What does it mean if a property is “under contract”?

Prepare for the Alabama Post-License Salesperson Exam. Utilize flashcards and multiple choice questions with hints and explanations. Ensure your success on the exam day.

When a property is described as "under contract," it indicates that a legally binding agreement has been formed between the buyer and the seller concerning the sale of that property. This contract typically outlines the terms of the sale, including the purchase price, any contingencies, and the closing date. Once this agreement is in place, both parties are generally obligated to adhere to the terms set forth unless certain contingencies are not met or the contract is legally canceled.

The significance of a property being under contract is that it demonstrates a committed intention from both the buyer and seller, signaling that the property is not available for other buyers unless the contract is terminated or voided for legitimate reasons. This clearly differentiates it from other options, such as temporarily taking the property off the market or accepting multiple offers, as those do not specify a finalized agreement.

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