What Does ‘Active Under Contract’ Mean in Real Estate?

Home buyers must understand this MLS status

If you're shopping for a home, you may see "Active Under Contract" listed as a property's status on the Multiple Listing Service, a large database of properties for sale. It's important to understand what that means before you view the property or make an offer.

Active under contract means that the seller has accepted an offer on the home, but the deal is not yet final. This guide provides more insight into what active under contract could mean for your ability to purchase a property.

'Active Under Contract' Definition

When you're buying a house and reviewing property listings on the MLS, you'll see that each home includes a status like active, active under contract (AUC), contingent, pending, or closed.

Active under contract means the seller accepted an offer, but some conditions remain unmet, like an appraisal or inspection. The home is usually still being shown, and the seller is accepting backup offers. Once the main conditions are met, the home moves toward pending, showings stop, and the transaction closes when the buyer pays the sale price.

Active Under Contract vs Pending

Active under contract is used as an MLS status when the buyer is early in the purchasing process. There are still things that could go wrong, such as an inspection showing problems or the prospective buyer failing to secure financing. Since the seller isn't certain the home will close, they keep the house active, continue showing it, and accept backup offers.

Once the conditions are met, the deal is all but certain to go through, but buyers need time for a mortgage to close. Since the buyer and seller are just waiting at this point, the MLS status changes to pending. Pending statuses mean that the sale will almost certainly become final, so you should move on to a different property.

Active Under Contract vs. Contingent

You may also see another MLS status that is very similar to active under contract: active contingent. This status also means that one or more contingencies are pending that must be fulfilled before the deal can close. Essentially, it is the same status as ACU, though with a different name.

How Does an 'Active Under Contract' Listing Work?

Real estate agents choose MLS statuses to give buyers as much information as possible. When a purchase contract has been signed, they can no longer list the home as active since there's an accepted offer. They choose active under contract to indicate that an offer has been accepted, but that the listing is still active until the conditions of the sale are met.

There can be many contingencies in an offer. A buyer could include a financing contingency, so they don't have to complete the sale if they can't get a loan. There may also be an inspection and appraisal contingency. The more preconditions there are, the more likely it is that something will go wrong, and the home will go back on the market or the seller will accept a backup offer.

What 'Active Under Contract' Means for Buyers

Active under contract means you have a chance to buy a home, but the chance is smaller than if the listing was active. You can see the home and make a backup offer. If the seller accepts and the original deal falls through, your offer becomes the primary contract. You move forward with meeting your conditions, like getting an inspection, with the goal of closing on the property.

What 'Active Under Contract' Means for Sellers

When a listing is active under contract, it is a good sign for sellers because they have accepted an offer and the home is moving toward closing. As long as there are no big problems and the contingencies are met, they will sell their property. However, since they are keeping their home active, they can continue accepting backup offers in the meantime to keep their options open.

Contingencies That Impact 'Active Under Contract' Status

Since homes are active under contract when there are contingencies to be fulfilled, it's helpful to look at common contingencies. Here are some of the most common conditions buyers want fulfilled before a home sale goes forward.

• Home sale contingency: If a buyer must sell their home before being able to buy, they will include a home sale contingency in their offer.
• Appraisal contingency: Lenders usually won't offer a loan for more than a certain percentage of a home's appraised value. Buyers include an appraisal contingency to make sure the house appraises for at least the amount they are paying for it.
• Home inspection contingency: A home inspection identifies problems with a home so that a buyer can ask for repairs or a reduced price if there are major issues that will be costly to fix.
• Title contingency: Title shows who owns a property and if there are any competing claims. A title contingency allows a buyer to ensure they can take ownership of the property free and clear.
• Financing contingency: Buyers often need a mortgage to afford a home. A financing contingency allows them to ensure they can get approved for a loan before moving forward.

Active Under Contract FAQs

Still need to know more? Here are some answers to frequently asked questions about active under contract status.

Should You Make an Offer on a Home Listed as 'Active Under Contract?'

If you want to make a successful offer on a house, your best bet is to submit an offer on an active home as there isn't already an accepted offer. However, if you really like a property listed as ACU, you can make a backup offer. In some cases, the original offer will fall through, and your backup offer could become the primary contract if it was accepted.

How Long Is a Home Considered 'Active Under Contract?'

The length of time a home is active under contract depends on the arrangement between the buyer and seller. Usually, this status lasts 30 to 60 days while pre-conditions of the sale are met. But it could be shorter if things move quickly or longer if there are issues.

Can 'Active Under Contract' Fall Through?

Active under contract can fall through. While it is not common for a home to go back to being active or for a seller to turn to a backup offer, it does happen.

Final Thoughts: 'Active Under Contract' Doesn't Mean 'Sold'

If you're interested in a property that is active under contract, there's still hope. You can go see the home and make a backup offer if you want. You can also begin exploring your mortgage options if you haven't already, as being pre-qualified could help you get an offer accepted on the house you're currently looking at or homes you find in the future.

Contact Freedom Mortgage today to learn more about your mortgage options and to start the prequalification process so you're ready to move forward when the right property comes along.