Aspects Involved in Real Estate Contracts

Document Sample
Aspects Involved in Real Estate Contracts Powered By Docstoc
					Real estate sales involve a contract, in which the cost of the property
and the conditions wherein the transaction is made are drawn. A real
estate contract is a means for sealing the agreement between the property
seller and buyer. When you hear of a property being under a contract, it
means that the seller has signed the contract and that the document has
been sent to the buying party.

These agreements involve contingencies, which protect the buyer in the
event that he or she finds out that purchasing the property was a
mistake. Contracts should include a section on contingencies, which may
include rendering the seller liable for structural defects on the
property. The buyer may render the contract void in case problems with
the property are discovered days after signing the contract.

Real estate sale should start with a contract offer. When a contract
offer is made, property assessment should follow and parties should agree
on a sale price. The sale price will be used in calculating the final
loan amount and down payment. If the resulting sale price is lower than
the amount stated on the contract, the loan should be modified. In some
cases, the seller may cancel the contract and walk away.

Look at it this way. If a property is sold at $150,000 with 10% down
payment, the amount of the loan would be $135,000 and $15,000 down
payment. If the property becomes appraised at an amount lower than
$150,000, the resulting sale price will be negotiated again. If the
negotiations go smoothly, the buyer can obtain the property at the lower
amount. But, if the seller does not approve of the change in sale price,
he or she may refuse selling the property.

A contract offer should involve a binder fee. A buyer produces the binder
fee or earnest money to show that he or she is serious in obtaining the
property. The amount of the binder fee depends on the offering price.

A real estate contract is first created by a real estate lawyer, and then
approved by the local and national real estate board. This contract
contains sections that state the rights and duties of both the seller and
buyer. What the contract should contain varies among states, but there
are pieces of information that should be seen in all real estate
contracts. The names of the seller and buyer and the detailed description
of the property being sold are essential pieces of information that
should be seen on the contract. The sale price should be indicated, as
well as the binder fee or earnest money amount. The closing date should
be stated. Of course, for that contract to be valid, it should bear the
signatures of the seller and buyer.

Buying a property may or may not involve a real estate agent. You can
always find properties for sale on the newspapers or on the internet. If
you have already contacted the owner and the both of you are willing to
make arrangements, you can phone a real estate lawyer to facilitate in
the transaction. Your lawyer can create the contract, or they can read
the prepared contract to see whether your rights are being followed.

Shared By:
Description: bussines is real estate.