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Real Estate Contracts - Understanding the Basics

Real estate deals are a complete package that includes pricing, terms, and agreements. Real estate deals occur within a zone of negotiation. The top portion of the zone is defined by the price and terms a buyer is willing to pay for the property. The bottom portion of the zone is defined by the lease attractive price and terms the seller refuse to accept.

However the zone of negotiation isn’t just about prices. Sale packages include both pricing and terms, and the ability to change both is important to successful bargaining. The deal is in the details that are found in the basic real estate agreement-a formal document typically distinguished by tiny tape and convoluted language. An unsigned form is merely a piece of paper.

In real estate to have an official contract, there must be an offer of acceptance. Even with a written agreement with offer and acceptance, you still need consideration to make the deal work. Consideration in real estate means that a buyer will make a deposit with an offer, cash that is designed to show the seller serous intent and to compensate the owner if the deal falls through due to fault of your own.

If you were to sell your home to a family member then it is possible to have a deal with good consideration- meaning love and trust rather than cold hard cash.

Basic real estate forms that are used locally are likely to cover many issues and in some cases may even be used without alteration. Keep in mind as real estate deals become more complex, more and more deals require not only basic forms, but also ""addenda""- additions to a contract form made on a separate sheet of paper. Two sheets are considered addenda, one sheet is addendum.

These addenda are important because if properly written they supersede any conflicting language found in the basic form. Remember to always have your addenda completely reviewed by a trusted real estate attorney to assure that the details of such additions are fully understood.

If anyone tells you that their form is the local standard and cannot be modified be weary. All forms can be modified as long as it is by mutual agreement. All provisions are subject to modification except when established by law.

Any real estate agreement can be discussed verbally, but generally to be legally enforceable they must be in writing. They also must be made by people who are legally competent.

If you decide to list your property through a broker, be certain to get a copy of the offer form used by that broker. Carefully inspect the document with the broker, and if necessary with an attorney. Fully understand all obligations required.

All areas have a standardized form agreement that is available for local home sales. It is recommended to use a localized for rather than a generalized national form because local jurisdictions commonly require certain items to have a valid real estate agreement.

The standard terms you should cover in an offer include price, deposits, damages, financing, location, application, seller take-back, settlement, title, agency, insurance, etc.


About the Author: Published by Joe and Colleen Lane, Realtors®. The Lane Real Estate Team services Tri City Wa Real Estate, Kennewick Wa Real Estate, Pasco Wa Real Estate, Richland Wa Real Estate, and surrounding Southeastern Washington Communities.




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