real estate listing status used by multiple listing services (MLS) to indicate that a seller has accepted an offer from a buyer, but the sale has not yet been finalized because certain contingencies remain unsatisfied. During this period, the property is typically still available for showings, and the seller may continue to market the home and accept backup offers. This status provides transparency to potential buyers that a deal is in progress but not yet guaranteed to close.
- Definition and Purpose: Active Under Contract signals that a contract has been executed but is contingent on specific conditions such as home inspection, financing, or appraisal. It allows the seller to keep the property active in the MLS while the contingencies are being resolved.
- Distinction from Pending: Unlike a Pending status, where most or all contingencies have been satisfied and the deal is closer to closing, Active Under Contract indicates that significant hurdles remain. Some MLS systems treat Active Under Contract as a hybrid status between Active and Pending.
- Showings and Backup Offers: Sellers in this status often continue to allow showings and may accept backup offers to have a fallback if the primary contract falls through. The real estate agent should clarify the terms with potential buyers.
- Common Contingencies: Typical contingencies include home inspection, mortgage financing, appraisal, title review, and sale of the buyer’s current home. Until these are satisfied, the contract is not firm.
- Duration: The length of the Active Under Contract period varies based on agreed-upon timelines. It can last from a few days to several weeks, depending on the complexity of the contingencies.
History / Background
The term “Active Under Contract” emerged as real estate industry practices evolved to provide more nuanced property statuses in the Multiple Listing Service (MLS). Traditionally, listings were simply categorized as Active, Pending, or Sold. However, as real estate transactions became more complex with multiple contingencies, agents and brokers needed a way to indicate that a property was under contract but still potentially available for backup offers. Local MLS associations began implementing the “Active Under Contract” status in the early 2000s to improve transparency and help buyers and agents understand the precise stage of a transaction. Its adoption grew alongside the rise of online real estate portals, which required more granular statuses for accurate listing syndication.
Importance and Impact
Active Under Contract has significant implications for buyers, sellers, and real estate professionals. For sellers, it allows continued marketing of the property and the opportunity to secure a backup offer, reducing the risk of starting the process over if the primary contract fails. For buyers, seeing an Active Under Contract listing clarifies that their offer could be considered as a backup, providing a possible pathway to purchase. Real estate agents use this status to manage expectations and streamline negotiations. The status also influences market data; properties that move from Active Under Contract back to Active can indicate market conditions or buyer reluctance, affecting pricing strategies. Overall, it adds a layer of transparency to the housing market that benefits all parties.
Why It Matters
Understanding the Active Under Contract status is crucial for anyone involved in a real estate transaction. Buyers can avoid mistakenly assuming a property is completely off the market and instead learn how to position a backup offer. Sellers can strategically use this status to keep their options open while still moving toward closing. Real estate agents rely on accurate statuses to comply with MLS rules and provide truthful information to clients. In a competitive market, knowing the difference between Active Under Contract and Pending can influence decision-making and negotiation tactics. For consumers, it demystifies the often-confusing timelines of a home sale.
Common Misconceptions
Active Under Contract means the property is essentially sold.
It means a contract exists but contingencies remain. The deal can still fall through, and the property may return to Active status. It is not a guaranteed sale.
You cannot make an offer on an Active Under Contract property.
Many sellers accept backup offers during this period. Buyers can still submit offers, though they are typically contingent on the primary contract not closing. It’s advisable to work with an agent to understand local rules.
FAQ
Can you still show a house that is active under contract?
Yes, typically the seller continues to allow showings to attract backup offers. However, it is advisable to check with the listing agent for specific terms and whether showings are permitted.
What happens if the contingencies are not met?
If contingencies are not satisfied within the agreed timeline, the contract may be canceled. The buyer usually receives their earnest money back, and the property returns to Active status.
Is active under contract the same as pending?
No. Active Under Contract means contingencies remain unresolved, while Pending indicates most or all contingencies have been cleared. The property is closer to closing in Pending status.
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