Having your offer on a house accepted is certainly something to celebrate, but it’s not time to pop the champagne just yet. When you see the term “sale agreed,” it means the seller has accepted the buyer’s offer on their house, but the contracts have not been signed and a number of steps must still be taken to seal the deal.
A property cannot legally be listed as sold until contracts have been exchanged by the buyer and seller and all closing requirements have been met. When a sale has been agreed upon, the sale could fall through for a number of reasons. The terms sale agreed, sale pending, and sold are not interchangeable. Each represents a different stage of the homebuying process.
Real estate terminology can differ from region to region, so it’s worth taking a look at the different language used for “sale agreed.” All of the following means that an offer has been accepted, but contracts have not yet been signed:
Sale pending means that all contracts have been signed and the home is in the very last stages of closing. While a property that is sale pending is closer to being sold than one that is sale agreed, the deal could still fall through for a variety of reasons. Failing to meet contract contingencies or obtain proper mortgage financing could prevent the property from closing.
A property is officially sold when all contracts have been signed, the buyer is satisfied with the inspection results, the buyer’s loan is approved, all contingencies have been met, and escrow (also known as closing) is complete.
When a seller accepts an offer on their house, everything the buyer and seller have agreed upon will start to play out in more or less this order:
This is when the buyer deposits good faith money into the escrow account (they can get this back if they change their mind; otherwise it will be applied to the purchase price).
As long as you haven’t made any substantial life changes or purchases (e.g., bought a new car, lost your job, or opened additional lines of credit), your pre-approval should easily solidify into an approval.
The lender will have the property appraised to make sure its value is in line with the sale price. If the appraisal comes back lower than the purchase price, you may have to renegotiate with the seller if you don’t want the sale to fall through. For example, you could try and convince the seller to lower the home’s price, or offer to pay a lower amount in cash if they won’t budge.
The house must be examined by a licensed property inspector. The buyer can still back out at this point if something unexpected pops up (e.g., the roof is no good, or the heating doesn’t work).
The title company performs a search on the property’s title to make sure it’s clear (meaning there are no outstanding liens and no one else can make a legal claim to its ownership). A few examples of title issues include:
Any regulations for property transfer are obtained or met.
This is your last chance to make sure everything is as agreed upon in the contracts.
Date decided between buyer and seller when everything is signed, closing costs are paid, and ownership is changed over to the buyer.
This is when the buyer officially moves into home.
The sale could fall through at any point in this process up until the contracts are signed on the closing date. During the tenuous stage of “sale agreed,” buyers should tread carefully, avoid making any major purchases that might alter their credit score, and ensure the property is as advertised.
There are many steps you will take as a buyer before you reach the “sale agreed” stage. Perhaps the best way to navigate the home-buying process is with the advice of experienced loan officers. Discover first-time homebuying tips from radius loan officers in our mortgage preparedness ebook.