What Buyers and Sellers Need to Know About Real Estate Contracts
Update: 2017-10-30
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Today we’re going to talk about what it takes to make a real estate contract legal and binding.
Buying a home? Click here to perform a full home search
Selling a home? Click here for a FREE Home Price Evaluation
Today we’re going to talk about what it takes to make a real estate contract legal and binding.
All offers to purchase real estate should be in writing. An offer doesn’t have any teeth unless it’s in writing, and most sellers won’t respond to a verbal offer. The seller then has the opportunity to respond to the offer by either accepting it or countering it with terms and a price that are acceptable to him.
This process would continue with each counteroffer being signed by the presenting party until mutually acceptable terms and price are agreed upon. If there is no agreement, then the contract falls apart.
So in general, the offer becomes a contract on the date that both parties have signed. Once this happens, the contract is binding for both the buyer and the seller. The contract is one of the most important steps in the home buying process, as it clears the way for both parties to begin the transfer of property.
It means that the sellers can begin planning their move out and the buyers can work with their agent, lender, and escrow company to get their ducks in a row for closing. Of course, just how binding the contract is depends on the detail of the contract itself. Some contracts may have contingencies built in.
Typically, a buyer’s agent will try to build in as many contingencies as possible into the contract to keep the client from being tied down in case something unexpected comes up. A listing agent, on the other hand, will typically advocate for as few contingencies as possible and may even ask to tighten up some of the time frames of the contingencies because their client doesn’t want the buyer walking away from the deal.
Why may a buyer cancel a contract? One of the most common reasons that real estate deals fall through or fall apart is because of financing, or, specifically, a buyer’s inability to get financing from their lender. For example, an appraisal contingency protects the buyer and gives them the opportunity to walk away from the sale if the property does not appraise for the purchase price.
If the home fails to appraise or appraises lower than the purchase price, it usually means that the lender won’t be able to provide the buyers with as much financing as they need to actually close on the property.
The contract is
United States
Today we’re going to talk about what it takes to make a real estate contract legal and binding.
Buying a home? Click here to perform a full home search
Selling a home? Click here for a FREE Home Price Evaluation
Today we’re going to talk about what it takes to make a real estate contract legal and binding.
All offers to purchase real estate should be in writing. An offer doesn’t have any teeth unless it’s in writing, and most sellers won’t respond to a verbal offer. The seller then has the opportunity to respond to the offer by either accepting it or countering it with terms and a price that are acceptable to him.
This process would continue with each counteroffer being signed by the presenting party until mutually acceptable terms and price are agreed upon. If there is no agreement, then the contract falls apart.
So in general, the offer becomes a contract on the date that both parties have signed. Once this happens, the contract is binding for both the buyer and the seller. The contract is one of the most important steps in the home buying process, as it clears the way for both parties to begin the transfer of property.
It means that the sellers can begin planning their move out and the buyers can work with their agent, lender, and escrow company to get their ducks in a row for closing. Of course, just how binding the contract is depends on the detail of the contract itself. Some contracts may have contingencies built in.
Typically, a buyer’s agent will try to build in as many contingencies as possible into the contract to keep the client from being tied down in case something unexpected comes up. A listing agent, on the other hand, will typically advocate for as few contingencies as possible and may even ask to tighten up some of the time frames of the contingencies because their client doesn’t want the buyer walking away from the deal.
Why may a buyer cancel a contract? One of the most common reasons that real estate deals fall through or fall apart is because of financing, or, specifically, a buyer’s inability to get financing from their lender. For example, an appraisal contingency protects the buyer and gives them the opportunity to walk away from the sale if the property does not appraise for the purchase price.
If the home fails to appraise or appraises lower than the purchase price, it usually means that the lender won’t be able to provide the buyers with as much financing as they need to actually close on the property.
The contract is
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