Understanding The Different Stages Of A Contract

Dated: 02/16/2017

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I frequently get calls or text messages from my clients that have driven by a house with a sign in the yard or found a house on one of the national home sites and they want to know if a particular house is still available.  I never mind the questions and I am always happy to check on the status, but 99% of the time the house is "under contract".  Although this is true, all "under contracts" are not created equally.  To most buyer's "under contract" will mean the house is no longer available and we need to move on to the next one. However, it is important to realize the different stages of the contract so you can better gauge the chances of the house coming back on the market.  Keep in mind these are generalizations and there are always exceptions to the rule.

Active - No contracts have been accepted and house is typically available to show. In today's market, seller's are typically inundated with offers within the first 48 hours.  It is not uncommon for them to stop showings and ask for highest and best by a specified deadline.  In these circumstances, the house may be listed as "available" for a day or two after the seller has stopped showings but before they have actually signed and executed a contract.

Active Option - The seller has accepted an offer and the buyer is performing their due diligence.  The option period typically lasts around 7 days but can be much shorter or longer depending on the contract.  During this time the buyer has the complete unrestricted right to terminate the contract.  This means they can change their mind for any reason and still receive their earnest money back.  This is also the time they will typically have an inspection done and negotiate any needed repairs.

Active Contingent - This is one of the most misunderstood statuses. "Active contingent" does not mean the buyer has another house to sell, but rather than they are still protected by a contingency in the contract.  The most common one is financing.  Typically the buyer will have 14 to 21 days to qualify for financing.  During this period of time, the only way for the buyer to terminate the contract is for their loan to be denied by the lender.

Active Kick Out - In a kick out, the buyer's ability to purchase the home is contingent on them selling a house.  This is the only status other than "Active" where the seller may have the ability to choose a different offer. Depending on the terms of the "kick out", the seller can accept a back up offer and notify the "kick out" buyer.  If the first buyer is unable to remove the contingency on their contract, the seller can kick it out and move to the second offer.

Pending - Typically all contingencies with the exception of the appraisal have expired. Anything can still happen but there is a good chance it is closing. 

If you have any questions, please do not hesitate to call or email.  It is always my pleasure to help! 


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Christy Horne

Christy is a multi-million dollar producing agent with the heart of a teacher. She grew up in the HEB area and is a graduate of Trinity High School. She attended the University of Texas at Austin whe....

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