When you drive by a home with a "For Sale" sign that also has a "Sale Pending" label on it, that typically means the terms for sale of the property are in place and finalized. At least a few weeks spans the time from when a homeowner accepts a purchase offer and the time the buyer closes on his loan and the purchase. A sale pending notification lets the market of real estate agents and prospective home buyers know that while the property is technically not sold, a sale is seemingly inevitable at a date agreed upon in the very near future.
The phrase "under contract" is used by a seller's real estate agent to communicate to a buyer's agent that a property does have an agreed-upon contract in place, but contingencies are in place before the sale becomes final. Contingencies are conditions that the buyer or seller agrees to meet before the sale is binding. Buyers often include a contingency for a loan approval to finance a house. Some ask that the sale is contingent upon the sale of their own home by a specific date. For the sale to become final, the contingencies must usually be met or the parties must agree to nullify them.
A major difference between the interpretation of sale pending versus under contract is that the buyer's agent typically advises his client not to hold out hope with a sale pending, but the buyer may have an opportunity to cut in on a home under contract if it has major contingencies. Some buyers prefer to avoid any homes with a contract in place. Others may get aggressive and try to cut in on a contract with contingencies, if possible.
The key to a new buyer having a chance at a home under contract, but with contingencies, is a kick-out clause. Many sellers that accept a contract with major contingencies, such as the sale of the buyer's home, include this clause. It typically states that if another buyer's offer is accepted, the contracted buyer has a certain time period to meet the contingencies, nullify the contingencies or void the sale. Another major difference between the sale pending and under-contract scenarios is that seller agents will often continue to lightly market a home with a contingent contract, while they usually shut down promotion when a sale is imminent.