IF YOUR HOME DOESN’T SELL FAST
by Neil Jenman Reading Time: Apx 2.5 mins From the moment a home is listed for sale, most agents have one goal – to persuade the sellers to reduce their price.…
by Neil Jenman
Reading time: Apx 6 minutes
Most consumers are perplexed by the real estate jargon. So many different terms, so many different meanings.
To the inexperienced it can feel like real estate agents are speaking another language.
A common phrase that can puzzle both sellers and buyers is ‘under offer’. But what does ‘under offer’ mean in real estate terms?
If you see this phrase on a real estate advertisement or a For Sale sign, here’s what it likely means. But please note: In different areas and with different agents, the same phrase can have slightly different interpretations. Like a similar language but a different dialect.
In most instances, ‘Under Offer’ means that a buyer has made an offer on a property. It may mean that an offer is being considered by the sellers or that the buyers are seeking legal advice and arranging finance, valuations and inspection reports.
Generally, ‘under offer’ means that a property has not been legally sold (often referred to by another term, “exchange of contracts”). It simply means that the process has been set in motion. Under offer could be defined as the real estate meaning of a sale that has started but not yet finalised.
It usually means that neither the buyers nor the sellers are obligated to proceed with the sale. Either party may back out of the sale without penalty or obligation.
In most cases (about 80%) properties that are listed as ‘under offer’ eventually lead to the property being sold.
The difference between ‘Under Offer’ and ‘Under Contract’ is usually a legal one. So, what does ‘under contract’ mean in real estate terms? If a property carries the term ‘Under Contract’, it means there has been a legal obligation made by either the sellers or the buyers or both.
For example, the sellers may have signed a contract subject to the buyers being able to obtain finance. If finance is not approved, the property comes back on the market for sale and usually there has been no loss to either the sellers or the buyers.
‘Under Contract’ might also mean that either the sellers or the buyers need to sell or buy another home. It is common for buyers to agree (under contract) to buy a home subject to the sale of their current home.
These are known as ‘subject to’ sales.
Legally, provided it is agreed between the parties, a real estate contract can be subject to anything.
Once a home is under offer, plenty can happen behind the scenes. The sellers may be considering the offer made by the buyers. This could mean that the sellers are considering a price they have been offered or some terms that buyers (or sellers) insist upon. For example, the sellers may want to remain in the property for a few weeks after settlement.
When a home is under offer both sellers and buyers are likely to be considering their options, checking on aspects of their sale including – and most importantly – independent legal advice.
As mentioned earlier, sales can still fall through while under offer.
When buyers see the phrase ‘Under Offer’ it does not mean that they cannot buy the home. Indeed, if you are a buyer and you see a home that is under offer – and you think you’d really like to buy this home – then you can also make an offer. Of course, your offer will need to be better than the offer already being considered by the sellers.
Strictly speaking, the term ‘Under Offer’ is used as a courtesy towards other buyers. It lets them know (or warns them) that if they want to buy the home that’s under offer, they may need to move quickly.
Some agents refuse to negotiate with more buyers when a home is under offer. Of course, if a second buyer wants to make a better offer, then refusing to deal with a second buyer is not in the sellers’ best interests. When hiring an agent, ensure you find a great agent who will prioritise your interests.
If you encounter an agent who does not want to enter negotiations when a property is under offer, you should obtain legal advice.
Or if you would like some support or help at no charge or obligation, contact Jenman Support or email [email protected].
Don’t let real estate jargon intimidate you. Click here to receive one of our complimentary guides for buyers or sellers.
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