When browsing real estate listings on Zillow, you may come across homes marked as “under contract.” This term can be confusing, especially for buyers and sellers who are unfamiliar with real estate jargon. Understanding what “under contract” means, how it differs from other statuses like “pending”, and whether you can still make an offer on such properties is crucial in navigating the home-buying process.
Understanding “Under Contract” on Zillow
Definition of “Under Contract”
When a home is labeled as “under contract” on Zillow, it means that a buyer has made an offer, and the seller has accepted it, but the sale is not yet finalized. The home is still in the transaction phase, where certain conditions, such as inspections, appraisals, or financing, must be met before the deal closes.
Despite being under contract, the home is not officially sold, and there is still a possibility that the deal could fall through. Various factors, including financing issues, contingencies not being met, or inspection problems, can cause a contract to be canceled.
Difference Between “Under Contract” and “Pending”
Many people confuse “under contract” with “pending”, but they have distinct meanings in real estate:
- Under Contract – The seller has accepted an offer, but the sale is contingent on certain conditions. The home might still accept backup offers in case the deal falls through.
- Pending – All contingencies have been met, and the deal is moving toward closing. At this stage, it is much less likely that the sale will fall apart.
If you’re a buyer interested in a home that is under contract, there may still be an opportunity to purchase it if the existing contract falls through.
Can You Make an Offer on a Home That Is Under Contract?
Backup Offers and Seller Considerations
Although a home under contract is not actively for sale, buyers can sometimes submit backup offers. A backup offer allows the seller to have an alternative in place if the current deal does not close.
Sellers may entertain backup offers in situations where:
- The current buyer is having trouble securing financing.
- The home inspection reveals significant issues.
- The buyer has difficulty selling their existing home (if contingent on the sale).
Submitting a backup offer doesn’t guarantee that you will get the home, but it puts you in a strong position if the deal collapses.
How to Submit a Backup Offer
If you are interested in a home that is under contract, follow these steps to increase your chances:
- Talk to a real estate agent – They can check the seller’s willingness to accept backup offers.
- Make a strong backup offer – Consider matching or exceeding the original offer price.
- Be flexible – If possible, waive contingencies or offer a quick closing timeline.
- Stay patient – If the original deal proceeds, you may not get the home, but if it falls apart, you will be the next in line.
While backup offers are possible, most under contract homes eventually move to closing. However, deals do occasionally fall through, and having a backup plan can give you an edge.
What Causes a Home Under Contract to Fall Through?
Financing Issues
One of the most common reasons contracts fail is buyer financing problems. Even if a buyer is pre-approved, issues such as job loss, credit score changes, or lender denials can lead to a contract cancellation.
To reduce this risk, sellers often prefer offers from buyers who are pre-approved rather than just pre-qualified for a mortgage.
Home Inspection Contingencies
A home inspection can reveal problems that may cause a buyer to back out or renegotiate terms. Common inspection issues include:
- Structural problems (foundation cracks, roof damage)
- Electrical or plumbing issues
- Mold, asbestos, or pest infestations
- HVAC system failures
If significant repairs are required and the seller refuses to fix them, the buyer may choose to walk away from the deal.
Appraisal Discrepancies
Lenders require an appraisal to ensure the home’s value matches the agreed purchase price. If the appraisal comes in lower than expected, buyers may struggle to secure financing, or they may request a price reduction. If the seller refuses, the deal could fall through.
Title Issues
A title search ensures there are no ownership disputes, unpaid liens, or legal complications related to the property. If problems arise, they must be resolved before closing, or the contract could be voided.
Buyer’s Remorse or Life Changes
Sometimes, buyers change their minds due to personal reasons, such as job relocation, family issues, or cold feet about the purchase. Some contracts allow buyers to withdraw within a specific period, but if they back out late in the process, they may lose their earnest money deposit.
What Should Buyers and Sellers Do in an “Under Contract” Situation?
For Buyers Interested in a Home Under Contract
If you are considering a home that is already under contract:
- Monitor the listing – If the status changes back to “active,” the deal has fallen through.
- Submit a backup offer – This increases your chances of getting the home if the original contract fails.
- Look for other options – Don’t rely solely on one property, as most under-contract homes proceed to closing.
For Sellers Whose Home is Under Contract
If you are selling a home that is under contract:
- Ensure the buyer is financially stable – Work with pre-approved buyers to reduce financing risks.
- Prepare for the home inspection – Address any known issues before listing to avoid deal-breaking surprises.
- Consider backup offers – If you receive a strong backup offer, it can provide security in case the current deal falls through.
Conclusion
Understanding the “under contract” status on Zillow is crucial for buyers and sellers navigating the real estate market. While a home under contract has an accepted offer, it is not yet sold, and deals can sometimes fall apart due to financing, inspections, or appraisal issues.
For buyers, submitting a backup offer can be a strategic move, though success is not guaranteed. For sellers, ensuring that the buyer meets financial and contractual obligations can help move the sale to closing smoothly.
By staying informed and working with experienced real estate professionals, both buyers and sellers can make well-informed decisions in a competitive market.