A List of Real Estate Contract Types

If you do any real estate investing, or are looking to purchase your first home, you're likely going to review and sign a real estate contract. Knowing general information about several types of contracts can help you navigate the world of real estate much smoother. However, when it comes to the fine print, you may need to have a good real estate lawyer on board, especially if you're going to be signing many contracts. Here's a list of real estate contract types to familiarize yourself with:

Residential Purchase Contracts

One of the most used real estate contracts is the Offer to Purchase Agreement, which is between the buyer and seller for the purchase of property. It's what you'll sign if you're a home buyer, for example. It covers the entire real estate transaction and includes important provisions, such as price and closing date. Before signing this contract you should pay a home or real estate property inspector to review damages and other issues with the property. This can affect the purchase price and how much you would be willing to offer in the end.

Contract for Deed

These are used in cases in which the owner of the property provides financing to the buyer. It's called a "Contract for Deed," because the deed will not be transferred until the buyer pays everything in full. The owner/seller is the lender and the buyer agrees to make payments, like they would pay mortgage payments to a bank. The buyer is able to possess the land and treat it as if they own it outright. However, the deal is never finalized until the property is paid for in full. The seller has an incredible advantage in this type of deal because they can foreclose rather quickly if the buyer defaults and walk away with the deed, property and interest payments made to date.

Lease Agreements

You may decide to rent your home or lease land to earn additional income. A lease agreement is what you can use to make those arrangements. A lease agreement is used by landlords to specify the agreement between the lessor (landlord or property owner) and the lessee (tenant), and 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.

Power of Attorney

When you're are unable to sign your own real estate contracts, either because of a mental incapacity or other reason, you'll need to sign a Power of Attorney, a document for someone else to sign on your behalf. You might also be a designated agent under a Power of Attorney, for an elderly parent or relative. Not having one can hold up a real estate transaction, and therefore it's important to take care of it now. Decide who you want to act on your behalf if you should fall ill or suffer some injury that would prevent you from executing agreements. A spouse is often the first choice.

These are the basic real estate contract types that are most used by beginners and veterans alike. If you're able to get a standard agreement that you understand well, you can use it as a template for future deals with other sellers or buyers.

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