A real estate contract involves buying or selling a house or property. Familiarizing yourself with different types of contracts in real estate helps you in choosing the right one, according to your situation. Here we specify 3 types of contracts in real estate which are most popular.
1. Contract for Deed
If the buyer wants to purchase the seller’s property, then contract for deed agreement is signed. This type of contract is used, if the buyer is not able to make down payment or acquire loan from bank. This contract states that, the seller receives additional income as interest payments and can foreclose the contract, when the buyer defaults. In case of default, seller gets to keep the payments made upto date on interest, the deed and the property. More risk lies with the buyers, if they are unable to acquire funds from financial institutions.
2. Sale Agreement
This type of contract consists of the selling price and contract closing details of the specific property. Sale agreement states all the terms, negotiated between both the parties involved. This type of written agreement is useful in protecting the buyers and sellers, if any disputes arise. You must bear in mind that sale agreement is a final deal and it cannot be broken, if you want to go for other offers.
3. Exclusive Right to Sell
This type of contract is the most commonly used agreement between the seller and the estate agent, in which the broker has exclusive rights for specifying and selling the property, on behalf of the owner. This is used when you want to sell your property, with the help of a mediator. Exclusive right to sell contract, is beneficial to the owner because, the commission of the broker, depends on the deal of the sale. In order to receive good commission, the broker needs to obtain best possible price for the property. Once you sign this contract, you have to pay commission to the broker, even when you make the sale yourself.