A Mini-Guide About Real Estate Contract Types!
If you are planning to invest in real estate, you must not know about the types of real estate contracts. As a real estate investor, you have to negotiate and sign contracts when you strike any deal. Therefore, it is important to understand the types of real estate contracts that you might use throughout your real estate career. This write-up will give you detailed insights into real estate contracts.
You should know the three main types of real estate contracts:
REAL ESTATE CONTRACT TYPES
Purchase agreement
When you purchase a home from a seller, you will definitely use the purchase agreement. The purchase agreement is a widely used type of real estate contract. The purchases agreement includes all the contract elements outlined above and can fall into one of three main categories:
- State/association purchase agreement: It is a standard agreement in which the buyer or seller involve real estate agent.You have to draft the agreement accoding a local Realtor association guidelines.
- General purchase agreement: This is a simplified, mini version of the state/association agreement, usually used when a buyer deals directly with a seller without involving a real estate agent.
- Property-specific purchase agreement: You will use this contract for non-traditional properties, such as mobile homes and vacant land.
Real estate assignment contract
You will use this contract when you want to buy property rights. The algorithm behind it is you will sell the rights to another buyer offering a higher price.
This wholesaling properties market is very large and competitive. You will use real estate assignment contract here. Generally, a fixer-upper is sold as-is in a wholesale situation. The benefit you can reap from the assignment contract is you can generate profit without doing any work from home.
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Lease agreement
You may decide to rent your home or lease land to earn extra income. A lease agreement is what you can use to make those arrangements. You will use a lease agreement to specify the conditions between the lessor (landlord or property owner) and the lessee (tenant). Make sure to includes important provisions, such as rent amount and the security deposit. There are many standard lease agreements on the Internet that you can find and adapt for your use.
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Power of Attorney
A power of attorney is a legal document that allows your legal advisor to decide your financial matters on your behalf. You might exercise the power of attorney if you’re:
- Mentally challenged
- Hospitalized or have any other sicknness that prevents you from signing the contract
- Not present in the country at the time of the signing of the contract
- The owner of several investment properties
- An elderly person unable to sign the contract
TAKEAWAYs:
Now that you know the ins and outs of a real estate contract, you can proceed with full confidence. Your offer is surely strong and you’ll have all your bases covered for a seamless transaction.
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Also Read: Essentials of Real Estate Contract