What Does “Under Contract” Mean in Real Estate? (Los Angeles Guide)

If you’re searching what does under contract mean in real estate, here’s the plain-English answer: a buyer and seller signed a purchase agreement with specific deadlines and contingencies, but the sale isn’t closed yet. Inspections, appraisal, title, and financing still have to clear. Deals can still fall apart—or a backup offer can step in.

Below is exactly what “under contract” covers in Los Angeles and how to use it to your advantage—whether you’re selling a house/condo or buying (and for commercial, how it maps to LOI/PSA and due diligence).

Quick definition

• Under contract = signed agreement + deadlines.

• Common contingencies: inspection/due diligence, appraisal, loan, title/HOA.

• Status isn’t final. Until contingencies are removed and the buyer funds, the listing can return to market—often with a backup buyer ready to go.

“Under Contract” vs “Contingent” vs “Pending”

• Under Contract / Contingent: Deal is active with one or more contingencies open (inspection, appraisal, loan, HOA, sale-of-home).

• Active Under Contract (AUC): Still showing, accepting backups.

• Pending: Major contingencies removed; moving toward closing.

• Back on Market (BOM): Contract canceled; listing is active again.

(MLS labels vary, but the flow above is the reality buyers and sellers experience in LA.)

What happens while a home is under contract (residential)

1. Inspections & disclosures (often days 1–10): general home inspection, termite, sewer camera (common in older LA stock), plus seller disclosures.

2. Appraisal (typically days 7–20): lender verifies value.

3. Loan approval (often days 17–21): buyer clears underwriting.

4. Title/HOA: title search, CC&Rs, HOA docs (condos), city retrofits (e.g., smoke/CO detectors, water-heater strapping).

5. Contingency removals → sign-off → loan docs → funding → recording.

Typical timing in LA: ~30–45 days escrow for financed buyers; faster for cash.

Commercial mapping (retail, mixed-use, office, industrial)

Commercial uses different words, same concept:

• LOI → PSA (purchase & sale agreement) = “under contract.”

• Feasibility/Due diligence: leases/estoppels, environmental (Phase I), survey/ALTA, lender DSCR sizing, appraisal.

• Closing: once contingencies are satisfied or waived.

Typical timing: ~30–60 days escrow, longer with environmental/estoppels.

How to use “under contract” to your advantage

If you’re the seller

• Keep momentum by accepting backups. Mark Active Under Contract and allow showings for backup offers. A strong backup deters retrades and keeps the buyer focused.

• Negotiate net, not just price. Push for meaningful deposit, clear contingency deadlines, and specific appraisal/repair terms (credits instead of open-ended work).

• Control the story. Provide clean disclosures early (and, if helpful, a pre-listing inspection). Fewer surprises = fewer price cuts.

• Commercial tip: set realistic estoppel thresholds (e.g., 75–80% of income) so one tenant can’t stall closing.

  
  

If you’re the buyer

• Write a real backup offer. Yes, you can write when a property is under contract. Make it easy to elevate: short contingencies, strong deposit, clear proof of funds, and (if needed) a modest appraisal-gap plan.

• Watch for wobble signals: long inspection extensions, appraisal issues, or financing snags. Ask the listing agent if they’re open to a backup—many are.

• Move fast when it falls out. Have docs ready (pre-approval, DU/LP findings, funds), so you’re first in line if the primary cancels.

• Commercial tip: if the first buyer struggles with DSCR or estoppels, be ready with your lender and a concise diligence list—speed wins.

Common reasons deals fall out of contract

• Inspection surprises (roof, sewer, foundation, electrical).

• Low appraisal relative to contract price.

• Financing (DTI shifts, rate locks, documentation).

• Title/HOA problems (liens, special assessments, litigation).

• Commercial: environmental findings, lease rollover risk, or DSCR shortfalls.

Knowing these lets you structure better contingencies—or pounce as a backup.

Can a seller accept another offer while under contract?

Primary cannot be replaced unless the first deal cancels—or the contract includes a kick-out clause (rare in LA residential, more common in some new construction or unique cases). The practical move is to take a backup offer in second position that becomes primary if #1 cancels.

How long is a house “under contract” in Los Angeles?

Most financed escrows run 30–45 days; cash can be shorter. Commercial can run 30–60+ days depending on leases and environmental. Timelines are negotiable—tight ones favor certainty and often your net.

“Under contract” marketing (small edge for sellers)

• Announce “Under Contract—Accepting Backups” on the MLS and socials.

• Keep the listing page live with a short form (“Notify me if this falls out / submit backup”).

• This builds a waitlist and strengthens your hand if the primary tries to retrade.

FAQs

Does “under contract” mean sold? No. It means there’s a signed agreement with contingencies and deadlines. The sale isn’t final until contingencies are removed, funds are wired, and the deed records.

Can I make an offer when a house is under contract? Yes—submit a backup offer. If the first deal cancels, yours can slide into first position without going back to the open market.

Under contract vs pending—what’s the difference? “Under contract/contingent” usually means some contingencies are still open; “pending” means major ones are removed and the deal is heading to close.

Why do “under contract” homes still show online? Sites mirror MLS statuses. Many LA listings stay visible while accepting backups.

Commercial: is LOI the same as under contract? Not yet. Under contract begins when the PSA is signed and diligence starts.

Bottom line (what to do next)

“Under contract” signals momentum—not a done deal. In Los Angeles, smart sellers use it to keep leverage with backup offers and tight timelines; smart buyers use it to position a strong backup and be first in line if the primary slips.

Want help on a specific address (residential or commercial)? Talk to a Los Angeles Real Estate Agent — share the property and your timing; I’ll outline the best move (primary or backup) in one short call.