When buying or selling a home, you may come across the term “under contract.” But what does it really mean, and why is it important? Simply put, a house is “under contract” when a buyer and seller have agreed on the terms of a sale, and both parties have signed a purchase agreement. However, this doesn’t mean the deal is done—it’s just the beginning of a process that can take weeks or even months to complete.
Understanding how long a house can be under contract is crucial for both buyers and sellers. For buyers, it helps set expectations for when they can move into their new home. For sellers, it provides clarity on when they can expect to finalize the sale and move forward.
What Does “Under Contract” Mean in Real Estate?
Definition of “Under Contract”
In real estate, “under contract” refers to the period after a buyer’s offer has been accepted by the seller but before the sale is finalized. During this time, both parties work through the terms of the agreement, including inspections, appraisals, and financing. It’s a critical phase where the deal is not yet guaranteed, as certain conditions must be met for the sale to close.
Key Milestones During the Contract Phase
The “under contract” period involves several important steps, including:
- Home Inspection: The buyer hires a professional to inspect the property for any issues.
- Appraisal: The lender assesses the home’s value to ensure it aligns with the loan amount.
- Financing Approval: The buyer secures final approval for their mortgage.
- Title Search: A title company ensures there are no legal issues with the property.
- Closing Preparation: Both parties finalize the paperwork and prepare for the closing day.
Each of these steps can impact how long the house remains under contract, as we’ll explore in the next section.
Typical Duration: How Long Can a House Be Under Contract?
Average Timeframes
On average, a house is under contract for 30 to 60 days. This timeframe is considered standard in most real estate transactions. However, the exact duration can vary depending on several factors, such as the type of financing, market conditions, and the complexity of the deal.
Shorter Contracts
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In some cases, contracts can be much shorter. For example:
- Cash Deals: When a buyer pays in cash, the process can be completed in as little as 10 to 14 days.
- Hot Markets: In competitive markets, buyers and sellers may expedite the process to secure a deal quickly.
Longer Contracts
Conversely, some contracts may take longer than 60 days to complete. This is common in situations like:
- Complex Financing: Buyers using FHA or VA loans may face additional requirements.
- Slow Markets: In a buyer’s market, sellers may agree to longer timelines to accommodate buyers.
- Unique Properties: Homes with legal or structural issues may require extended negotiations and due diligence.
Key Factors That Influence Contract Length
Several factors can influence the duration of a house remaining under contract. Let’s break them down:
Financing Approval
The mortgage process is often the most time-consuming part of the transaction. Lenders need to verify the buyer’s income, credit score, and other financial details. The type of loan also matters:
- Conventional Loans: Typically faster, taking around 30 days.
- FHA or VA Loans: This may take longer due to stricter requirements.
Home Inspection and Repairs
A home inspection usually takes place within the first 7-10 days of the contract period. If significant issues are found, negotiations over repairs can add days or even weeks to the timeline.
Appraisal Process
The appraisal ensures the home’s value matches the agreed-upon price. If the appraisal comes in lower than expected, it can lead to delays as the buyer and seller renegotiate terms.
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Title Search and Clearance
A clear title is essential for the sale to proceed. Common title issues, such as liens or disputes, can delay the process until they are resolved.
Contingencies and Special Clauses
Contingencies, such as the sale of the buyer’s current home or financing approval, can significantly impact the timeline. These clauses must be met before the deal can move forward.
Market Conditions
The state of the real estate market also plays a role. In a seller’s market, transactions may move faster due to high demand. In a buyer’s market, the process may take longer as sellers wait for better offers.
The Step-by-Step Timeline of a House Under Contract
Here’s a typical timeline for a house under contract:
DayActivity
Day 0 Offer accepted, contract signed
Days 1-10: Earnest money deposit, schedule inspections
Days 10-20 Inspection period, repair negotiations
Days 20-30 Appraisal ordered and completed
Days 30-45: Mortgage underwriting, title search, insurance
Days 45-60: Final walkthrough, closing preparations
Day 60 Closing day (keys transferred)
For cash deals or unique circumstances, this timeline may be shorter or longer.
Common Delays and How to Avoid Them
Common Causes of Delays
- Financing Issues: Loan approval setbacks are a frequent cause of delays.
- Inspection Problems: Major repair needs can lead to extended negotiations and disputes.
- Appraisal Discrepancies: A low appraisal can stall the process.
- Title Issues: Legal complications with the property title can take weeks to resolve.
- Paperwork Errors: Missing or incorrect documents can slow things down.
Tips to Minimize Delays
- Prepare Documents Early: Ensure all necessary paperwork is ready in advance.
- Hire Experienced Professionals: Work with a knowledgeable real estate agent and attorney.
- Communicate Openly: Keep all parties informed throughout the process.
Can a House Be Under Contract Indefinitely?
No, a house cannot remain under contract indefinitely. Most contracts include an expiration date, typically 30 to 60 days from the signing date. If deadlines are missed, the contract may be extended through an amendment or terminated altogether.
Special Cases: When Contracts Are Shorter or Longer Than Average
- Cash Purchases: Can close in as little as 10 days.
- New Construction: Completion may take several months.
- Distressed Properties: Foreclosures or short sales often involve lengthy timelines.
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