On Zillow, encountering a listing labeled "under contract" is a common yet often misunderstood occurrence for homebuyers. This status indicates that the seller has accepted an offer from a buyer, and the transaction is now moving through the necessary steps to reach closing. While the property is no longer available for showings, the deal is not yet finalized, leaving a window of opportunity depending on how the contract unfolds.
Decoding the "Under Contract" Status
When a Zillow listing changes to "under contract," it signifies a legally binding agreement between the seller and the purchaser. This means the seller has removed the property from the active market, signaling to other potential buyers that the home is no longer up for grabs. However, this phase involves contingencies that can still cause the deal to fall through, allowing the property to return to an active status if certain conditions are not met.
The Contingency Period: Why Deals Fall Through
Not every contract results in a completed sale, thanks to the contingency clauses embedded in the agreement. These clauses protect the buyer by allowing them to back out without losing their earnest money deposit if specific conditions are unmet. Common reasons a contract might dissolve include the failure to secure financing, issues uncovered during the home inspection, or the appraisal coming in lower than the purchase price.
Key Contingencies to Understand
Mortgage Contingency: Protects the buyer if they cannot obtain a loan.
Inspection Contingency: Allows the buyer to renegotiate or exit the deal based on the home inspection report.
Appraisal Contingency: Ensures the home is worth the purchase price; if it isn't, the buyer can walk away.
For Buyers: What This Means for Your Search
If you are browsing Zillow and see a property marked as under contract, it is generally not productive to submit an offer immediately. The seller is bound to the current buyer, and interfering could damage your reputation as a serious agent. However, monitoring the listing is still valuable, as you can prepare your finances and strategy in case the deal falls through and the status reverts to active.
Navigating the "Active" and "Pending" Confusion
Zillow employs various status labels that can confuse home seekers, particularly "active" and "pending." An active listing is available for showings and offers, whereas a pending property is under contract but still visible to the public. Understanding the difference helps you gauge the urgency and competition level for a specific property.
Zillow Status Definitions at a Glance
The Reality of Back-Up Offers
Sellers sometimes accept backup offers while under contract, especially if the current deal feels unstable. If the primary contract fails due to inspection or financing issues, the seller can move forward with the backup offer. This strategy provides a safety net for the seller, but it requires patience and vigilance from the backup buyer, as they must wait to see if the initial contract collapses.
