Have you ever come across the term “house under agreement” while browsing real estate listings and wondered what it really means? If so, you’re not alone. This phrase often confuses buyers, sellers, and even those new to the real estate industry. It’s one of those terms that sounds straightforward but carries a lot of nuance.
Whether you’re a first-time homebuyer, a seasoned seller, or a real estate professional, understanding this term is crucial for navigating the home-buying process with confidence.
What Does It Mean When a House Is Under Agreement?
When a house is listed as “under agreement,” it means that the Buyer and seller have reached a legally binding agreement. In simpler terms, the seller has accepted the Buyer’s offer, and both parties have signed a contract. However, the sale isn’t final yet—it’s just one step closer to closing.
Synonyms for “Under Agreement”
In real estate, the term “under agreement” is often used interchangeably with other terms like:
- Under contract
- Contingent
- Pending
- Active with contract
While these terms are similar, they can have slight differences depending on the context or the real estate market. For example:
- Under contract and agreement, both indicate that a signed agreement exists between the Buyer and seller.
- Contingent means the deal is conditional on certain requirements being met, such as inspections or financing.
- Pending typically means that all contingencies have been satisfied, and the sale is moving toward closing.
Key Differences Between “Under Agreement” and “Pending”
It’s important to note that a house under the agreement is not yet sold. The sale is still subject to contingencies, which are conditions that must be met for the transaction to proceed. On the other hand, a pending status usually means that all contingencies have been resolved and the sale is in its final stages.
In short, “under agreement” is a transitional phase. The property is no longer actively marketed, but the deal isn’t yet set in stone.
The Process Leading to a House Being Under Agreement
Understanding how a house reaches the “under agreement” stage can help you navigate the process more effectively. Let’s break it down step by step.
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Finding the Right Property
The journey begins when a buyer identifies a property they’re interested in. This could involve attending open houses, working with a real estate agent, or browsing online listings.
Making an Offer
Once the Buyer decides on a property, they submit an offer to the seller. This offer includes details like:
- The proposed purchase price
- Contingencies (e.g., financing, inspections)
- The closing timeline
Negotiations
The seller can:
- Accept the offer as is
- Reject the offer outright
- Counter the offer with revised terms
Negotiations may go back and forth until both parties agree on the terms.
Signing the Agreement
Once the Buyer and seller agree, they sign a purchase and sale agreement (P&S). At this point, the house is officially under contract.
The Role of Contingencies
Contingencies are a critical part of the agreement. They act as safeguards for the Buyer, allowing them to back out of the deal if certain conditions aren’t met. Common contingencies include:
- Home inspection: Ensures the property is in good condition.
- Financing: Allows the Buyer to secure a mortgage.
- Appraisal: Confirms the property’s value matches the agreed price.
These contingencies must be resolved before the sale can move forward.
Common Terms Related to Houses Under Agreement
Real estate terminology can be confusing, especially when similar terms are used interchangeably. Let’s clarify some of the most common ones.
Under Agreement (UAG) vs. Contingent (CTG)
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- Under Agreement (UAG): Indicates that the Buyer and seller have signed a contract, but contingencies may still be in place.
- Contingent (CTG): Highlights that the agreement is conditional on specific requirements being met.
Pending
A pending status means that all contingencies have been satisfied, and the sale is moving toward closing. It’s a more advanced stage than “under the agreement.”
Active with Contract
This term is used when a property has an accepted offer but is still being shown to potential buyers as a backup plan.
TermMeaning
Under the Agreement (UAG), the Buyer and seller have signed a contract; contingencies may still apply.
Contingent (CTG) Agreement is conditional on specific requirements being met.
Pending All contingencies are resolved; the sale is nearing completion.
Active with Contract: An accepted offer exists, but the property is still being shown to other buyers.
What Happens After a House Is Under Agreement?
Once a house is under agreement, the real work begins. This phase involves meeting contingencies, preparing for closing, and addressing any potential roadblocks.
The Contingency Period
During this time, the Buyer typically:
- Conducts a home inspection to identify any issues.
- Secures financing by finalizing their mortgage.
- Completes an appraisal to ensure the property’s value aligns with the purchase price.
Possible Outcomes
- Successful Closing: If all contingencies are met, the sale proceeds to closing.
- Deal Falls Through: If contingencies aren’t met, the Buyer may back out, and the property could return to the market.
Can Buyers Submit Backup Offers?
Yes! In some cases, buyers can submit backup offers in case the original deal falls through. This is more common in competitive markets.
Why Understanding “Under Agreement” Matters for Buyers and Sellers
For Buyers
Knowing what “under agreement” means can help buyers:
- Manage expectations about the property’s availability.
- Understand the importance of contingencies.
- Decide whether to keep searching or submit a backup offer.
For Sellers
For sellers, this phase is critical because:
- The property is no longer actively marketed.
- They must meet their obligations under the agreement.
- They can’t accept other offers unless the current deal falls through.
Legal Implications
A signed agreement is legally binding, meaning neither party can back out without consequences unless contingencies allow it.
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