What is The Real Estate Contract?
The real estate contract is the binding legal document for a real estate deal. Whether you sell the home on your own or use an agent, you will still need a contract. Before signing anything, be sure that the real estate contract includes everything that is required by law.
1. The Mutual Assent
This is the agreement that was reached by both the seller and the buyer. It needs to be stated in the contract that the two parties have indeed decided on a purchase price. Any contingencies would be recorded in this agreement. The wording must be satisfactory to both as being correct.
2. The Names of The Parties
The names of both the buyer and the seller need to be in the contract. Include first, middle, and last name. The name needs to be spelled correctly for the title. It is easier to change a name on the contract than it is later on with the title company.
3. Location of The Property
The location of the property is important. Description of the property is included here. It should not be a vague description but be as detailed as possible so that there is no question about the property being sold.
4. The Purchase Price
The price as agreed upon must be written in the contract. This is the price excluding any fees and earnest money already paid during escrow. If the exact number is not known, a close estimate can be written in along with the source of the figure (an appraiser).
5. The Consideration
The consideration is the reason that the contract is being drawn up. It is the benefit derived from the agreement made between the two parties. The fact that there is consideration is more important than the amount.
6. Signatures of All Required To Sign
A contract wouldn’t be legal without signatures. A signature implies agreement with the contract and its terms. The contract doesn’t need to be notarized to be legal. The signatures of all required parties are enough to make it binding.
The requirements for a real estate contract are basically the same for a FSBO and a property represented by an agent. A contract where both parties agree on the stipulations is called a bilateral contract. Unless you deal in real estate investment property or offer a buyer an option to buy, you will use this type of contract.
Before signing a contract be sure to read over it, not just glance at it. Those creating the contract can make mistakes and you don’t want to overlook anything. Later on down the road is not the time to debate a costly mistake. Know what needs to be in your real estate contract.
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