Buying or selling a home requires a lot of work, and a real estate Contract can help safeguard you against potential hiccups and surprises. It also allows you to spell out your expectations and protects you from legal and financial problems down the road if things go wrong.
The most common type of real estate contract is the purchase agreement, which is often a standard agreement between a buyer and seller when a real estate agent is involved. This document outlines important details about the transaction, such as the sale price of the property, the closing date, and the amount of the earnest money deposit.
In most cases, a real estate contract is signed by both parties involved in the transaction. It is important to have both parties sign the contract to ensure that it is legally binding and cannot be voided.
There are several different types of real estate contracts, and each one should be tailored to the specific circumstances in which it is being used. These include:
Property-Specific Purchase Agreement
If you are looking to buy a property that is outside of the traditional single-family house, then you should consider using a property-specific purchase agreement. These real estate contracts are often more extensive and include additional clauses about the specific property being sold.
Real Estate Assignment Contract
In a real estate assignment contract, you purchase a distressed property and sell it to another buyer at a small profit. This is a common wholesaling strategy that works well for investors, as it allows them to acquire distressed properties at discounted prices.
A kick-out clause is an important aspect of any real estate contract. It allows the seller to terminate the contract if they find a better offer for their current home or if they are unable to sell their current home because of an unexpected event.
Inspection Details
A home inspection is an essential part of the real estate process. It can reveal major problems that could affect the value of the property and make you uncomfortable with your purchase. Including detailed inspection details in your real estate contract will give you the peace of mind that you need and allow you to back out of the deal should you be unhappy with the results.
Financing Clause
A financing clause is an important part of any real estate transaction, and it should be included in every real estate contract. This contingency will allow you to walk away if you are not able to obtain the financing needed for your home.
Riders
Adding riders to your real estate contract can help you clarify certain terms, such as rules of homeowner’s associations or a Federal Housing Administration rider that specifies you will secure a mortgage via FHA. These riders can also specify a period of time during which the sellers must pay for repairs to the home.
Power of Attorney Conclusion: Finally, a power of attorney document can be extremely helpful if you are unable to sign your real estate contract yourself because of a medical or legal issue. This document allows another party to sign on your behalf, so if you are unable to sign the contract yourself, your spouse or child can.
