What Does Under Contract Mean in Real Estate?

by Maya Black

Buying or selling a home can be a complex, time-consuming process. Whether you work with a real estate agent or manage a transaction on your own, knowing what to do and when to do it can keep you from inadvertently violating the terms of your sales agreement. That said, even though a property "under contract" is technically off the market, there are circumstances that could cause it to become available sale.

The Sales Contract

When a buyer finds a house she wishes to buy, her real estate agent will help her fill out and submit an offer to the seller. The offer -- which becomes a sales contract once accepted and signed by both parties -- contains information such as the property address, the offering price, the amount of buyer's deposit and the items that convey in the home, such as the appliances and certain types of window treatments. An offer also may include contingencies, meaning those items that must be satisfied before a contract can be legal and binding. Typical real estate contingencies are those related to home loan approval, home inspections and homeowner association document review.

Under Contract

When the buyer and the seller mutually agree to an offer's terms and conditions, the signed and dated contract gets distributed to the parties engaged in seeing it through to closing. This includes the buyer, the seller, the lender and title company. The listing agent usually places an "under contract" sign on the property that lets passers-by know that the house is off the market, barring any unforeseen circumstances. She also updates the property listing in the multiple listing service to advise other agents that the seller has accepted a ready, willing and able buyer's offer.

Kick-Out Variation

In fast-moving real estate markets, you might see additional signs on properties under contract that read "CNTG/KO" or "CNTG/ NO KO." The former indicates that the seller has accepted a contingent offer but could "kick it out" if she gets a more attractive one from another ready, willing and able buyer. The latter simply means that the seller has accepted an offer and is willing to wait until the contingencies have been addressed. If the contract falls through, then she'll put the property back on the market. Buyers don't have to worry about being blindsided by a kick-out clause. Even though the seller has this right, the buyer must agree that she can exercise it in the initial sales offer.


Buyers and sellers can solidify a contract and hasten the path to closing by satisfying contingencies as quickly as possible. For example, buyers can apply for their home loans and gain approval before house hunting. This includes allowing the loan officer to review full credit reports and providing him with pay stubs, bank statements and tax returns. Additionally, for a property such as a condominium, a buyer might be able to forgo the home inspection contingency, especially if the community was recently constructed and provides maintenance.

About the Author

Maya Black has been covering business, food, travel, cultural topics and decorating since 1992. She has bachelor's degree in art and a master's degree in cultural studies from University of Texas, a culinary arts certificate and a real estate license. Her articles appear in magazines such as Virginia Living and Albemarle.

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