What does it mean to get a property under contract?

Question

I've got a dumb question (Trying to learn the process)..... What does it mean to get a property under contract? What does it look like (step by step)? What do you need to do that? Is this something an Attorney would do or I could download?

Derek T. · Answer

Seneca, getting a house under contract simply means that a buyer and seller of real estate come to an agreement to transfer the house.   This is confirmed with a contract that specifies all of the details of the transaction.  The contract also needs to be accompanied by an ernest money deposit.

Seneca Hampton · Answer

@Steve Babiak my question was not concerning the basics of a simple Real Estate agreement nor the process of how to go about coming to a meeting of the minds. The question was concerning the term "under contract" which implies a process. Having never heard the term I was attempting to gain clarity rather than assume. Better to ask a dumb question and look dumb now than find myself looking dumb in a real life situation.

@Bryan L. Thank you for clarifying I appreciate it!

Steve Babiak · Answer

I can't believe that the OP with the title of "Residential Real Estate Agent" posted this topic; that is something I thought that every agent training course covered ...

Bryan L. · Answer

@Seneca Hampton  - I don't understand about your question about the "great price".  You can certainly have a property under contract without a great price, and you can certainly have a great price on a property (listing price or asking price) without it being under contract.  And you can get a property under contract with or without a broker.  And you can work with a broker and never get a house under contract.

Relating to your question about signing a contract, yes you can sign a contract on the spot, or you can have an attorney or a broker assist you.  And yes, there are probably templates available on the internet, or with attorneys, or with brokers.  You can also pull out a napkin from your Hardees bag and write up a contract on that, just you and the seller (or buyer).  When you have an agreed upon price and terms, and you get it written down and everyone signs it, you have a contract.  Some may say that earnest money (or consideration) is also required, but I'm not sure on that.

Ursula B. · Answer

We also use the term 'under contract' in NC.  Usually the process goes something like:

1) Buyer completes an Offer to Purchase form and sends it to the Seller's agent with an Earnest Money Check;

2) Seller can reject the offer, counter the offer (meaning change some of the terms in the buyer's original offer), or accept the offer by signing the contract

3) The seller's agent then communicates the rejection, counter or acceptance to the buyer (or the buyer's agent).  At the point of communication of the accepted offer, we are now 'under contract'.

A little oversimplified, but that's the basics of the process we follow.

James Wise · Answer

Doesn't always "have" to be an E.M. amount. It's just very common.

Ellis San Jose · Answer

@Seneca Hampton

Depending on the complexity of the transaction, you don't need an attorney to create or "draw up" most contracts.  However, it may be wise to have an attorney review the contract.

Seneca Hampton · Answer

I think I have had a case of not understanding the verbiage. So getting a property "under contract" = opening escrow... ? I.e. Me: "Hey Bob, I'll give you 100k for your house. What you do you say?" Bob: "Ok, I'll take it."

Now at that point are we signing a contract on the spot (is there a template for this)? Or is this something you'd have drawn up by an Attorney?

Correct me if I'm wrong but "getting a property under contract" is the exact same as the process one goes through with a broker but with a great price, right?

Abel Vazquez · Answer

It is an agreement stating that you and the owner had a meeting of the minds base on what he/she is looking for and what you offered is I think the most simple way to put it.

Bryan L. · Answer

We use that term (under contract) in TN.  Some people in other states use the term "open escrow".

What does it mean to get a property under contract?

Most Popular Reply