Understand the Process — Then Find the Right Agent
Knowing where a property sits in the sale process is essential, whether you're a buyer, a first-time seller, or an experienced investor. And the agent you work with makes a significant difference to how smoothly that process goes.
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What Does "Under Contract" Mean?
When a property is listed as "under contract", it means the seller has accepted an offer and both the buyer and seller have signed and exchanged contracts. This creates a legally binding agreement between both parties.
Each party receives a signed copy of the other's contract — either electronically or as a hard copy. This formal exchange is known as the exchange of contracts, and from this point, the property is described as under contract.
Critically: "under contract" does not mean the property has sold. The sale is not yet complete. The contract can still fall through during the cooling-off period or if conditions attached to the contract are not met.
Under Offer vs Under Contract vs Sold — What's the Difference?
These three terms describe different stages of a property transaction and are commonly confused:
Under Offer
A property is under offer when one or more buyers have submitted offers, but the seller has not yet accepted. The property remains on the market, and the seller may still be weighing up competing offers or negotiating terms.
Under Contract
A property becomes under contract once both parties have signed and exchanged contracts. This is a legally binding agreement — both buyer and seller are bound to its terms unless specific conditions in the contract are not met, or the cooling-off period applies.
Sold
A property is officially sold once all conditions have been satisfied, the cooling-off period has passed, and settlement has been completed. At settlement, the buyer pays the balance of the purchase price and ownership is formally transferred.
How Does a Property Go Under Contract? Step by Step
- Buyer makes an offer — the property is listed as "under offer"
- Seller accepts the offer — negotiations on price and conditions are finalised
- Contracts are prepared — the seller's solicitor or conveyancer prepares the contract of sale
- Contracts are exchanged — both parties sign and exchange copies — the property is now under contract
- Cooling-off period begins (private sales only) — the buyer has a set number of business days to withdraw, subject to a penalty
- Conditions are met — if the contract is conditional (e.g., subject to finance or building inspection), these must be satisfied
- Contract goes unconditional — all conditions cleared, property is legally committed to sale
- Settlement day — buyer pays the balance, ownership transfers, property is sold
Cooling-Off Periods Explained
The cooling-off period gives buyers a window of time after exchanging contracts to reconsider the purchase, conduct further due diligence (such as building and pest inspections), and withdraw from the contract if needed — subject to a financial penalty.
During the cooling-off period, the buyer is typically required to pay a deposit of around 10% of the purchase price, which may be partially forfeited if they withdraw.
Key points:
- The cooling-off period applies to private treaty sales only — it does not apply to properties sold at auction
- The length of the period and the penalty for withdrawal vary by state and territory
Cooling-Off Periods by State and Territory
Note: Rules and penalties vary and may be updated. Always confirm the current requirements in your state with your conveyancer or solicitor.
Conditional Offers and "Subject To" Clauses
In a private sale, buyers can request that the contract be made subject to certain conditions being met before the sale becomes unconditional. Common conditions include:
- Subject to finance — the sale proceeds only if the buyer is approved for a home loan
- Subject to building and pest inspection — the buyer has the right to withdraw if the inspection reveals significant issues
- Subject to the sale of an existing property — the buyer's purchase is contingent on selling their current home first
- Subject to valuation — the sale proceeds only if the bank's valuation of the property meets the agreed price
While the contract is still conditional, both parties remain under obligation to try to fulfil those conditions. If the conditions are not met, the buyer may be entitled to withdraw from the contract without penalty (depending on the specific clause and how it's drafted).
Once all conditions are satisfied, the contract becomes unconditional — the sale is committed and neither party can withdraw without significant legal and financial consequences.
Can a Property Under Contract Fall Through?
Yes. An under contract property can fall through at several points:
- During the cooling-off period — the buyer withdraws and pays the applicable penalty
- If a condition is not met — for example, finance is declined or a building inspection reveals major structural issues
- If either party defaults — breaching a legally binding contract has serious financial and legal consequences, so this is uncommon, but it can happen
If a contract does fall through, the property returns to the market. This is one of the key reasons why properties remain listed and agents continue to accept enquiries even after a contract has been exchanged.
Why Are Under Contract Properties Still Advertised?
It may seem confusing to see a property listed as under contract still appearing on real estate platforms. There are practical reasons for this:
- The contract may still fall through — until settlement is complete, the sale is not guaranteed
- Agents continue to take enquiries — having additional interested buyers provides a safety net if the current contract collapses
- It's prudent for the seller — maintaining buyer interest protects the seller's position should negotiations need to restart
- Inspections may continue — agents may continue holding open for inspections, particularly if conditions are still being met
For sellers, this approach ensures there is no gap between a fallen contract and re-launching the property to the market.
What Sellers Need to Know About Going Under Contract
If you're in the process of selling your property, going under contract is a significant milestone — but it's not the finish line. Key things to be across as a seller:
- Review all conditions carefully with your conveyancer before signing — understand exactly what could allow the buyer to exit
- Stay in close contact with your agent throughout the cooling-off period and while conditions are being satisfied
- Keep your property available for inspection in case the contract falls through and you need to re-engage the market quickly
- Don't commit to purchasing your next property until your current contract is unconditional — particularly if settlement timing is important
- Know your settlement date and ensure you have everything in place to meet it, including moving logistics and any remaining mortgage arrangements
The right real estate agent will guide you through every step — from exchange through to a smooth settlement.
What Happens on Settlement Day?
Settlement day is the final step in the property sale process. On this day:
- The buyer pays the balance of the purchase price (the full amount minus the deposit already paid)
- The seller's mortgage is discharged (if applicable) and the remaining sale proceeds are transferred
- Legal ownership is formally transferred to the buyer
- The buyer receives the keys and takes possession of the property
Settlement is coordinated by the conveyancers or solicitors for both parties, and in most states it now occurs electronically through platforms such as PEXA. The settlement period — the time between exchange and settlement — is agreed in the contract and typically ranges from 30 to 90 days, though shorter or longer periods can be negotiated.
FAQs: Under Contract in Real Estate
What does under contract mean in real estate?
Under contract means the buyer and seller have both signed and exchanged contracts, creating a legally binding agreement. The property has not yet been sold — the sale is complete only once all conditions are met and settlement occurs.
What is the difference between under offer and under contract?
Under offer means a buyer has made an offer that hasn't been accepted yet — the property is still on the market. Under contract means both parties have signed contracts and the property is legally committed to the buyer, subject to any conditions or cooling-off rights.
Can you make an offer on a property that is under contract?
In most cases yes — and a good agent will continue to accept enquiries and register buyer interest while a property is under contract. If the current contract falls through, registered buyers can be contacted immediately.
What is a cooling-off period?
A cooling-off period is a set number of business days after contract exchange during which the buyer can withdraw from the purchase by paying a penalty. It applies to private treaty sales only — not to auction sales. The length and penalty vary by state and territory.
What is a conditional offer?
A conditional offer is one that includes "subject to" clauses — for example, subject to finance approval, building inspection, or the sale of the buyer's existing property. The sale only proceeds if all conditions are satisfied.
What happens if a contract falls through?
If the contract falls through — due to the buyer withdrawing during cooling-off, conditions not being met, or a default — the property returns to the market. The seller may retain part of the deposit depending on the circumstances and stage at which the contract ended.
What is settlement day?
Settlement day is when the buyer pays the balance of the purchase price, the seller's mortgage is cleared, legal ownership transfers to the buyer, and the buyer takes possession of the property. It is the final step in completing the sale.
How do I find a real estate agent who will guide me through this process?
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