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What Does Active Under Contract Mean?

What Does Active Under Contract Mean

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Demystifying “Active Under Contract” in Real Estate

If you’ve ever dabbled in the real estate market, you may have come across the term “active under contract.” This phrase might seem confusing at first glance, but it’s actually a crucial piece of information for both buyers and sellers. In this section, we’ll unravel the mystery of “active under contract” and provide some valuable insights.

Breaking Down the Term

Active under contract is a status in the real estate world that indicates a property has received an accepted offer from a buyer, but the sale hasn’t closed yet. During this period, both the buyer and seller are working diligently to fulfill the terms and conditions of the contract. However, due to various contingencies like home inspections, financing, and appraisals, the deal might not go through or you must know what does pending mean in real estate before.

Key Statistics and Data

As a potential homebuyer or seller, it’s essential to understand the real estate market’s nuances. According to the National Association of Realtors, about 20% of pending home sales fall through, leaving the door open for other interested buyers. While every market is different, knowing this information can help you strategize and make informed decisions during your real estate journey.

Keeping It Simple

In a nutshell, “active under contract” means that a property has a pending offer but is still technically available for other offers. As a buyer, this gives you a chance to submit a backup offer, and as a seller, it allows you to entertain multiple offers, ensuring you get the best deal possible. By understanding this term, you can navigate the real estate market more confidently and make smarter decisions.

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Dissecting the Difference: Active Under Contract vs. Pending Status

When exploring the real estate market, it’s vital to comprehend the distinction between “active under contract” and “pending status.” These two terms may appear similar, but they have subtle differences that can significantly impact your home buying or selling experience. Let’s delve into what sets these two statuses apart.

Active Under Contract Explained

As we’ve discussed earlier, a property with an “active under contract” status has an accepted offer, but the sale is not yet finalized due to various contingencies. The property remains on the market, allowing potential buyers to submit backup offers in case the initial deal falls through.

Pending Status Unveiled

On the other hand, “pending status” signifies that all contingencies have been satisfied, and the sale is only awaiting the final closing. In most cases, pending sales do not entertain new offers since the deal is almost complete, and both parties are confident that the transaction will be successful.

The Rationale Behind “Active Under Contract”

You might wonder why the “active under contract” status is necessary in the real estate market. This classification serves several essential purposes, benefiting both buyers and sellers.

Seller Advantages

For sellers, “active under contract” helps maintain interest in their property. In case the initial offer falls through, they can quickly move on to other interested buyers without having to relist their home. According to the National Association of Realtors, relisting a property can lead to a 4% decrease in the final sale price. By staying active under contract, sellers can avoid this potential loss.

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Buyer Opportunities

For buyers, the “active under contract” status provides an opportunity to submit backup offers on desirable properties. As mentioned earlier, about 20% of pending home sales don’t close, which means being prepared with a backup offer could help you secure your dream home purchasing even if you weren’t the first in line.

Understanding these differences and the rationale behind “active under contract” can empower you to make informed decisions and better navigate the real estate market.