Understanding Real Estate Terminology: Under Offer and Under Contract

Introduction

When it comes to the real estate market, it's essential to understand the various terms used to describe the status of a property. In this article, we'll explore two commonly used terms: "under offer" and "under contract." These terms indicate different stages in the process of buying or selling a property. By familiarising yourself with these terms, you can navigate the real estate market more confidently and avoid missing out on potential opportunities.

Under Offer: Exploring Potential

The term "under offer" is often seen in property listings and generates disappointment among potential buyers. However, it's important to recognise that when a property is marked as "under offer," it means that a verbal offer has been accepted, but no formal agreements have been signed yet. At this stage, contracts are not binding, and the deal is not finalised.

Buyers should be aware that until contracts are signed and exchanged, both the seller and the buyer have the freedom to walk away from the deal. While seeing a property listed as "under offer" might deter some potential buyers from making inquiries, it's actually wise to reach out to the agent and express your interest. Many factors can cause a deal to fall through, such as finance issues or adverse inspection reports. By expressing your interest, you may be first in line if the property becomes available again.

Conditional Contract: Pending Fulfillment of Conditions

A conditional contract is the next stage after a property is under offer. At this point, the buyer and seller have signed a contract, but the deal is still subject to specific conditions being met. Common conditions include a cooling-off period and a finance clause.

During the cooling-off period, typically five business days, the buyer has the option to withdraw from the contract without any financial penalties. This period allows buyers to conduct further inspections or seek legal advice to ensure they are comfortable proceeding with the purchase.

The finance clause is another common condition in a conditional contract. It allows the buyer time to secure financing from a bank or lender. If the buyer's loan is not approved within the specified period, the contract can be terminated.

While a conditional contract signifies progress, it's crucial to remember that the sale is not yet finalised. Buyers can walk away if conditions are not met. However, sellers generally cannot withdraw from the contract unless the buyer fails to fulfill their obligations.

Unconditional Contract: The Deal is Sealed

An unconditional contract is the stage at which the property sale is officially confirmed. In this stage, all conditions, including the cooling-off period and finance approval, have been successfully satisfied. The buyer pays the deposit, which is typically a percentage of the property's purchase price, demonstrating their commitment to the purchase.

Unlike in the previous stages, an unconditional contract provides certainty to both parties involved. The property is now considered sold, and the seller can proceed with confidence. At this point, the "sold" sticker goes up, indicating that the property is no longer available.

Conclusion

Understanding the terms "under offer" and "under contract" is essential for anyone navigating the real estate market. Remember that being under offer means a verbal offer has been accepted but is not yet finalised, and conditions may cause the deal to fall through. A conditional contract represents progress but is still subject to specific conditions. Only when a contract becomes unconditional is the property officially sold.

As a buyer, it's important to keep an eye on properties marked as under offer and to register your interest with the agent. By staying informed and proactive, you can seize opportunities that may arise if a deal falls through. Whether you're buying or selling, knowledge of these terms empowers you to make informed decisions in the dynamic real estate market.