So you’ve finally found the right home for you.
Your bids were out and approved.
Congratulations!
But the purchase isn’t done yet. Now it’s time to go to contract.
Let’s begin with the basics…
What is a Real Estate Contract?
Real Estate Purchase Contract: also known as residential purchase agreement.
A Real Estate Contract is a legal contract between parties for the purchase and sale, exchange, or other conveyance of real estate. “Legal Considerations” are the basis of this contract. These considerations being money (most commonly) but could sometimes be property exchange or promise to perform.
The contract can only be effective if it is in written form – as required by the Statute of Frauds.
It’s not uncommon for this to constitute of different variation, depending on the state’s law.
All parties must participate in the “exchange of contracts”. Both will sign one contract of sale and another to be retained by each respective party. The exchange is typically closed off and completed once each party is in possession of a copy of the contract signed by the other.
Your contract must include, but not limited to:
- Identification of the parties
The principal parties are the competent seller(s)/buyer(s) stated on contract with their complete legal name.
If any real estate agents are involved in brokering the sale, they are usually listed as the real estate broker/agents and are expected to earn commission from sales.
- Details of the Real Estate Property
Must further discuss the address and the legal description of the property
- Fundamental details, rights, contract obligations, and conditions of what is and what is not included
- Purchase price
The complete amount of sales price and the agreed terms of payment must be stated precisely with no details to spare.
Includes the amount of deposit and the closing costs.
- Legal Purpose
This calls for void of contract if illegal action is involved.
- Prospect date of closing
- Determine the Consideration
As aforementioned, a consideration is the value in exchange for the property whether it be monetary, property in exchange, or promise to perform.
- Signatures
Both parties must voluntary sign off the contract.
A Real Estate Contract is typically followed by Contingencies.
The buyer must meet these contingencies after performing the contract. Contingencies may include, but not limited to:
- Mortgage Contingency
- Appraisal Contingency
- Inspection Contingency
- Another Sale Contingency
What if I want out?
Make sure to finalize everything before plunging in the contract. Withdrawal is possible but could cause a serious loss of your deposit, getting sued, or a completion of contract among many.
In cases when you really must get out, address this on contingencies being met as these can be your legitimate emergency “out”.
Relying on contingency quit is still not advisable for reasons that this process could easily go wrong.
Confide in your real estate agent or broker for any paragraphs you don’t understand or even if you find things suspicious. Remember: a real estate agent may be limited from providing legal advice but would be sufficient in dealing with Real Estate Contracts.
Buy Like Rent is a Real Estate Agency based in Florida with an experience for over 50 years in rent-to-own, buy and sell, property investment, real estate brokerage, and mortgage banking operation services.
