The process of buying a house, like any other process, has several stages. Terms “Under offer” or “Under contract” are essentially the same, they indicate the status of the house through the selling process – note that they only apply to a private sale and never to an auction.
When a house is “Under offer” or “Under contract”
When the vendor accepts the buyer’s offer, they sign a Contract of sale or a Contract note. Usually that document is subject to conditions, such as building and pest inspections and financing.
Signing a contract subject to conditions is a very logical thing to do – inspections cost money (you can expect to pay anything between 500 – 1000$) so you need to have some certainty that you’re inspecting a house that you’re going to end up with. Also, getting your loan approved takes time – well, banks were never famous for doing things quickly. So on one hand you want to sign the contract to secure that house you like so much – but on the other hand you want to be able to walk away if it has problems you don’t know about yet.
At this stage, when you have a signed a contract (by both the buyer and the vendor), but still haven’t done the inspections, didn’t get the finance approved and didn’t pay the deposit yet – the estate agent puts a sticker “Under Offer” or “Under Contract” across the advertising sign.
When a house is considered “Sold”
Usually the inspections are done within a week of signing the contract, and once you have the building and pests reports back, your loan has been approved and you have paid the deposit – the agent will change the status of the house from “Under offer” or “Under contract” to “Sold”. Even though the settlement date is in two or three months and the main amount of money is yet to be paid – the house is considered to be sold once all the conditions in the contract were met.
Interestingly, houses being sold through auctions don’t have that “under offer” stage – they go to “Sold” or “Passed in” immediately after and here is why. When a house is being sold at an auction, all the inspections and loans should be done and approved before the bidding starts, because in auction the contract is non-conditional. If you haven’t done the inspection or don’t have the money – too bad, because when the auctioneer announces the house as sold to you – this is it, it’s yours for better or worse .