What does "under contract" mean in real estate?

The term "under contract" in real estate refers to a scenario where a property is subject to a purchase agreement, meaning that the buyer and seller have agreed upon the terms of the sale, but the transaction has not yet been finalized or closed. This stage is critical in the real estate process, as it indicates that the property is no longer available for other buyers while the terms of the agreement are being fulfilled, such as inspections, financing, and other contingencies.

This concept is distinct from other scenarios in real estate. For example, when a property is available for lease, it is not under contract as it has not been secured for sale. Similarly, when a property is listed for sale, it may be actively marketed but does not imply that there is an accepted offer in place. Lastly, when a property is considered sold and pending payment, it indicates a step further along than "under contract" since it suggests that all conditions have been satisfied and the transaction is awaiting finalization. Thus, the essence of "under contract" is specifically linked to the pending status of a purchase agreement prior to closing.