Real Estate Contracts

A real estate contract is an agreement in which a buyer and a seller make certain promises to each other in the attempt to exchange real estate.  The buyer will most often exchange monetary compensation in return for the seller’s property.  However, in rare situations, real estate contracts can also offer an exchange between two parties that involves swapping or trading property instead of monetary compensation.  There are several sections found in a standard Real Estate contract that you should be aware of, in order to avoid any unnecessary risk to you or your family.   Because Real Estate contracts are legally binding we strongly recommend that you acquire the services of a real estate agent whenever a real estate contract is involved.  Having a Real Estate agent represent you will drastically help in decreasing your exposure to unnecessary risk. 

Real Estate agents are trained to understand every line item listed in a real estate contract and will ultimately be the most competent person to write up the contract on your behalf.  Although we recommend that you use a Real Estate agent to coordinate your transaction, you can still choose to do this on your own.  A real estate contract is easily accessible and can often be downloaded online for a small price.  Whether you decided to enter into a contract on your own or with the help of a trained professional, you will still need to have a basic understanding of what a real estate contract is and how it works. 

The contract should identify the property being offered up in the exchange and the agreed upon price for this property.  Therefore, the real estate contract will need to have the address and legal description listed to identify the property that is up for sale.  The contract will also display the agreed upon price for which the buyer is willing to purchase the property for.  All buyers and sellers involved in the real estate contract will be identified by their full names.  You will also see the real estate agent’s information listed, if they are to receive any compensation for this transaction.  In order for the contract to be legally binding, all identified parties will be required to sign the contract.  Only written real estate contracts are considered to be legally binding, and will only be enforced based upon the information listed within the contract.

Real estate contracts will also include a list of dates involving contingency issues and the specific dates for which they must be resolved by.  These contingencies normally involve a variety of steps that need to be fulfilled in order for the contract to proceed.  Some contingencies include (but are not limited to) acquiring financing approval, home inspection deadlines, sale of any other property, and verified value on the subject property through an appraisal.  The contract would be null and void if any of these contingencies are not satisfied during the real estate transaction process.      

Anyone entering into a real estate contract must be of sound mind and of legal age in order to be held liable for the contents listed in the agreement.  The nature of the transaction must also be legal.  Contracts that negotiate terms which are considered to be illegal for any reason will result in a non-binding contract with no legal merit at all.  This prevents anyone from entering into an agreement when they are not in a position to make these considerations of their own accord, and will eliminate any illegal activity. 

Finally, if all contingences are met and the property maintains the agreed upon condition, the real estate transaction will conclude with the designated closing date.  The closing date will indicate the time in which the seller will relinquish ownership rights to the property in exchange for the agreed upon price.  At that point the buyer will then become the new legal owner of the property.  Typically, the buyer will also take possession of the property on the same date of the closing.  If the property is not relinquished by the seller at that time, then a per diem charge will be assessed per day.   

Real estate contracts are put into place to protect both parties involved in the transactions.  Out of all the real estate contracts that are written, 99.9% are fulfilled without any major issues.  If the buyer and the seller work together to ensure the completion of the transaction, it should conclude as expected.  It is in those rare situations, where either the buyer or the seller fails to meet their obligations, when a real estate contract can help.  The real estate contract will be reviewed by an independent arbitrator who will use the information in the contract to determine who has breached the agreement. 

There are several realtors or brokers who are more than willing to help you with a real estate contract, and most of them will help you without requiring any out-of-pocket costs to you.  If you find yourself in a situation where you need a legally binding Real Estate contract simply call me.  I will provide you with a free copy upon request.