Flipping Real Estate Contracts: A 6-Step Guide For Investors

The idea of making quick profits with minimal upfront investment has made flipping real estate contracts one of the hottest strategies for new and seasoned investors alike. By simply securing a great deal and assigning the contract to another buyer, investors can generate impressive income without ever owning the property, all while avoiding many of the risks that come with traditional real estate investing.

But while flipping real estate contracts sounds simple on paper, there’s a lot more to it than just finding a motivated seller and a willing buyer. Success in this business comes down to knowing the process, mastering the legal ins and outs, and positioning yourself as a valuable deal-maker in a competitive market. Without the right knowledge, it’s easy to make costly mistakes that could stall your growth.

In this guide, you’ll learn everything you need to succeed with flipping real estate contracts, including:

• What Does It Mean To Flip Real Estate Contracts?
• How To Flip Real Estate Contracts In 6 Steps
• Do You Need A License To Flip Contracts?
• Is It Illegal To Flip Real Estate Contracts?
• Can You Flip Real Estate Contracts With No Money?
• How To Flip Real Estate Contracts With No Money
• How Much Money Can You Make Flipping Real Estate Contracts?
• How To Get Out Of A Real Estate Contract
• Should You Flip Real Estate Contracts Or Flip Houses?
• Final Thoughts On Flipping Real Estate Contracts

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What Does It Mean To Flip Real Estate Contracts?

If you’re new to real estate investing, you might be asking: What exactly is flipping real estate contracts?
Let’s break it down in simple terms.

Flipping real estate contracts means you find a great deal on a property, usually something like a fixer-upper, and sign a purchase agreement with the seller. But instead of buying the property yourself, you assign your rights in that contract to another buyer, often a real estate investor who plans to fix and flip the home for a profit. In return, you collect what’s called an assignment fee or wholesale fee for bringing the deal together.

The beauty of flipping contracts is that you don't need to buy, repair, or even own the property. You’re simply acting as a middleman, connecting a motivated seller with a cash buyer, and getting paid for making that connection happen. It's a smart strategy because it requires little upfront money, no construction experience, and less risk compared to buying properties outright.

Think of it like this: You spot a great opportunity, lock it up under contract, find a buyer willing to pay more, and earn the difference as your profit, all without ever taking ownership of the home.

In the world of real estate wholesaling, flipping real estate contracts is one of the fastest and most accessible ways to get started and build real-world investing experience.

How To Flip Real Estate Contracts In 6 Steps

Venturing into real estate contract flipping can feel overwhelming if you're unsure where to start.

But, like any business venture, understanding the steps involved is key to successful execution.  We break down how to flip real estate contracts into six straightforward steps.

By following this roadmap, you'll equip yourself with a solid foundation to jumpstart your real estate endeavors, increase your likelihood of success, and navigate the complexities of this lucrative niche with confidence. Here are the essential steps to get you started flipping and selling real estate contracts:

1. Find The Right Property
2. Write Up The Contract
3. Get The Contract Approved
4. Assign the Contract
5. Collect Your Assignment Fee

1. Find The Right Property

The first step to flipping real estate contracts successfully is finding the right property, and not just any property will do.
You need a deal that offers enough value to attract serious cash buyers and leave room for everyone to profit.

As a rule of thumb, always focus on motivated sellers, people who need to sell fast, not just those casually testing the market. Motivated sellers might be facing foreclosure, going through a divorce, relocating for a job, dealing with financial hardship, or even inheriting an unwanted property. Because they’re under pressure, they’re often more willing to negotiate below market value, giving you a prime opportunity to lock up a great deal.

Beyond the seller’s situation, you’ll also want to look for distressed properties. These are homes that need major repairs, updates, or have obvious cosmetic issues. Many distressed homes can’t qualify for traditional financing, which means the seller usually needs a cash offer, making them a perfect fit for a wholesale deal.

When you’re flipping real estate contracts, distressed properties and motivated sellers are your two best friends. Focus your energy on spotting signs like overgrown lawns, boarded-up windows, neglected maintenance, or "for sale by owner" signs — all hints that someone might be ready to make a deal.

Stay consistent, practice due diligence, and always research the property’s condition and market value carefully. The more deals you evaluate, the sharper your instincts will become, and the easier it will be to spot properties that cash buyers will jump at.

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2. Write Up The Contract

Once you’ve found the right property, the next crucial step in flipping real estate contracts is locking in a solid purchase agreement with the seller. This is where the real work—and real opportunity—begins.

You’ll need to negotiate the terms of the contract directly with the property owner (or their agent if they have one). Keep in mind, there’s no one-size-fits-all contract. Every seller has different needs and motivations, so it’s important to have an open and honest conversation to figure out what matters most to them. A great wholesale deal is built on creating a win-win situation, where the seller feels heard and you secure the flexibility you need to flip the contract successfully.

And here’s something most beginners overlook: price isn’t always the seller’s biggest concern.
Many sellers care more about convenience, speed, and certainty. Offering terms like flexible closing dates, buying the property “as-is” without requiring repairs, paying in cash, or even taking over a property with tenants already in place can sometimes matter more than squeezing out top dollar. Tailoring your contract terms to solve the seller’s specific problem gives you a massive advantage.

When it’s time to actually write the contract, don’t guess or cobble something together.
Work with a real estate attorney or an experienced mentor who understands contract assignments and wholesale real estate transactions. They’ll make sure your agreement protects you legally, includes key assignment clauses, and sets you up for a smooth handoff when you flip the contract to your end buyer.

Remember, in flipping real estate contracts, a strong, well-written purchase agreement is your golden ticket, so take your time and get it right from the start.

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3. Get The Contract Approved

Now that the contract has been drafted, it is time to obtain signatures from both parties. As long as the contract is appealing to the seller, there is no reason why he/she shouldn't sign it and move toward closing.

Once the contract has been signed by the parties involved, it becomes effective according to the doctrine of equitable conversion. The seller retains the legal title of the property while the buyer acquires an equitable interest and gains control of the property.

Once you have approval and signatures from all parties, you have what's called an executed contract. From here, it's simply a matter of both sides fulfilling the obligations spelled out in the contractual agreement. Remember that contracts are legally binding, so pay close attention to what is included in the fine print.

4. Find A Buyer

Before you even think about signing a purchase contract with a seller, one of the smartest moves you can make when flipping real estate contracts is having reliable buyers already lined up. This step is absolutely crucial if you want your deals to move quickly and collect assignment fees with as little stress as possible.

Start by building a strong cash buyers list. These are investors who are actively looking for deals, often paying in cash, and are ready to close fast. Reach out to local real estate investors, network at meetups, attend foreclosure auctions, and even connect with property managers who work with investors. Get to know what your buyers are looking for, things like property condition, location, purchase price range, and how much rehab work they’re willing to take on. The better you understand your buyers' needs, the easier it will be to match them with the right property.

Once you have your executed contract in hand, you can quickly present the deal to your list and identify who’s ready to buy. When you know exactly what your buyers want, assigning contracts can happen in just a few hours, sometimes even the same day.

In the world of flipping real estate contracts, speed and confidence are everything.
The bigger and better your buyers list becomes, the faster you’ll move deals and the more consistent your assignment fees will grow.

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5. Assign the Contract

Now comes the exciting part: officially assigning the contract to your end buyer so you can complete the process of flipping real estate contracts and collect your assignment fee.

At this stage, you’ll complete the necessary assignment paperwork, which legally transfers your rights and obligations under the purchase contract to your buyer. The buyer has already agreed to your marked-up price, understands the deal, and is ready to move forward. Your job now is to make sure the paperwork is clear, complete, and properly executed to avoid any confusion at closing.

When you flip a real estate contract, you’re not selling the property itself; you’re selling your right to purchase the property under the terms you negotiated with the seller. Once the assignment is signed, your buyer steps into your shoes and becomes responsible for closing the deal directly with the seller. The buyer will fund the purchase, take title to the property, and move forward with whatever plan they have, whether that’s flipping, renting, or rehabbing.

In flipping real estate contracts, this final paperwork step is where everything comes together.
A clean assignment ensures everyone knows their role, and it paves the way for you to get paid quickly and move on to your next deal.

6. Collect Your Assignment Fee

After you find a buyer, assign the deal, and the transaction closes, you'll earn what is referred to as assignment fees. This is the difference between the amount stated in your initial contract and the final sale price that your buyer pays for the deal. Depending on your relationship with your cash buyers, you can structure the deal to get paid inside or outside of escrow.

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*For in-depth training on real estate investing, Real Estate Skills offers extensive courses to get you ready to make your first investment! Attend our FREE Webinar Training and gain insider knowledge, expert strategies, and essential skills to make the most of every real estate opportunity that comes your way!

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Do You Need A License To Flip Contracts?

As an aspiring real estate investor, you've probably asked yourself this question: “Do I need a license to flip real estate contracts?”

The short answer is: No, you do not need a license to flip contracts. What you do need is the proper education and training on how to flip real estate contracts. In understanding how to wholesale real estate step-by-step, we know that it generally doesn't require a real estate license to complete a contract assignment. 

That said, there are numerous advantages to becoming a real estate agent and having your license when assigning contracts, including:

1. Easily getting access to property listings in your local real estate market (MLS)
2. Obtaining state-specific real estate contracts and addenda
3. Instant credibility when engaging with other agents and sellers
4. Another source of income is through sales and referral commissions
5. Select states, such as Illinois, require licensure when assigning the contract

The question of whether or not one should get a license to flip contracts has generated a heated debate on online and offline platforms among real estate investors and brokers.

Read Also: 11 Real Estate Jobs Without License Requirements

Is It Illegal To Flip Real Estate Contracts?

The legality of flipping contracts has become a hot topic among newbies and expert real estate investors alike.

Some claim that it is legal since wholesaling is not brokering, but rather signing a contract and assigning it to another party. In short, contract flippers are not selling property, but rather selling the ownership of the real estate contract. On the flip side, those who find it illegal claim that wholesalers act as brokers since they are advertising and "selling" properties; thus, the law must apply in this situation.

To add salt to injury, wholesalers typically market property that they don’t own. In most states, the act of “marketing property” is in its own brokering, which is deemed illegal without a license.

If you get 20 lawyers to explain to you the legality of flipping real estate contracts, you will undoubtedly get 20 different answers. To ensure that you flip real estate contracts without getting on the wrong side of the law, consider getting your real estate license since no one will accuse you of 'brokering' without a license.

Alternatively,  you can double close on the property. Work with local title companies to set up a simultaneous closing (or back-to-back closing) and resell it immediately.

There's generally nothing illegal about buying a property and then selling it shortly thereafter.  

Can You Flip Real Estate Contracts With No Money?

Yes, it is possible to flip real estate contracts without money. In fact, it is not as difficult as you might think.

For this reason, wholesaling and flipping contracts have grown in popularity among all levels of investors, from experienced investors to those just starting a real estate business. 

If you're tight on capital, perhaps from having too many projects going on or having too much capital tied up in other deals, wholesaling is a fantastic way to monetize your deal flow while achieving conservative returns. That said, without a doubt, real estate investing is easier to do with some capital than without.

Before we dive into the details of each option you can choose, we invite you to view our video on How To Get Into Real Estate With No Money! This comprehensive guide, with host Alex Martinez, will help you better understand how you can begin investing today without any out-of-pocket cash!

How To Flip Real Estate Contracts With No Money

Essentially, the steps involved in flipping real estate contracts without money are similar to those outlined earlier in this post. However, the main obstacle to overcome is the placement of an earnest money deposit after your contract is accepted. As you develop relationships with your investor buyers, you can simply ask them to fund the earnest money deposit when they have committed to the deal. This allows you to flip real estate contracts without investing a dime in the deal. 

The amount of earnest money deposit is typically anywhere between 1 and 3% of the purchase price, depending on the competitiveness of your local market. If the buyer doesn't agree to fund the earnest money deposit, other sources can help you flip real estate contracts without investing a dime. Here are 3 ways to flip real estate contracts with no money:

• Getting A Real Estate Partnership
• Private Money Lenders
• Hard Money Lenders

Getting A Real Estate Partnership

This is, without a doubt, one of the easiest ways to fund real estate contract flipping deals without money. Find a partner who has the money to invest. This could be a friend, a family member, a close business associate, or another real estate professional.

Ask the partner to finance the earnest money deposits for your wholesale ventures. There are numerous ways to create a true win-win for you and your partner. You'll be doing all the work to make the deal happen, and they'll fund the capital required as needed to push the deal forward. At the end of the day, you can offer to split the profits 50-50 or even pay a flat fee.

Private Money Lenders

Private money lenders are individuals with disposable money to invest, who are more interested in playing a "passive" role in the transaction. Often, these are wealthy, relationship-based lenders who understand the real estate business and believe that you're capable of providing a solid return on their investment. 

You can get pretty creative with how you structure the loan from a private money source. You're more likely to negotiate a reasonable interest rate compared with other sources of capital. A great question to ask these individuals is, "What type of return are you currently getting on your money?"

Many individuals with capital are merely receiving a 1-3% interest rate in savings accounts and bonds. So, offer them a more attractive rate to entice them to become a capital source for your real estate deals.

Hard Money Lenders

Getting a hard money loan is another reliable source of funding. Hard money lenders are people and professional companies who are willing to lend money on real estate transactions at high-interest rates, around 9-14%. Some even charge points on top of the interest. Ideally, find a hard money lender who can fund 100% of the deal. 

In some instances, when flipping contracts, you may need to actually close on the property. There are specific hard money lenders who offer transactional funding, which is a short-term loan designed for back-to-back closings. 

*Pro Tip: Only choose this source of funds for properties that you are planning to double close. 

Read Also: How To Wholesale Real Estate With No Money

How Much Money Can You Make Flipping Real Estate Contracts?

How much money you can earn flipping real estate contracts is dependent on several factors, including:

• The number of contracts you flip a year
• The size of the assignment fees you're able to earn
• How well you can negotiate your purchase contracts

Therefore, there is no universal amount of money that you can make by flipping real estate contracts. However, experienced contract flippers who turn over dozens of properties annually can easily hit six and seven figures in income per year!

When you choose to flip real estate contracts, keep in mind that it might take as much as 180 days to flip a single house, which means that your end buyers can be tied for up to 6 months. That's why it's important to have an extensive list of cash buyers or work only with sophisticated, high-volume fix and flippers. 

As a matter of fact, only 11% of house flippers flip more than ten properties a year.

Also, keep in mind that the amount of money you will make from flipping real estate contracts will depend on the market you are selling your flips. This is because some markets are more profitable than others. For example, in some cities such as Pittsburgh and Pennsylvania, flippers saw returns of up to 131% in 2019, while those in McAllen-Edinburg, TX had an average profit of $8,750.

While flipping contracts can work in any market, it's important to understand your local arena and know what types of properties investors are looking to flip. Therefore, ensure flipping is popular among investors in the location that you choose.

Read Also: Wholesale Real Estate Contract: Template & FREE PDF Download

How To Get Out Of A Real Estate Contract

A prudent real estate contract comes with a number of contingencies. These are conditions that must be met for a buyer to move forward with fulfilling the agreement. Contingencies imply an understanding with the seller that certain tasks will be completed within a certain time. If these conditions are not met, then you can use these contingencies to get out of a contract.

Let's say you have found an ideal property that you put under contract, but a home inspection report details some pricey issues such as a damaged foundation that needs repair.

As long as there is an inspection contingency in place, you can back out of the contract. If the seller is not willing to offer credit to offset the repair costs or doesn't want to fix the problem at all, you have the right to walk away without any repercussions.

Watch my short explanation of why including an inspection contingency is arguably the most important thing as a real estate investor:

Getting Out Of A Contract With A Financing Contingency

A financing contingency is another essential safeguard that can help you as a flipper to get out of an accepted offer contract. This happens if a lender or capital source fails to give you approval within the agreed timeframe. 

Nonetheless, before you use contingencies to opt out of an accepted offer, pay close attention to contingency deadlines. For instance, a financing contingency is typically met within 30 days to get final loan approval, while an inspection contingency is typically removed within 7-14 days after the agreement is signed. In case you need more time to finish a contingency task, you must request a contract extension that must be approved by the seller in writing to become effective.

Opting Out Of A Contract Using An Escape Clause

When designing a real estate contract, ensure that it contains an escape clause. This is basically a clause or term and condition that will allow you to avoid performing the contract without being liable for breach of contract whenever the need arises.

For example, if an inspection reveals that there are irregularities or defects in a property, you can use this clause to opt out of an accepted offer.

This clause takes many forms, such as a 'subject to 30-day due diligence' clause, which allows the buyer a 30-day buffer period to inspect a property before accepting to purchase it. Another one is the 72-hour clause, which is prevalent in many real estate contracts.

Should You Flip Real Estate Contracts Or Flip Houses?

Well, before we answer this question, you need to know that there is a difference between flipping houses and flipping real estate contracts.

According to any Flipping Houses 101 course you may take, flipping a property requires you to buy the house, fix it up, and then flip it to a buyer. If you are a fan of HGTV house flipping shows, you can attest to the fact that there is a lot that goes into flipping houses. 

You need capital to buy the house and even more to fix it up. You have to manage contractors vendors, and understand the sales process. Additionally, you have to wait for weeks or even months before the property can be listed and sold. Time is money, as you'll be paying holding costs for every day you own the property, as well. 

When flipping real estate contracts, you will be in and out of the deal before ever owning the property. Since you're simply participating in the acquisition, you're simply assigning the contract to someone who takes on all the risk and hassle of fixing and flipping the house.

Unlike flipping houses, you don't need to take any risks or invest any money. This flipping real estate contract is an ideal option to choose, especially if you are a new real estate investor.

Final Thoughts On Flipping Real Estate Contracts

There are a wide array of things that can help you achieve this as a real estate investor, but flipping real estate contracts is one of the surefire ways to earn money quickly.

However, what may hinder you from achieving your goals is the preconceived notion that you need to have a lot of capital and a desirable credit score. Nonetheless, you can pull this off even if you have a zero balance in your bank account and the poorest credit score in the neighborhood.

While flipping real estate contracts is a fairly straightforward concept, there are many small details that make it more complex than it looks on the surface. If it were plain and simple, everyone would be doing it!

You need to learn how to flip real estate contracts the right way so that you can easily break into the industry. To do this, it's important to invest in your education and gain mentorship from successful investors in the industry. Consider learning from others and taking a course that will give you all the insights, tips, suggestions, and strategies that will set you ahead of the competition.

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Ready to Take the Next Step in Real Estate Investing? Join our FREE live webinar and discover the proven strategies to build lasting wealth through real estate.

Whether you're just getting started or ready to scale, we'll show you how to take action today. Don't miss this opportunity to learn the insider tips and tools that have helped thousands of investors succeed! Seats are limited—Reserve Your Spot Now!

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*Disclosure: Real Estate Skills is not a law firm, and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks, and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs.