What Does "Under Contract" Mean When Buying a House?
"Under contract" means the buyer and seller have both signed a purchase agreement, but the sale isn't final yet. The home is committed to that buyer while the steps in the contract play out, such as inspections, the appraisal, loan approval and title work. The house is officially sold only at closing, when the deed is recorded and the loan funds.
Most deals that go under contract close, but some fall through because of inspection issues, a low appraisal, financing problems or a contingency the buyer or seller uses. Here's what "under contract" means for buyers in North Carolina and South Carolina, how it differs from "pending" and "contingent," and what happens next.
I'm Paul Mattos, a mortgage broker with Refine Mortgage, licensed in North Carolina and South Carolina.
Under Contract vs. Pending vs. Contingent
Listing sites and agents use these terms a little differently, but generally:
Under contract is the broad term for any home with a signed purchase agreement that hasn't closed yet.
Contingent usually means the contract still has open conditions, such as inspections, appraisal or financing, or the buyer needing to sell another home.
Pending usually means the main contingencies have been resolved and the deal is moving toward closing.
Your local MLS may use slightly different status labels, so ask your agent what a listing's status means.
What Happens After You Go Under Contract
Once your offer is accepted and signed, several things start at once:
Deposits. In North Carolina, you typically pay a due diligence fee to the seller and earnest money into escrow. In South Carolina, you typically pay earnest money. Both are usually credited toward your purchase at closing.
Inspections during the due diligence or inspection period in your contract
Your loan moves into processing and underwriting, and the lender orders the appraisal.
Title work and homeowners insurance
Clear to close, then closing and keys
My guide to what happens after mortgage pre-approval walks through each step, and what happens during mortgage underwriting covers the loan review in detail.
How Long Is a House Under Contract?
Many purchases close in roughly 30 to 45 days after the contract is signed. Your contract sets the target closing date, and the actual timeline depends on the loan, the property, inspections, the appraisal and how quickly documents come in. New construction can be under contract for months while the home is built. See how long it takes to buy a house.
Can a Buyer Back Out When a House Is Under Contract?
Often, yes, but what you can get back depends on your contract and timing.
In North Carolina, the standard contract gives the buyer a due diligence period. During that period, the buyer can generally terminate for any reason. The due diligence fee is generally kept by the seller, while earnest money is generally refunded if you terminate before the period ends. After the due diligence period, backing out can mean losing your earnest money too, except in limited situations described in the contract.
In South Carolina, contracts typically spell out inspection, appraisal and financing contingencies with specific deadlines. Whether you can terminate and keep your earnest money depends on those terms.
In either state, read your contract carefully and ask your agent or attorney before you rely on a contingency.
Can a Seller Accept Another Offer While Under Contract?
A seller generally can't sell to someone else while bound by your contract. Many sellers do accept backup offers, though, which move into first position if your deal falls through. That's one reason to meet your deadlines and keep your loan on track.
Why Under Contract Deals Fall Through
Inspection problems the buyer and seller can't agree on
A low appraisal that leaves a gap between the price and the value
Financing issues, often from changes in income, credit or debts after pre-approval
Title problems, such as liens or ownership questions
Insurance challenges on older homes or homes with roof issues
The buyer's home not selling, when the contract depends on it
A thorough pre-approval and steady finances help prevent the financing problems. See what not to do before closing on a house.
Can You Still Tour or Make an Offer on a House That's Under Contract?
Sometimes. If the seller accepts backup offers, you may be able to tour the home and submit one. Ask your agent whether the seller is taking backups and how the contract's timelines could affect your chances.
Under Contract FAQs
Is "under contract" the same as sold?
No. The home is sold at closing, when the deed is recorded and the loan funds.
What should a buyer do right after going under contract?
Send the signed contract to your loan officer, schedule inspections, pay any required deposits on time and line up homeowners insurance. Keep your finances steady until closing.
Does under contract mean my loan is approved?
No. Your loan still goes through underwriting and the appraisal. A pre-approval is not a final approval.
What happens to my earnest money if the deal falls through?
It depends on why and when the contract ends. Your contract's terms control, so review them with your agent or attorney.
Buying in North Carolina or South Carolina?
If you're getting ready to make an offer, I'll review your financing first and run the numbers on the home before you go under contract. We can talk by phone or video.
Schedule a mortgage consultation or start your mortgage application.
Paul Mattos
Mortgage Broker | Refine Mortgage
Carolina Home Financing
NMLS# 2339069 | Licensed in NC and SC
Call or text: 980-221-4959
Email: paulm@refinemortgage.net
Refine Mortgage Inc. | NMLS# 2417960 | Equal Housing Lender. This article provides general educational information and is not legal advice, a commitment to lend, a rate quote, or an offer of specific credit terms. Contract terms and listing status definitions vary; consult your real estate agent or attorney about your agreement. Approval, pricing, and program availability depend on credit, income, assets, property, appraisal, and underwriting requirements. Not all applicants will qualify.
