Flipping Real Estate Contracts 101

Key Takeaways

A great way for new investors to get started in the industry is by learning how to flip real estate contracts. With a relatively low level of risk, barrier to entry, and cost, flipping real estate contracts awards new investors with the path of least resistance. Nonetheless, despite the relative ease of execution that has been associated with contract assignment, there is still an evident margin of error one must take into consideration before they can partake in the strategy themselves. Therefore, it’s important for investors who want to flip contracts to educate themselves on the subject matter; only then will they realize success on a higher level.

What Does Flipping Real Estate Contracts Mean?

Flipping real estate contracts is just another way of assigning contracts—or wholesaling real estate using the assignment contract—the two are entirely interchangeable.

As a wholesale strategy, flipping real estate contracts serves as a way for investors to act as the intermediary between sellers and end buyers. However, instead of acquiring the subject property, the investor flipping the contract (the wholesaler) will simply enter into an agreement with the original owner; one that gives them the rights to buy the property at a later date.

That’s an important distinction to make: the original owner isn’t selling the home, but rather awarding the investor the rights to buy the home. Today’s wholesalers sign a contract that says they have the rights to purchase the property in return for what is typically referred to as “equitable interest” in the home.

Next, I’ll dive further into the assignment of contract process.

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Contract assignment

The Basics Of A Contract Assignment

Flipping real estate contracts has become synonymous with perhaps the simplest investment strategies in the entire housing industry: wholesaling. However, make no mistake about it: the “simple” moniker is applied loosely. Not unlike every form of real estate investing, even simple real estate contracts come with an inherent degree of risk. Therefore, in order to increase your odds of realizing success, one must exercise due diligence and follow the steps outlined below:

  1. Find A Property

  2. Write Up The Contract

  3. Get It Approved

  4. Find An End Buyer

Step 1: Find A Property

Flipping real estate contracts starts with finding the right property. Not only will investors need to find a home that’s desirable, but they will also need to work with a buyer who is willing to go through the assignment contract process; specifically, motivated sellers. At the very least, motivated sellers are just that: motivated. Whether they are facing foreclosure or need to move for work, people who are motivated to sell represent a great opportunity. Investors should prioritize homes owned by those who need to sell—not those who simply want to sell. Doing so will increase the likelihood of a deal being brought to the closing table, or (in this case) entering into an agreement on a basic real estate contract.

In searching for a viable candidate, there are several strategies for investors to consider. There are two places investors should look if they want to find distressed homeowners: their local courthouse and list providers.

Take a trip to the local courthouse and browse recent lis pendens or notice of default filings. As it turns out, delinquent mortgages are public knowledge and can be viewed by anyone who knows how to find them. With a little due diligence and patience, investors may be able to compile a list of nearby homes whose owners are motivated to sell for one reason or another.

Investors who would rather pay for someone else to do the legwork can simply purchase a list of delinquent homeowners. More often than not, these lists (which can be bought online) are created using the same documents at the courthouse.

Step 2: Write Up The Contract

Once investors find a home that exhibits all of the characteristics of a good wholesale deal, the next step is to negotiate contract terms with the homeowner. Provided they are ready and willing to sell, the idea is to negotiate an assignment of contract. That said, there’s no universal contract that will work for every negotiation. Instead, investors will need to tailor the impending contract to meet both the homeowner’s intentions and their own.

The verbiage of the contract between each party is of critical importance. There should be no room for interpretation or ambiguity. The act of assigning a contract needs to be purposeful and deliberate. All purchase and sale agreements, by default, can be sold to another party unless specifically stated otherwise. It is very important to make sure the contract states the investor’s exact intentions. Hire an attorney versed in these types of real estate transactions to ensure ensuing discussions go smoothly.

Step 3: Get It Approved

Once drafted, the contract must receive approval from both parties. After all, even the most basic real estate contracts represent an agreement on behalf of each individual. Of course, that means investors will need to draft a contract that appeases sellers—that’s where the motivation comes into play. In the event an investor can identify the seller’s motivation, they may be able to write a contract that is simultaneously attractive to the seller and beneficial for the impending wholesale deal.

Provided each person involved in the deal agrees to the terms, it’s time to sign the contract. According to the doctrine of equitable conversion, once a real estate purchase agreement is signed by all parties and becomes effective, the buyer becomes the equitable owner and the seller retains bare legal title to the property under the previously agreed-upon terms.

Step 4:Find A Buyer

Today’s best contract flipping investors begin with the end in mind. More specifically, they’ll have a buyer lined up before they even sign a contract with a seller. That way, they’ll already know how the deal is expected to unfold. Most wholesalers, for that matter, compile what’s known in the industry as a buyers list. As its name suggests, a buyers list is a list of potential buyers. Wholesalers may consult such a list to identify anyone interested in buying a home and proceed to assign them the contract from the impending deal. A properly curated buyers list could facilitate an assignment of contact in as little as a few hours.

Pros & Cons Of Real Estate Contract Flipping

Before you get to decide to get started in real estate contract flipping, you should take time to weigh the pros and cons to figure out if this investment strategy is right for you and your goals.

Benefits Of Real Estate Contract Flipping

Real estate contract flipping presents many attractive investing benefits. One real estate contract flipping benefit is that it does not require much money to get started. That means that there is little risk associated with this opportunity as well. Flipping contracts is a great way to get money in your pocket fast.

Disadvantages Of Real Estate Contract Flipping

Although there is a potential to make money flipping real estate contracts, there are also some drawbacks. One drawback is that creating a large amount of income from flipping real estate contracts will require a large number of deals. This will require investors to spend more time and effort evaluating potential deals. Investors will also be required to spend a significant amount of time to compile their wholesalers list for each deal to be matched with a buyer who is ready to assign the contract. Developing an efficient system for doing so will not happen overnight and many investors find that there is a drawback in the amount of time it may take to find success with this investing strategy.


If you are interested in an entry-level investing strategy, learning how to flip real estate contracts might be for you. The barrier to entry, in particular, is relatively low. Additionally, assigning a contract is viewed as a relatively risk-averse real estate investment strategy. That said, investors can’t underestimate the process. While easier to grasp than rehabbing, wholesaling must be approached with cautious optimism. Do not let its simplicity get the best of you. Instead, learn how to flip real estate contracts with a proven system. Understanding the contract assignment process is the best way to mitigate risk and realize success.

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Real Estate Investing Strategies
Real Estate Investing Strategies
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Real Estate Investing Strategies
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Real Estate Investing Strategies