Active Under Contract: What It Means for Buyers and Sellers

An "active under contract" status means a seller has accepted a buyer's offer but is still accepting backup offers because the sale is not yet final. This status indicates the deal is contingent on specific conditions being met, and the property typically remains on the market for 30 to 60 days. For buyers, seeing a home listed as active under contract presents a potential opportunity to submit a competitive backup offer.

What Does ‘Active Under Contract’ Mean?

When a property is listed as active under contract, it signifies that the seller has accepted an initial offer from a buyer. However, the sale is not finalized. The seller continues to market the property and encourages additional offers as backups. This strategy is common when the initial purchase agreement includes contingencies—conditions that must be satisfied for the sale to proceed to closing. Common contingencies relate to financing, home inspections, and appraisals. If any contingency is not met, the contract can be voided, allowing the seller to turn to a backup offer.

How Is ‘Active Under Contract’ Different from ‘Pending Sale’?

Understanding the distinction between listing statuses is critical for accurately assessing your chances as a buyer.

• Active Under Contract: The deal is in its early stages. Key contingencies are still being evaluated. The property is often still available for viewings, and the seller is actively seeking backup offers. This status carries a higher degree of uncertainty that the sale will close.
• Pending Sale: The property is further along in the transaction process. Most or all major contingencies have been satisfied, such as the buyer securing financing and the home appraisal meeting the sale price. At this stage, the seller is typically no longer accepting offers, and the listing is essentially off the market, awaiting final closing procedures like the title search and final walkthrough.

Why Do Home Sales Fall Through?

A home sale can fall apart for several reasons, most often during the active under contract phase when contingencies are being tested. Based on industry assessment, the primary reasons include:

• Financing Contingency: The buyer fails to secure a mortgage loan by the deadline specified in the contract.
• Appraisal Contingency: The property's appraised value comes in lower than the agreed-upon purchase price, and the buyer and seller cannot renegotiate.
• Inspection Contingency: The home inspection reveals significant issues (e.g., structural damage, faulty systems) that the seller is unwilling to repair or compensate for, leading the buyer to withdraw.
• Home Sale Contingency: The buyer's offer is contingent on the sale of their current home, which does not sell in time.

Pro Tip: To improve the strength of your own offer, consider obtaining a mortgage pre-approval before you start house hunting. This demonstrates to sellers that you are a serious and qualified buyer.

Can You Make an Offer on an Active Under Contract Home?

Yes, you can and should make an offer on a home you love, even if it's active under contract. Your offer would be considered a backup offer. Have your real estate agent contact the seller's agent to confirm they are still accepting backups. If so, your agent can also gather intelligence on what terms are most important to the seller (e.g., a quick closing, minimal contingencies) to help you structure a compelling proposal. While the seller cannot break the existing contract to accept your offer, they can review it if the primary deal falls through.

Key Takeaways for Buyers

If you encounter an active under contract listing, do not be discouraged. This status represents a clear opportunity for proactive buyers. The original sale is not guaranteed to close. By submitting a strong backup offer with fewer contingencies or a competitive price, you position yourself as the next in line. Ensure your finances are in order and work with an experienced real estate agent who can effectively communicate with the listing agent and navigate the nuances of backup offers.