Under offer vs under contract are two terms that confuse many Australian property buyers. These phrases appear constantly during property searches, but understanding what they actually mean can save you time, money, and disappointment.
The distinction matters more than you might think. One status means you still have a chance to make an offer, while the other means the property is legally spoken for.
Knowing the difference helps you act quickly when the right property appears. According to REA Group, over 60% of Australian properties sell within the first four weeks of listing, making speed and understanding essential in today’s market.
What Does Under Offer Mean?
Under offer means a buyer has submitted an offer that the seller is seriously considering. The property remains technically available during this period.
You can still make an offer on a property under offer. Sellers often consider multiple offers simultaneously, especially in competitive markets.
The under offer period typically lasts between a few days to two weeks. During this time, the buyer and seller negotiate terms, arrange building inspections, and review contracts.
Nothing is legally binding during the under offer stage. Either party can walk away without financial penalties.
Some sellers use the under offer status strategically. It creates urgency among other interested buyers and can trigger better offers.
What Does Under Contract Mean?
Under contract means the buyer and seller have signed a legally binding sale agreement. The property is no longer available to other buyers.
This status follows the exchange of contracts. Both parties have committed to the transaction with legal consequences if either backs out.
The cooling-off period applies in most Australian states during the under contract phase. Buyers typically have three to five business days to withdraw, though they’ll forfeit a penalty, usually 0.25% of the purchase price.
Once under contract, the sale proceeds to settlement. This process takes anywhere from 30 to 90 days, depending on what the contract specifies.
Making an offer on a property under contract is pointless. The legal commitment prevents the seller from accepting any other offers.
Key Differences Between Under Offer and Under Contract
The main difference lies in legal commitment. Under offer involves no binding agreement, while under contract creates enforceable obligations.
Financial risk differs significantly between the two. Under offer means no money changes hands. Under contract typically involves a deposit, usually 10% of the purchase price.
Your ability to make an offer changes with each status. Properties under offer welcome additional offers, but properties under contract are off limits.
Time frames vary considerably. The under offer period is brief and flexible. The under contract period follows a structured timeline ending in settlement.
Agent communication differs too. During under offer, agents actively encourage competing offers. Once under contract, they’ll redirect you to other properties.
Why Properties Move from Under Offer to Back on Market
Deals fall through more often than many buyers realise. Approximately 20% of properties under offer return to the market, according to Domain.
Building and pest inspections reveal problems that buyers aren’t willing to accept. Major structural issues or pest infestations often kill deals.
Finance approval fails to come through. Pre-approval doesn’t guarantee final approval, and buyers sometimes discover they can’t secure the necessary funds.
Buyers get cold feet. The emotional weight of purchasing property overwhelms some people, leading them to withdraw their offer.
Negotiation breakdowns occur when buyers and sellers can’t agree on price adjustments after inspections or when conditions can’t be met.
What Should You Do When You See These Statuses?
When a property shows as under offer, act quickly if you’re interested. Contact the agent immediately to express your interest and submit your own offer.
Don’t assume the existing offer will proceed. Many under offer situations fall through, and agents appreciate having backup buyers ready.
Ask the agent specific questions. Find out how long the property has been under offer and whether the seller is still accepting offers.
When a property is under contract, move on to other options. Register your interest with the agent as a backup, but don’t wait around hoping it falls through.
Keep searching actively. The Australian property market moves quickly, and new listings appear daily. Check realestate.com.au regularly for updated listings.
Stay prepared with pre-approval and a clear budget. When the right property appears, you’ll need to act within hours, not days.
Understanding Your Rights and Obligations
Australian property law varies by state and territory. Each jurisdiction has specific rules about cooling-off periods, deposit requirements, and contract conditions.
Buyers in New South Wales receive different cooling-off rights than those in Victoria or Queensland. Understanding your state’s regulations protects you during the buying process.
Seek legal advice before signing anything. Property purchases represent significant financial commitments, and contract mistakes can cost thousands.
Real estate agents represent the seller’s interests, not yours. Their duty is to achieve the best price and terms for their client.
Consider engaging a buyer’s agent if you’re unfamiliar with the process. They work exclusively for you and understand the nuances of under offer and under contract situations.
Conclusion
Understanding under offer vs under contract gives you a significant advantage in Australia’s competitive property market. Under offer means you still have a chance to submit your own offer, while under contract means the property is legally committed to another buyer.
This knowledge helps you respond appropriately when you find your dream property. Act quickly on properties under offer, but save your energy when properties move under contract.
For more guidance on navigating the Australian property market, check out our comprehensive property buying guide on seen.com.au.
FAQs
1. Can a seller accept multiple offers on a property under offer?
Yes, sellers can accept multiple offers simultaneously and review them side by side. They’re not obligated to accept the first offer received and often wait to see if better offers arrive before making a decision.
2. Do I lose my deposit if I pull out during the cooling-off period?
You’ll typically forfeit 0.25% of the purchase price as a penalty if you withdraw during the cooling-off period. The full deposit returns to you, minus this penalty amount, which compensates the seller for taking the property off the market.
3. How long does a property usually stay under offer before going under contract?
Most properties transition from under offer to under contract within seven to fourteen days. This timeframe allows for initial negotiations, building inspections, and final contract reviews before both parties sign.
4. Can I make a higher offer on a property that’s already under contract?
No, you cannot make an offer on a property under contract because a legally binding agreement already exists. However, you can ask the agent to contact you if the sale falls through, which happens occasionally before settlement.
5. What happens if the seller receives a better offer while under contract?
The seller must proceed with the existing contract and cannot accept a higher offer. Breaking a signed contract to accept a better offer would breach Australian property law and expose the seller to legal action and financial penalties.