Real estate contracts are the legally binding documents that outline the terms of a real estate transaction between a seller and buyer. The contract includes details such as purchase price, closing costs and contingencies.
The first step in any real estate sale is to make an offer. A real estate agent or broker will help you create a written real estate offer that includes the property address, sales price and details of the offer. It is a good idea to have an attorney review this document before you sign it to ensure that all the terms are legal and that there are no hidden surprises in the contract.
Once you have an offer, the next step is to accept it or counter it with a counter offer. Once you have accepted the offer, the agreement becomes legally binding.
There are several ways to write a real estate contract, but the most common way is to use an escalation clause. This escalation clause automatically increases the price of your offer over any competing offers that are made. This makes it easier for you to compete against other buyers and may result in a quicker sale.
Another option is to use a standard form contract created by the local real estate board or organization. These contracts often have a number of provisions that are common to most residential real estate transactions. Some of the provisions include an obligation on the part of the seller to provide a set of documents (such as a title insurance policy or appraisal) to the buyer, and the right for the buyer to terminate the contract at any time based on review of these documents.
This is important to the buyer because it allows them to make sure that they have all of the information needed before making a decision on whether or not to buy the property. It also helps the buyer understand the process, so they are prepared for anything that may come up.
If the contract is signed, it will have the parties’ initials on it. It will then be filed at the local courthouse to record it as an official document.
A contract can also be formed on an implied-in-fact basis, which is the same as a written agreement. This type of agreement can be derived from the actions and conduct of the parties, but it is harder to prove that the conditions have been met.
Consideration: The most common consideration for a real estate contract is money. However, other forms of value are acceptable as well. Examples of consideration can include another property or a promise to perform.
The contract must be signed by both parties and notarized to be valid. In addition, it must meet other legal requirements to be enforceable.
The most important things to remember when drafting a real estate contract are the following: There must be a legal purpose, there must be legally competent parties, an agreement by offer and acceptance, consideration must be stated, and consent must be given willingly and knowingly. If any of these elements are not met, the contract will not be enforceable and the deal cannot occur.