What does “active under contract” mean in real estate?

You may have come across an “active under contract” status on a home listing that’s piqued your interest. While active under contract may not sound inviting, it doesn’t mean you should bypass the opportunity altogether.

Before a home is labeled “active under contract,” the home is typically labeled “active” on the Multiple Listing Service (MLS), a service used by brokers to provide information about properties that are for sale. Once the seller accepts an offer, the agent will change the status to active under contract. This means a seller has accepted an offer from a buyer, but it hasn’t quite closed. The deal is most likely in its early stages, and both parties are waiting for certain progress to be made and contingencies to be met before they can move further into the sale.

The seller may be waiting on their buyer to secure financing. The buyer may be waiting on a home inspection or appraisal to come through. In some cases, the buyer may have a contingency that requires their current home sells before officially closing on the new one.

When a home changes to active under contract, buyers may still make offers. Do note that even with an offer higher than the one accepted, it is still considered a backup. Sellers can’t typically exit their contract for the sole purpose of money. If the deal falls through, then the seller may consider one of those offers.

What is the difference between “active under contract” and “pending?”

Active under contract and pending are similar, but they communicate two separate statuses in real estate. Active under contract is when a home offer has been accepted but there are still conditions and contingencies that must be met. Pending typically comes after active under contract, when all conditions have been met and the house is nearing closing. While pending is a step closer to closing, there are still no absolute guarantees that the home will close. The only guarantee for closing on a home sale is when you reach that very day.

FAQs

Why are active under contract homes still listed?

Active under contract homes are still listed because the home hasn’t officially closed. The seller may accept backup offers if the current offer falls through due to a contingency or other unpredictable circumstance.

When does a home become active under contract?

A home becomes active under contract when the seller accepts an offer.

How long do homes stay active under contract?

It depends. A home will stay active under contract until all contingencies have been met. How long that takes depends on the deal and number of potential contingencies. There may be a delay that causes a home to be active under contract for longer than planned, or you may have a simple deal that moves to the next step relatively quickly.

Can you make an offer on an active under contract home?

Yes, typically you can still make an offer on a listing that is active under contract. While there are no promises regarding the likelihood of that offer getting accepted, there may be some unforeseen circumstance that prevents the initial sale from going through and with that, you may be happy you put in an offer.

In summary

Active under contract is one of the stages between accepting an offer and closing on a home. The home sale may be in its early stages, or both parties are still waiting for certain contingencies to be met. If you’re a buyer interested in a home that’s active under contract, you can typically still submit an offer. Just note that it will likely remain as a backup option. If the sale falls through, however, the seller may then consider your offer.