What Does it Mean When a Home is Under Contract?
When you are looking for a home, you may have seen the words “under contract” or “pending” on a listing. This means that another buyer has made an offer on the home and the seller has accepted it. However, this does not mean that the home is sold.
There are a few things that can happen that could make the home available again. For example, the buyer may not be able to get a loan, or they may find a different home that they like better. If this happens, the seller may put the home back on the market.
How Many Homes Have Gone Under Contract in 2023?
According to the National Association of REALTORS® existing-home sales slid 3.4% from March to a seasonally adjusted annual rate of 4.28 million in April. Year-over-year, sales slumped 23.2% (down from 5.57 million in April 2022).
The limited supply of homes for sale is contributing to the decline in pending home sales. There are simply not enough homes on the market to meet the demand from buyers. This is especially true in some of the most desirable markets, such as those with good schools and access to jobs.
Offers Falling Through
In January 2023, the national cancellation rate was about 20%, according to Ali Wolf, chief economist at Zonda. That’s about twice the typical rate. The most common reasons for offers falling through are:
- The buyer is unable to get a mortgage.
- The buyer finds a different home that they like better.
- The buyer cannot afford the home.
- The seller finds a better offer.
- The buyer backs out of the deal for personal reasons.
A buyer may back out of the deal if they find something wrong with the home during the home inspection. This is a standard part of the home buying process, and it allows the buyer to have a professional look over the home and make sure that there are no major problems. If the home inspection reveals any major problems, the buyer may ask the seller to fix them, or they may back out of the deal altogether.
Finally, the home may appraise for less than the buyer offered. This means that the bank that is lending the buyer money will not give them the full amount of the loan. If this happens, the buyer may have to come up with the difference in cash, or they may have to back out of the deal.
Opportunity Awaits: How to Increase Your Chances of Success
If you like a property that’s currently under contract, then talk to your real estate agent first. If the seller is accepting back-up offers, they can put one in on your behalf in case the first offer falls through. If the seller is not taking back-ups, they can at least let the listing agent know of your interest. Then, if something happens to derail offer No. 1, you’ll be first in line to hear about it.
In the event the home does get re-listed, make sure you pull out all the stops to impress the seller. Come Approved to Move™ to give them confidence in your offer and financing, and include an offer letter to make a direct, personal appeal. Get in touch to start your mortgage application today.