What Is the Difference Between Under Contract & Sold in Houses?

A house is under contract when the seller accepts a purchase offer.
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The procedures and regulations for transferring real estate from one owner to another vary by state; however, the sale of a house is not finished until the seller and buyer complete every step required by law. Each step also requires full documentation. From the day a seller lists the house for sale until the closing and settlement, the seller, buyer and their respective real estate agents must execute a variety of actions that move the sale process forward. Although the desirable outcome of putting a house under contract is an eventual purchase, the potential for glitches resulting from the actions of either party might result in no actual sale.

Contract Logistics

A potential buyer must make an offer to purchase a house in writing. The seller’s agent presents the buyer's written price offer and purchase terms to the seller. The seller can accept, reject or modify the buyer's offer. When the seller and buyer agree on the price and any sale conditions, both parties sign a written contract, which often includes the expected sale or closing date. When the seller accepts the contract, the real estate agent no longer lists the house for sale, but the seller can accept backup contract offers. These contract offers are only valid if the first contract fails.

Earnest Money

To secure the right of purchase and remove the house listing from active sale status, a buyer commonly pays a cash deposit, or earnest money. The selling agent or that agent's broker places this money into an account where it remains until the final sale date or the cancellation of the contract by one of the parties. The amount of earnest money required to put the home under contract depends on state laws and the value of the house for sale. Conditions for refunding the buyer's deposit or applying it to the purchase generally are part of the contract. A house for sale is under contract only after the buyer deposits the earnest money specified in the seller's acceptance of the buyer's offer.


A signed contract binds the seller and buyer to complete the home sale within the limits of the terms of the contract. The buyer has a right to hire an independent home inspector who determines if the home has structural defects, faulty systems or hazards, such as mold. The discovery of serious problems can derail the sale or delay it while the buyer and seller negotiate terms for assigning costs and responsibilities for defects and repairs. In states that require additional inspections for such situations as termite damage, the contract might require that the seller provide proof of satisfactory inspections before the sale goes forward.

Closing and Settlement

In most states, an independent title company searches government records to determine whether the seller has legal rights to convey ownership of the property to another person. Liens against a property, estate disputes and other title flaws can result in delay or cancellation of the sale of a house. When the seller's title is clear, the parties set a date for the closing and settlement. The seller and buyer meet at a designated location where the agents for both parties present each document required by law for real property ownership transfers. When the seller receives the required money from the buyer, he transfers the title, deed and keys to the buyer, which finalizes the sale of the house.

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