Estate Sale Contract

What Are Basic Real Estate Sale Contracts?

Real estate, also known as real property, refers to any home, building, or land. Properties can have lands, structures, and even natural resources. When there is a sale or purchase agreement involved among real properties already, that means signing a contract known as the real estate sale contract comes to the picture. You expect this contract to incorporate the legal obligations and property rights between buyers and sellers to comply with the real estate transaction process. The seller often prepares the sales agreement, along with the documents required to sell property, when a buyer finally decides a property or home purchase. Once both parties agree, following the contract rigidly is a must, or rulebreakers would have to deal with the law or legal consequences.

Over $493.3 billion was the revenue estimated for the real estate industry in the US back in 2019.

The Census Bureau reported that new home sales back in September 2019 reached a 701,000 seasonally adjusted annual rate (SAAR).

Statista also mentioned that Hong Kong was labeled as the highest-priced city in terms of housing properties by averaging around $1.24 million worth of a residential property.

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Why Is It Important?

What makes real estate sales contracts important is by enforcing the law into the property or land purchase agreement. If ever someone backs out from the agreement, then at least there is already a plan about how it shall be processed. Moreover, such a contract outlines every single detail from housing or property transaction. The type of residential or commercial property for sale, names of the buyer and the seller, payment amount, and the payment schedule will surely be present there for awareness. Aside from working as a proof of purchase document, you also appreciate the path to home ownership. Secure housing is beneficial for settlement, so you need not pay for continuous rentals of properties you cannot own. You can even make such properties as a long-term investment when you decide to sell after many years or, perhaps, plan a small business or commercial entity with such properties.

Real Estate Evolution: A Brief History

Before making an offer to purchase land or preparing an agreement to sell personal property form, do you ever wonder how real estate evolved through the years? In pre-historic times, our ancestors have their ways of dealing with shelter and land without labeling the properties as real estate yet. Between 30,000 and 15,000 B.C., people used to be nomads wherein they do not mainly stay in one place as shelter forever. The reason behind this is due to their hunting lifestyle; wherein there are more places to hunt for food. As time went by, tribal leaders have been formed, and they paved the way for taking claims of particular lands. Tribes went from a small farming area to a big city as the population increased in the long run.

Fast forward; dynasties developed where kings and aristocratic leaders were elected. At this point, tenancy goes along with taxes. Therefore, paying taxes is part of living, and peasants had to continue working to pay for their rent with tax. Things eventually changed when politics developed, and machines came. New rules and inventions helped make life easier, including how the housing system works. More terms got introduced to the public, like mortgages, loans, trades, and more. Lands and properties can be bought, sold, rented, or even traded. The point here is that when you think of current investment opportunities, home or land ownership is one of the oldest and most effective examples to do.

What Are the Elements Found in a Basic Real Estate Sale Contract?

Are you familiar with what consists of a real estate sale contract? Maybe you are interested in a very luxurious property like the ones in Hong Kong which are considered very expensive. According to Statista, the average price of their residential properties cost about $1.24 million. Maybe you turn overwhelmed with everything, and you seem unsure of what to do with the purchase agreement form or binding contract. The key is to understand every element found in that contract since there can be a lot of factors from personal information to the disclosure. Recognizing such elements will help you receive protection anyway by setting clearer expectations. The elements to expect are the following:

Party Information: Identifying who is who marks as the first step of any agreement. In dealing with sales or purchase contracts, there are always two sides, which are the buyer and the seller. Recognizing each party is significant for clarification. Sometimes there are other people expected to identify as well, like the agent, contractor, guarantor, and other tenants. Giving out the wrong personal details may keep the contract as void since the correct information is required.Property Info and Address: What property is at stake in the first place? A detailed outline and description of the type of property is necessary. Is it a mobile home, manufactured home, or maybe that is not simply a residential property like an apartment sale? Most importantly, a specific address on the property address must remain evident.Price and Terms: The serious part of the contract starts with the prices and its terms. Sellers and buyers must have discussed the offered price already, but some terms are essential as well to make a generic form similar to a more detailed letter. Payment methods, installment arrangements, financial requirements—you name it. What matters most is that every term is followed strictly.Closing Date and Costs: In ensuring that a closing date got set, it should be placed in writing, which is why this section in the agreement is vital. Once the closing time and date are listed on the form, then property possession ensues. Furthermore, you expect the possession to be recorded under the bill of sale.Taxes and Additional Fees: Part of compliance includes real estate taxes and other assessments. Costs include maintenance plans, homeowners’ association fees, and more. In case taxes are adjustable at some point, this section can be discussed inside the addendum. You cannot belittle this part, though, because sometimes an additional fee can cost a lot, so more preparation turns required.Included and Excluded Items: Other people seem to overlook other parts of a purchase order like the excluded and included items of a property sale. Aside from the building or structure, additional items could already be part of the purchase. You might receive lighting, HVAC, doors, windows, bathroom fixtures, and kitchen appliances as well. Additionally, some aspects may need disclosure here, including termite damage, poor disposal system, and others. Review this section thoroughly in case your expectation of what is excluded or incorporated from the purchase turns out differently. Thus, you have a right to complain or negotiate.Contingencies: Anything can happen in the future, and it works best to at least prepare for possible incidents and circumstances with a contingency plan. To keep the shelter in impressive condition, you may set up for inspection, appraisal, and more. The same goes for your financial plan through funding or mortgage.Penalties: Agreements likely tackle about consequences given to any party committing any penalty. Maybe a buyer did not commit to the final payment plan, and it can lead to a purchase default. Once there are signatures given by all parties in a contract with penalties stated clearly, then everyone is encouraged to remain responsible for their obligations. Otherwise, legal consequences come to rule breakers.

How to Devise a Basic Real Estate Sale Contract

With numbers of estate sales involved, numerous contracts are at hand too. As stated in a report, there were even 701,000 SAAR US new house sales in September 2019. You can count as one of the current estate sale statistics by devising a contract for purchases too. It will be achievable to come up with your real estate sale contract until transactions are enforced by law. Check out the steps on how to make a basic real estate sale contract:

Step 1: Pick a Template to Modify

Have you checked our real estate sale contract templates yet? Rest assured, you will create your contract quickly by downloading your preferred template first. Never forget to check if you got the appropriate example for a purchase and sale agreement template or real estate contract because many different contracts exist. Next, you may modify the template by adjusting the format and placing the correct information to its blanks. You eventually get the hang of it once you explore its features and slowly complete it.

Step 2: Be Accurate with the Property Details and Inclusions

When you provide the rest of the required information to the template, you cannot ignore accuracy. You generally begin with the property information. Buyers want a detailed description of what product they are getting, and the same importance applies to the sellers who should be aware of what they exactly provide. Remember the elements mentioned earlier, specifically the property info and address or the included and excluded items? Those are your guide on what to give here. Furthermore, you can make use of a checklist in enumerating the details and inclusions to avoid missing anything.

Step 3: Recognize the Correct Parties

More about the elements, of course, you should never miss out on the party information. In case you are unsure about any personal detail from another party, then it works best to ask and have it confirmed first. It turns wrong to write based on assumptions only because errors shall cause the document to be considered null. For example, you might have placed a nickname rather than the legal name, and that is not allowed. Correcting information inside contracts should be common sense anyway since those work as official business documents already.

Step 4: Aim for Clarity with the Payment Terms

Do not create vague statements towards the payment and its terms because objections may rise if unclarified. Expect to provide the precise amount of total selling price, earnest money, down payment, and other miscellaneous fees. If there was an oral contract or agreement settled before this writing, then what got stated here should match to what was spoken. Not sticking to the plan will only end in a disagreement like having one party to cease the transaction.

Step 5: Prepare for Disputes and Penalty Agreements

When things do not end as planned, particularly if a buyer fails to commit with every stipulation in the contract, consequences must take its turn. It becomes unfair on the seller’s part to just have the whole real estate sale stopped merely because a buyer changes his or her mind. Maybe almost everything was prepared for the transaction already. Researching more about the real estate contract law basics or talking with an estate attorney for this matter can help a lot in finalizing this appropriately.

FAQs

Who prepares the real estate sale contract?

The seller often prepares or drafts the real estate sale contract. However, sellers should make this along with the buyer’s offer, consent, and details. What to input on the contract will also include the buyer’s information anyway, which is why buyers are still needed.

How long is a real estate sale contract good for?

In most cases, real estate sale contracts are good for up to a year. Even so, the duration depends on what was agreed upon in the contract. As long as every party is aware of such duration, then there is no problem.

Should the real estate sale contract be notarized?

Notarized letters and documents become typically required for official or legal documents, but real estate sale contracts can work without it. But, some examples, like the real property deed, would require in being notarized. Nevertheless, acknowledging the notary public for a contract is the right thing to do, but it is not always stipulated.

If you are serious in accomplishing your housing needs as part of your American dream, then review your contract before anything else. Indeed, it gets exciting to move into your dream home slowly, yet the details inside any real estate contract are no laughing matter. High costs, strategic plans, and important decisions are even a concern to deal with first. As you purchase a property, you always process a basic real estate sale contract for documentation purposes. Consequently, you will value the whole agreement in the future if you can manage to meet the obligations just as you value your newly purchased property.