Recently, it has come to my attention that, as a REALTOR, there are questions that keep coming up. As a Real Estate Professional, there are some things that seem obvious because I see them over and over again.
They aren’t always that obvious to the average home buyer or seller. Inspired by my dear REALTOR friend, Anna Banana Kruchten, I am hereby launching a series of “Frequently Asked Questions.” I hope this helps clarify the sometimes confusing jargon that gets thrown around!
What Does “Under Contract” Mean?
You may notice as you are driving around that you will see a “For Sale” sign in a yard with an “Under Contract” placard on it. Other times, you will find a house you’d like to see, but when you try to schedule a time to see it, you are told that it is “Under Contract”. What does this mean?
When a buyer finds the right home, he or she makes on offer. This is presented on the Contract to Buy and Sell, which is a detailed contract with a schedule of dates, room for contingencies, attachments, concessions, offer price, financing arrangements and appraisal requirements. It is a 15 page document and is designed to spell out expectations and protect both buyer and seller during the process of closing the sale.
When buyers purchase a home, they want the assurance that are able to thoroughly research their purchase before the sale is final, and that no other buyer will purchase the home while they are doing this research. If buyer and seller agree on initial terms, both parties will sign a binding contract which will allow the buyer to conduct this research. The property is then considered “Under Contract”. This period can last 30-60 days, or sometimes longer, as in the event of a short sale.
The buyer is then responsible for doing this research, with deadlines for each piece of research or information. Often times, Earnest Money will be held in an escrow account, which will be applied to the buyer’s deposit at closing.
This research includes applying for a loan, having a certified inspection of the property, obtaining a title commitment and title insurance, obtaining property insurance, reviewing an HOA documents, and making sure the property appraises and the loan will close. Depending on the type of property and the location, other information the buyer will want to research can include surveys, well and septic inspections, or water rights.
Questions about the home buying process? Call me at 720-341-5235 today for answers!