Like any other contractual agreement, a properly executed real estate contract is a binding legal document. Regardless of whether you seek the services of a real estate professional, or you choose to sell (or buy) a property yourself, you'll need to have a legal contract as a basis of the transaction. Although varying in looks and amendments, in order to meet the requirements of law a standard real estate contract must include (at least) the following sections:

Names of the parties to the contract. Needless to say, the names of the property's seller and buyer must both be annotated on the contract. First, middle and last names of the parties should all be included and must be spelled correctly for the sake of property title. It's much easier to change or correct a name on the contract than it is to later change an already executed title document.

Mutual assent. This section contains the actual agreement that was reached between the parties, along with any contingencies made a part of the transaction moving to conclusion. The mutual assent must directly state that the two parties have indeed reached an agreement on a purchase price for the property, and the wording must be satisfactory to both as being correct.

The property's purchase price. The price as agreed upon by the parties must be identified in the contract, and should be written out both in longhand (as signing a check) and in number form. The amount listed is the price of the property only and should not include any fees or other charges paid during escrow.

Location and legal description of the property. The description and location of the property are both vital, again for the sake of transference of a proper and clear title. The property's description must be of the legal variety to avoid any ambiguities, and be as detailed as possible so that there can be no question about the identity of the property being sold.

Consideration. The consideration is the benefit derived (for each side) from the agreement made between the two parties. For the buyer, the consideration is the property that he or she will receive from the seller. For the seller, the consideration is the purchase price that will be paid by the buyer.

Signatures of all those that are party to the agreement. Of course, a contract is not legally binding without the proper signatures. As such, a party's signature implies agreement with the contract and all of its terms.

Again, the basic requirements necessarily for a valid real estate contract are the same for a for-sale-by-owner transaction and a sale with agent representation. However, before signing any contract, be sure to read it carefully; do not make the mistake of just glancing through it (which people often do because of the general length of real estate documents). Even if drawn up by an experienced attorney, the contract could contain mistakes and you don't want to be the one to pay for them. Better safe now than sorry later.

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