Real Estate Contract

A real estate contract is the written agreement between buyer and seller that sets the price, deposit, financing, contingencies and closing date for a property sale. For a BRRRR purchase the contingencies matter most, since they decide how long the investor has to confirm the rehab and value before the deposit is at risk.

An inspection contingency gives time to bring in contractors and price the work. A financing contingency protects the deposit if the hard money or bridge lender backs out. An appraisal contingency is less common on distressed houses, because the investor is paying for the after-repair value, not the current one.

Sellers of rough properties often ask for short timelines and few contingencies. Investors who agree to that need their due diligence and lender lined up before signing, because once the contingency periods pass, walking away usually means losing the earnest money.

Further reading: Real Estate Contract on Wikipedia.