What does the term "under contract" signify?

The term "under contract" signifies that the buyer and seller have signed an agreement, indicating that both parties have mutually accepted the terms for the sale of the property. This agreement outlines the responsibilities and obligations of both parties for the transaction, including the purchase price, contingencies, and closing date.

When a property is described as under contract, it means that a legally binding contract is in place, which typically prevents either party from unilaterally backing out without potential legal consequences. This status is important in real estate because it shows that the property is committed to a transaction, indicating to other prospective buyers that the property is no longer actively available for other offers unless the current agreement falls through. Therefore, understanding the implications of a property being "under contract" helps buyers and sellers navigate the real estate market effectively.