How To Put A House Under Contract

How To Put A House Under Contract

Have you ever wondered what it takes to put a house under contract? As a real estate investor, this skill is essential for scoring great deals before they hit the open market. Getting a property under contract opens up a world of opportunities – you can wholesale the deal, rehab and flip the house, or rent it out.

In this comprehensive guide, we’ll walk you through the entire process step-by-step. From finding motivated sellers to negotiating the purchase agreement, performing due diligence, and finally closing on the property, we’ve got you covered. By the end, you’ll have the confidence to put that first house under contract and be well on your way to real estate riches!

Finding Motivated Sellers

The first step is locating motivated sellers who are looking for a quick and easy way to unload their property. Here are some proven methods to find good leads:

Driving for Dollars

Literally drive around neighborhoods looking for vacant or rundown houses. Jot down addresses and look up the owners on county assessor sites. Direct mail campaigns work great for contacting these leads.

Online Advertisements

Place Facebook ads, Craigslist posts, or Google Ads targeted at distressed homeowners needing to sell fast. Make the ad sympathetic to their situation.

Networking Events

Tell everyone you meet that you buy houses for cash, as-is. Host meetups or attend real estate networking events to meet more potential sellers.

Direct Mail Campaigns

Send postcards or letters to mailing lists of absentee owners, pre-foreclosures, probates, and other motivated sellers. Follow up repeatedly to improve response rates.


Place yard signs, billboards, or bandit signs around your farm area with your “We Buy Houses” offer. Capture motivated sellers driving by.

Driving for Dollars

Literally drive around neighborhoods looking for vacant or rundown houses. Jot down addresses and look up the owners on county assessor sites. Direct mail campaigns work great for contacting these leads.

The key is uncovering why the seller is motivated. Are they behind on payments? Facing foreclosure? Inherited the property? Getting divorced? Sellers in these situations will be more open to your offers because they’re under pressure to sell quickly.

Analyzing Deals & Making Offers

Once you’ve found a motivated seller, it’s time to analyze the deal and make an offer. As a rule of thumb, subtract your maximum rehab budget from 70% of the ARV to arrive at your maximum offer price.

Of course, you won’t have time for a deep analysis while negotiating. Make quick but conservative estimates at this stage using the ARV Method:

  • Estimate ARV – Research comps and make an honest assessment of value after repairs.
  • Deduct repairs – Create a rough rehab budget based on needed work.
  • Calculate offer – Start around 60-70% of ARV minus repairs.

Having repair crews or contractors ready to inspect helps accurately estimate rehab costs. Use the ARV Method to support your offer price along with comparable sales.

Be flexible on your close date if needed to get the contract. Keep perspective – this is just an opening offer. There will be room to negotiate once the property is under contract.

Avoid over-analyzing the deal prior to having a contract in place. As the saying goes – “Analysis paralysis!” If the numbers work at a high level, make an offer and work out the details later.

Writing The Purchase Agreement

Now it’s time to write up the purchase agreement to put the property under contract. Here are key points to include:

Offer Price & Terms

State the offer price, proposed close date, amount of earnest money deposit, and that the sale is as-is.


Build in inspection, financing, and other standard contingencies to protect yourself as the buyer.

Option to Assign Contract

Include a provision allowing you to assign the purchase contract to another buyer. This enables wholesaling.

Due Diligence Period

Specify a due diligence timeframe (ex. 30 days) to complete inspections and confirm financing.

Personal Property

Define any personal property (furniture, appliances etc.) and whether they’re included in the sale.

Simple Terms

Keep the language clear, simple, and direct. Avoid confusing clauses and legalese.

Aim for a 1-2 page contract. Submit your offer to the seller for review. Don’t get discouraged if they counter – negotiation is expected.

Negotiating With Motivated Sellers

After submitting your initial offer, the seller will likely counter. Don’t be afraid to negotiate!

Here are some tips:

  • Make reasonable concessions to close the gap if needed – increase price, shorten contingencies etc.
  • Get clarity if the seller counters on multiple terms – focus on the biggest issue first.
  • Listen closely to understand the seller’s true constraints – money, timing, condition etc.
  • Frame concessions in terms of helping the seller solve problems or avoid risks.
  • Know your walk-away point and be ready to walk if you reach it. Don’t overpay.

With motivated sellers, keeping the deal moving forward is key. Negotiate in good faith and with respect. Ultimately, both parties want to close.

Performing Due Diligence

Under contract? Great! Now the real work begins. The due diligence period is your chance to vet the property. Key items to review:

Inspections – Hire inspectors to evaluate roof, structure, mold etc. Get repair estimates.

Title Search – Review title for liens, encumbrances, or other issues impacting ownership.

Permits – Verify no permit or code violations. Research certificate of occupancy status.

HOA Rules – Review covenants, bylaws, fees if part of an HOA. Make sure you can execute plans.

Utilities – Confirm all utilities are in working order – sewer, water, gas, electric.

Zoning – Ensure current zoning allows your intended use of the property after renovations.

Walkthroughs – Do multiple site visits to identify any red flags not caught on initial review.

Watch out for deal-breaking problems at this stage – title issues, structural damage, inadequate zoning, major code violations etc. If repairs exceed budgets or problems threaten profitability, renegotiate or walk away.

Wholesaling Option

Don’t want to take on the rehab yourself? Consider wholesaling the property instead.

This involves finding a wholesale buyer, assigning them your contract, and closing simultaneously with the original seller. The difference between their purchase price and the assigned contract price is your profit.

Many investors make a living solely wholesaling houses without doing any renovations. Leverage buyers on your list to sell at this stage for quick cash-in-hand.

Closing on the Property

The due diligence is done and your financing is arranged (if needed)? You’re almost at the finish line! Follow these final steps for smooth closing:

  • Schedule final walkthrough 1-2 days before closing to ensure condition matches expectations.
  • Review Closing Disclosure from title company and confirm numbers match contract terms.
  • Send wiring instructions for any remaining funds required at closing.
  • Bring certified funds, 2 forms of ID, and other items listed by title company to signing appointment.
  • Sign paperwork, get keys, and celebrate your successful acquisition!

With the property now legally yours, the rehab and flip (or wholesale) can begin. The profits made possible by putting that house under contract await!


Getting a property under contract is a crucial milestone for real estate investors. Mastering this skill opens up opportunities to wholesale and flip houses for massive profits.

We covered the entire process start to finish – from locating motivated sellers and negotiating offers to due diligence and closing. While the path involves many steps, armed with the right knowledge you can confidently put a house under contract.

Now it’s time to take action and gain experience! As the saying goes, you make your money in real estate when you buy. Happy deal hunting!