Under Contract in Real Estate: Can You Still Buy?

• 🧠 Around 15% of real estate contracts fall through before closing, often due to financing or inspection issues.
• 🏠 Being “under contract” doesn’t mean a home is off-limits—backup offers are still possible.
• ⚠️ Financing, appraisal, and inspections contribute to over 80% of canceled real estate deals.
• 📝 Contingencies in a real estate contract are designed to protect buyers and can be deal-breakers.
• 💰 Listing with a 1% commission agent can save sellers up to $15,000 compared to traditional models.

Under Contract in Real Estate: Can You Still Buy?

When a home is marked as “under contract,” that means a purchase agreement has been signed by the buyer and seller—but the sale isn’t final. There are still many steps to go through, and complications can arise. Knowing what ‘under contract’ means, and how it affects buyers and sellers, can help you in a busy market. It can also help you with deals that are already in progress.

What Does “Under Contract” Mean?

In real estate, a house is said to be “under contract” once both the buyer and the seller have signed a legally binding document known as a purchase agreement or real estate contract. This agreement outlines all the terms involved in the transaction, including the price, closing date, and contingencies. Importantly, while it’s a significant milestone in the home sale process, going under contract doesn’t mean the deal is guaranteed—it simply means both parties are working through the agreed-upon conditions.

Many factors can still derail a transaction at this point. From financing snags and failed inspections to low appraisals or unforeseen title issues, any number of problems may arise during escrow. State regulations also play a big role: some restrict what sellers can do once a home is under contract, while others allow showings to continue or backup offers to be accepted.

So even though the home is technically off the market, it’s not entirely unavailable—a savvy buyer may still have a chance.

How the Real Estate Contract Process Works

From the moment an offer is accepted to the day of closing, the transaction follows a structured roadmap. Understanding this process can help both buyers and sellers avoid pitfalls—and help other interested buyers understand where opportunities might open up.

Real Estate Contract Timeline:

Generally, the under-contract phase spans 30–60 days, although deals can close faster (especially cash offers) or face delays due to issues like financing, title problems, or buyer contingencies.

Can You Still Make an Offer on a House Under Contract?

Yes, you can. If you’re interested in a house that’s already under contract, you’re not entirely out of luck. You can still make a backup offer—a legally recognized agreement to purchase the house if the current contract falls through.

A backup offer gives you priority over other interested buyers if the original deal collapses. You’re essentially next in line, ready to step in without delay. And since about 15% of deals fall through, it’s worth considering.

Benefits of a Backup Offer:

• You reserve your spot in line without engaging in a bidding war.
• Sellers often appreciate serious backup buyers as a safety net.
• You may gain negotiation leverage if the seller is eager to close quickly after a failed deal.

🧠 Keep in mind: A backup offer becomes binding once the primary contract ends. Make sure you’re ready and willing to move forward quickly if needed.

Why Do Homes Under Contract Fall Through?

Failure to close on a home that’s under contract may happen more often than you think. According to the National Association of Realtors, about 15% of signed contracts don’t reach closing (National Association of Realtors, 2023). This statistic shows that offers being accepted isn’t the final step—issues can still emerge.

Top Reasons Deals Collapse:

• Financing Problems: Even pre-approved buyers can be denied during final mortgage underwriting.
• Low Appraisal: A home must appraise at or above the contracted sale price for most lenders to approve a loan.
• Inspection Surprises: Discovery of issues like mold, termite infestations, or faulty foundations can prompt buyers to back out.
• Title Complications: Disputes, liens, or unresolved ownership questions can stall or cancel a deal.
• Job Loss or Credit Changes: Life changes can impact a buyer’s ability to get financing even after going under contract.

According to NAR, more than 80% of contract fallouts are linked to financing, inspection, or appraisal failures, which are all typically tied to contract contingencies. These aren’t just minor bumps—they represent serious hurdles.

Contingencies Explained: Deal-Breakers or Deal Savers?

A contingency in real estate offers protection for both buyers and sellers. These are specific conditions included in the real estate contract that must be met for the agreement to proceed. If they aren’t, the buyer (or sometimes the seller) can back out of the deal without penalty.

Common Real Estate Contingencies:

Most homebuyers include several contingencies to protect themselves, especially in markets where time is not a pressing factor. Sellers might push back against too many contingencies, so it’s often a negotiation point during the offer phase.

After Contingencies: What’s Next?

Once all major contingencies are resolved or removed, the contract becomes much firmer, and the earnest money deposit becomes non-refundable in most cases.

What Happens After Contingencies Are Cleared:

• The buyer finalizes mortgage approval and locks in funding.
• Title searches are completed to ensure clean ownership transfer.
• Homeowners’ insurance is selected, and utility handovers are prepped.
• A final walk-through is scheduled just before closing.
• Both parties sign documents, and money changes hands.

At this point, it’s rare but not impossible for the deal to unravel. Funding snafus, unexpected legal problems, or last-minute buyer concerns can still derail what seemed like a guaranteed closing.

What If Someone Fails to Meet the Contract Terms?

Both buyers and sellers take on legal and financial obligations when they sign a real estate contract. If either fails to uphold their end of the agreement, serious consequences can follow—and they vary depending on the stage of the sale.

If the Buyer Defaults:

• Before Removing Contingencies: Earnest money is usually refunded.
• After Removing Contingencies: The seller may retain the earnest money, which ranges from 1–3% of the purchase price.
• Potential for Legal Action: If significant damage results, the seller may pursue compensation.

If the Seller Defaults:

• Specific Performance Lawsuits: Buyers can compel the seller to complete the sale.
• Refund of Buyer Fees: Buyers may be entitled to reimbursement of inspection, appraisal, and legal costs.
• Loss of Time: Buyers re-enter the market without a home, which may have financial or emotional costs.

💡 Tip: Sellers working with low-commission agents (e.g. 1%) can more easily afford to relist and recover from failed deals, avoiding heavy losses on repeated agent fees.

Backup Offers: Still a Shot at the Home

Think of a backup offer as having a reservation at a restaurant—should the first party cancel, your name’s next. It’s a completely separate legally valid agreement that only springs into action if the existing deal falls apart.

Pros of Submitting a Backup Offer:

• You’re saved from bidding wars that may erupt when a property re-enters the market.
• Sellers appreciate eager buyers who can transact quickly.
• You can often get better terms since you’re providing certainty during uncertainty.

However, don’t treat a backup offer casually. Once it becomes active, you’re locked into a binding agreement. Some buyers submit backup offers without fully understanding their obligations—they could end up buying a home they’re not ready for.

How Long Can a Home Stay Under Contract?

Most real estate contracts schedule closings 30–60 days after acceptance. However, that timeframe isn’t set in stone. The actual length can vary depending on contract terms and snags.

Factors That Extend Contract Timelines:

• Mortgage Approval Delays: Lenders may request more documents or reassess borrower eligibility.
• Repair Negotiations: If issues arise during the inspection, back-and-forth over who pays can cause added days or weeks.
• Appraisal Disputes: If the home appraises too low, financing must be adjusted, or price renegotiated.
• Home Sale Contingencies: If a buyer is relying on the sale of another home, delays on that end extend the entire timeline.

Good backup buyers stay informed during this period. Ask your agent to keep tabs with the seller’s agent—often, they’ll share hints about whether the existing contract is shaky.

How to Approach a Home That’s Under Contract

Tips for Buyers:

• Have your own agent quietly inquire about the status.
• Submit a strong backup offer with limited contingencies.
• Offer flexibility on closing or price if you’re really interested.
• Look out for “contingent” vs. “pending” status—these terms have different meanings in different MLS systems.

Tips for Sellers:

• Vet buyers up front: solid pre-approvals, verified earnest money, and clear contingency timelines.
• If a deal falls through, have a backup plan—whether that’s a fresh round of open houses or relisting.
• Consider agents with discounted commission structures (like 1%) to avoid duplicating costs if you must relist shortly.

Avoiding Financial Pitfalls with Traditional Agent Fees

Deals fall apart. When that happens, your agent costs could double—unless you’ve planned wisely.

Traditional Commission Pitfall:

• A full 5–6% listing agent commission on a $500,000 home could translate to $25,000–$30,000 in fees.
• If your contract falls through and you have to relist, those fees are incurred again.

Smarter Commission Strategy:

• Listing with a 1% full-service listing agent could save you up to $15,000 or more.
• Use the savings to fund repairs, reduce your home price for a faster sale, or keep more equity.

💡 Example: A seller with a $500,000 home listed with a 1% full-service agent pays just $5,000 on the listing side. That’s a significant savings buffer if the first deal fails and you need to relist.

Real Estate Contracts: Quick FAQs

Better Agents, Better Backup Plans

Whether you’re crafting that backup offer or trying to relist after a failed contract, having the right agent is everything. Resources like 1% listing commissions, experienced negotiators, and backup offer strategy consultants can streamline the process and improve your odds.

With a better-prepared plan:

• You stay informed about contract progression.
• You mitigate financial risk if things fall apart.
• You keep your deal on track—or jump in when another falters.

✅ Ready to relist without overpaying? Try our 1% full-service listing now.
✅ Hoping for a second chance on your dream home? Ask us about buyer rebates and backup offer strategies.

 Talk to an expert now — Your free, no-pressure chat is just one click away.

Citations

National Association of Realtors. (2023). Realtors Confidence Index Survey. Retrieved from https://www.nar.realtor/research-and-statistics