Every real estate transaction, whether residential, commercial, or industrial requires a contract. Yet it can be verbal too. However, a valid real estate contract should have some specific factors. On the contrary, the contract can get voided by law. Let’s take a look at those required factors.

PRICE & TIMING IN A REAL ESTATE CONTRACT

The two most basic essentials of a real estate contract are the final buying price and the transaction timeline. The contract should surely mention the contingencies implementation dates and when the transfer of title will take place.

Both parties need to clearly understand this information for the transaction to be successful. This is the first requirement of a valid real estate contract.

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CONTINGENCIES

You have to complete the contingencies of a contract. Every contingency has its own conditions and timeline.

For example, the seller may need to make certain repairs to the property before the closing period. If you don’t meet any of the contingencies, both parties have the right to walk away without closing the deal.

INSPECTION DETAILS

The most used contingencies are those link with the home inspection. Indeed, every contract should include a contingency. The contingency should allow buyers to close the deal if the property inspection does not go as planned.

You have to specify which, if any, repairs the sellers need to make before closing. Inspection details will clear expectations for both parties. It will also protect buyers from entering into unwanted transactions.

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FINANCING CLAUSE

You have to include a contingency that allows buyers to back out of the transaction. The buyer can back out if there is any financial constraint. In some cases, it is also a good-to-go idea to add a clause protecting the buyer’s rights.

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CLOSING COST IN A REAL ESTATE CONTRACT

Always make sure to mention who is responsible for closing costs to avoid any confusion later on. You should always keep an eye out for this piece of information. Furthermore mostly sellers are responsible for closing the costs. Although the seller contingency can be buried within the contract.

SUMMARY:

A real estate contract surely doesn’t need to be overwhelming or confusing. Undoubtedly, a good first step is to understand the essential factors of a contract. How the factors will benefit you as an investor, and the best situations for using them. Understanding this will put you one step closer to real estate contracts mastery.

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