What Does Under Offer Mean in Real Estate: A Clear Explanation

When it comes to buying or selling a property, there are a lot of terms that can be confusing to those who are not familiar with the real estate market. One such term is “under offer.” This term describes a property that has received an offer from a potential buyer who has not finalized the sale.

Under offer is a common term in the real estate market, and it can have different meanings depending on the context. Generally, it indicates that a property has received an offer from a potential buyer, but the seller has not yet accepted it. During this time, buyers can consider the property “under offer,” and other potential buyers may still make an offer.

Understanding the meaning of under offer in the real estate market is essential, as it can significantly impact buyers and sellers. For buyers, it is necessary to know that a property under offer may still be available for purchase. At the same time, for sellers, it is vital to understand the implications of accepting an offer and taking a property off the market.

Understanding ‘Under Offer’ in Real Estate

Definition and Process

When a property is listed as “under offer” in real estate, a potential buyer has made an offer on the property, and the seller has accepted it. However, the sale has not yet become in its final phase, and the contract is still subject to certain conditions.

Making an offer on a property involves the buyer submitting a written offer to the seller, which the seller can accept, reject, or counter. If the seller accepts the offer, the property is listed as “under offer.” The buyer and seller then work together to satisfy the conditions of the contract, such as obtaining financing, completing inspections, and addressing any repairs or issues with the property.

Difference Between ‘Under Offer’ and ‘Under Contract’

It is important to note that “under offer” and “under contract” differ. “Under offer” means that the seller has accepted an offer from a potential buyer, but the sale has not yet been finalized. “Under contract,” on the other hand, means that all the contract conditions have been satisfied, and the sale is now binding.

Some agents may also use the term “sold subject to contract” to describe a property “under offer.” This implies that the seller has accepted an offer, but the sale is still subject to certain conditions before becoming binding.

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Making an Offer on a Property That is Under Offer

It is still possible to make an offer on a property listed as “under offer.” The seller may consider other offers if the contract conditions are not yet satisfied.

The Seller’s Perspective

When a property is under offer, a potential buyer has made an offer, and the seller has accepted it. This is a positive development from the seller’s perspective as it is the first step towards a successful sale. However, there are still some important considerations to keep in mind.

Considering Offers

When a seller receives an offer, they must carefully consider it before accepting or rejecting it. The offer should be evaluated based on the asking price, the terms of the offer, and the buyer’s ability to complete the transaction. The seller may also want to consider whether there are any backup offers in case the current offer falls through.

Managing Multiple Offers

The seller may be in a strong negotiating position if the property has multiple offers. However, managing multiple offers can be challenging, and the seller may need to work closely with their real estate agent to evaluate each offer and negotiate the best deal. Sometimes, the seller may want to consider a sealed bid process to ensure that all potential buyers have an equal opportunity to make an offer.

Communicating with Estate Agents

The seller should maintain open and transparent communication with their estate agent throughout the process. The agent can help manage the offers and guide how to proceed. The seller should also be flexible and responsive to potential buyers, which can help build trust and confidence in the transaction.

In summary, when a property is under offer, it is an essential step towards a successful sale. However, the seller must carefully consider each offer, manage multiple offers, and maintain open communication with their estate agent.

The Buyer’s Journey

When a buyer wants to purchase a property, they go through a process that includes making an offer, inspecting and appraisal, and obtaining financing and mortgage approval. Here are the steps in the buyer’s journey:

Making an Offer

The first step in the buyer’s journey is making an offer on the property. This involves submitting a written offer to the seller outlining the sale’s price, terms, and conditions. The seller can either accept, reject, or counter the offer.

Inspection and Appraisal

After the offer is accepted, the buyer typically has a set period to conduct inspections and appraisals on the property. This is to ensure that the property is in good condition and that the buyer is aware of any issues that may need to be addressed. Building and pest inspections are often included in this step. If the inspections and appraisals reveal any problems, the buyer may choose to renegotiate the terms of the sale or back out of the deal altogether.

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Financing and Mortgage Approval

Once the inspections and appraisals are complete, the buyer must obtain financing and mortgage approval. This involves applying for a home loan and providing the lender with documentation such as income statements, tax returns, and credit reports. The lender will then assess the buyer’s financial situation and determine whether or not they are eligible for a mortgage loan.

Legal and Contractual Considerations

Understanding the Contract of Sale

When a property has a listing status of “under offer,” a buyer has made an accepted offer, but the sale is not completed. At this stage, the parties exchange contracts, a legally binding agreement outlining the sale’s terms and conditions.

Contingencies and Clauses

The contract of sale may be conditional or unconditional. A conditional contract means that the sale is subject to certain contingencies or conditions that must be met before proceeding. These contingencies may include obtaining financing, inspections, or selling the buyer’s existing property. In contrast, an unconditional contract means that the sale is not subject to any conditions and is legally binding on both parties.

The contract of sale may also include various clauses that define the rights and obligations of the parties. These clauses may cover issues such as the settlement date, the deposit amount, and any special conditions that apply to the sale.

The Role of Conveyancing

Conveyancing is the legal process of transferring property ownership from the seller to the buyer. It involves several steps, including title searches, preparing legal documents, and coordinating the settlement process.

During the conveyancing process, the conveyancing solicitor will review the contract of sale and ensure that all legal requirements have been met. They will also identify any title issues or other legal concerns they must address before the sale proceeds.

Once the conveyancing process is complete, the parties exchange contracts, and the sale becomes legally binding. The settlement process will then take place, which involves the payment of the purchase price and the transfer of ownership of the property to the buyer.

After the Offer

Once you make an offer on a property, understand the potential outcomes to make informed decisions.

Potential Outcomes

  • Accepted Offer: If the seller accepts the offer, the property will be marked as “sold subject to contract” or “under offer.” The buyer must satisfy certain conditions before the contract becomes unconditional, such as building and pest reports or finance approval.
  • Fall Through: If the buyer cannot satisfy the contract’s conditions, the sale may fall through. In this case, the property will become available for purchase again.
  • Backup Offers: If the property has a mark of “under offer” but the sale has not yet become unconditional, the seller may consider backup offers. The seller may accept a backup offer if the first buyer cannot satisfy the contract’s conditions.
  • Gazumping: If another buyer makes a higher offer after the seller accepts an offer, the seller may accept the higher offer, causing gazumping and frustrating the original buyer.

Handling Offer Withdrawal or Rejection

  • Withdrawal: If the buyer decides to withdraw their offer, the property will become available for sale again. However, if the buyer withdraws their offer during the cooling-off period (if applicable), they may pay a penalty.
  • Rejection: If the seller rejects the offer, the property will become available for sale again. However, the buyer may make a higher offer or move on to a different property.

It is essential to remember that buying and selling property can be complex and may vary depending on the specific circumstances. You have to seek professional advice when making important decisions in real estate transactions.

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Frequently Asked Questions

Is it possible to schedule a viewing for a property currently under offer?

  • You do not have to schedule viewings for properties that are under offer.
  • However, if the current offer falls through, the property may become available again, and potential buyers can then schedule a viewing.

Can you explain the differences between a rental property being under offer and being available?

  • Rental properties can also be under offer if a tenant has submitted an application and the landlord reviews it.
  • If a rental property has a listing status as available, the landlord is not reviewing any current applications, and potential tenants can submit applications.

What occurs during the period when a house is under offer?

  • When a house is under offer, the buyer and seller will work to satisfy any contingencies outlined in the contract.
  • This may involve obtaining financing, completing inspections, or resolving any other issues that arise during the sale process.

Is submitting an offer on a property that has already received an offer permissible?

  • Yes, submitting an offer on a property that has already received an offer is permissible.
  • However, the current offer will be a priority, and the buyer will consider subsequent offers only if the first offer falls through.

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