What Does ‘Under Contract’ Mean in Real Estate Investing?
Closing your first real estate deal is a major milestone, but many investors get ahead of themselves—especially when trying to secure funding. Before a lender will finance your deal, you need to have the property under contract, which gives you the exclusive right to purchase it under agreed-upon terms. Without this, a great opportunity can slip away to another buyer. Understanding what it means to be under contract, how to get there, and what to do next is essential to closing successful deals.
Understanding ‘Under Contract’ in Real Estate
A property goes under contract when the buyer and seller agree on price and terms, formalized in a signed purchase agreement. This contract outlines key details such as the purchase price, closing timeline, and any contingencies—like financing or inspections—that must be met before the sale is finalized. While this agreement moves the deal forward, it does not mean the sale is complete.
For real estate investors, this stage is when a deal becomes real. Once a property is under contract, the seller is legally bound to the agreement and cannot accept another offer unless the contract falls through due to unmet contingencies or financing issues. This gives the investor security to proceed with due diligence, finalize funding, and confirm the deal makes financial sense. However, there’s still work to do—negotiations, inspections, and securing the right financing all play a role in determining whether the deal ultimately closes.
How to Get a Property Under Contract
Securing a property under contract is the first real step toward closing a deal. Until an agreement is signed, the property is still available, meaning another investor can step in and take the opportunity. To lock in your right to purchase, you’ll need to follow a clear process.
Here’s what it takes to get a property under contract:
- Negotiate the Terms – Agree on the price, contingencies, and closing timeline with the seller.
- Sign a Purchase Agreement – A legally binding contract that formalizes the deal. Standard templates are available through real estate associations, attorneys, or online legal services.
- Submit Earnest Money – A deposit held in escrow to demonstrate your commitment to the transaction.
Once the contract is signed, you have control over the deal—but that doesn’t mean you’re locked in. Most agreements include contingencies that allow you to back out under certain conditions, such as failed inspections or financing issues. However, missing deadlines or canceling without cause could result in losing your earnest money or other penalties.
What to Do Once You’re Under Contract
Once you have a property under contract, the next step is securing financing from The Hard Money Co. (apply here) and making sure you get to the closing table. Your ability to close is everything. Getting a deal under contract but failing to follow through can damage your reputation and make future deals harder to secure. On the flip side, earning a reputation as a reliable closer will open more doors.
Beyond closing, you need to stay proactive. Once financing is in place, the clock starts ticking—every extra day costs money and eats into your profit. Delays in closing, securing permits, or starting renovations can quickly erode your margins. Move with urgency, stay on top of the process, and get the deal done.
Conclusion
Getting a property under contract is just the beginning. Secure your financing, close the deal, and move fast—your success depends on it. Apply with The Hard Money Co. today.
