Last Updated on April 25, 2022 by Admin
Real estate is a lucrative business and an exciting career. Several numbers of people take up positions as real estate agents every year. If entering the real estate game is something you are keen to do, check out Udemy’s course on starting a career in Real Estate. Read more to learn about real estate contracts.
A real estate contract is between parties for the purchase and sale, exchange, or other conveyance of real estate. The sale of land is governed by the laws and practices of the jurisdiction in which the land is located.
If you’re already working in the field, you may want to check out Udemy’s exciting new course on Twitter For Real Estate. In it, you’ll find great advice on how to take your strategies to the next level using social media.
Either way, fresh or seasoned, there are several key components to the business that any real estate agent must understand to succeed. One such focus is a strong knowledge of contracts and law. A better understanding of real estate contracts, including how to read and write them, can put you in a better position to serve your clients and business.
What is a Real Estate Contract?
Real estate is defined as a piece of property that consists of actual land, buildings, or in some cases, both. A real estate contract, most simply, is a written document signed by two persons or business representatives (also known as parties) for the purchase and sale, exchange, or another form of passage of that estate.
When a real estate contract is drawn up for the cases listed above, it transference a deed or title. These are recordable documents that confirm ownership of the real estate in question.
However, deeds, titles, or easements are not the ‘real estate contract’ itself. They are the documents that prove legal right and ownership; a real estate contract is the document that details how those items are exchanged from one party to the other.
Not all real estate contracts are created for the purchase, sale, or exchange of real estate. A Leasehold Estate is a type of estate for a piece of property that is being rented. It will have a different set of rules for exchange.
This can be for a home, apartment, or piece of land (the real estate in question). These rental contracts are called ‘leases’ and do not result in recorded deeds or titles like the above-mentioned contracts.
Most often, a real estate contract is bilateral. This means that two parties have agreed upon the information for sale, including the exchange of monies, titles, and the like.
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First and foremost, for a real estate contract to be held up and valid in a court of law, it must be in writing. This is a standard necessity required by the United States Government. Any non-written real estate contract – i.e., verbal – is non-binding according to American courts.
Next, the contract must include certain key information to be considered respected, safe, and upstanding.
The Parties involved in real estate contracts
The full name of any parties involved in the contract must be clearly stated on the contract itself. Identifying the parties is a must. Without stating the names or titles of the parties involved, there will be no proof of their existence concerning the real estate contract being created.
The parties are usually split into two categories: buyers and sellers. Most often, they are referred to as “The Principles.” This will separate them from the real estate agent who is acting only as a representative in negotiating price and other amenities. If a real estate agent is the person brokering the sale, they should also be listed in this manner.
The real estate being sold needs to be identified. Like the parties above, this information must be in writing on the contract so that no miscommunication is possible.
At the very minimum, the address of the property should be listed. However, it is most often preferable that a legal description be included. A legal description will state the property’s acreage, dimensions of the house, and any other pertinent information available.
Invariably there will be a debate between the parties as to the price of the sale. Bargaining, as an agent or salesman knows, is part of the experience. Once a price is agreed upon, and hands have been shaken, make sure that this price is put onto the contract and clearly stated, in both numbers and as a written phrase. If the price is not on the contract, it can be considered null and void.
A real estate contract must be entered voluntarily. Without signatures from both parties, the contract is not valid. Signing the contract proves that both parties agreed to the information within it and will follow the rules set out by the contract. No one can be forced to sign the document.
Most real estate contracts do not require notarization by a Notary Public; however, it is not uncommon for buyers or sellers to request this. It is just one more step that allows all parties involved to feel absolutely secure in the contract that has been agreed upon.
A strong real estate contract will often include more information. Many contracts will include a ‘Deed Specified.’ This section focuses on the actual deed to the property. Remember, the real estate contract is the contract of sale, not the document proving the property’s ownership.
It is important that in the real estate contract, the actual deed be specified. Furthermore, if there are any liens or encumbrances on that title – which will transfer over during sale – they must be listed as well. Failure to disclose that information could lead to a nullification of the contract and an end of the sale.
A contingency section is included in the contract to specify the duties that must be performed once the contract is signed. These include mortgage, inspections, and secondary sale contingencies. Each section will pertain to the property in question and should be agreed upon by both parties.
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Undoubtedly there will be a lot of back and forth discussions and paperwork. If you are finding yourself drowning in hard copies, check out Udemy’s Course on creating paperless files for real estate. It might help you to get digitally organized so you can focus on the tasks at hand. Because real estate contracts are so number heavy, it might be wise to check out Udemy’s Course on Excel for Real Estate. These courses might give you the one-two punch needed to do your best.
Learning How to Be a Real Estate Agent (something you can do on Udemy) means knowing everything you can about the field. Real estate contracts can be wordy, confusing, and take time and patience to get right. It is important that both parties be happy with the final product.
Therefore, a better understanding of real estate contracts is necessary to avoid conflict and move towards closing a great deal faster.
If you’ve been thinking about getting into the real estate game for some time, then start today by checking out Udemy’s course on how to start a career in real estate. In it, you’ll find everything you need to get your feet on the solid ground of real estate. From there, check out other Udemy courses so that when the time comes, you’ll be drafting strong contracts for every sale you make!
Source: This article is originally posted on Udemy.