Before going through with a real estate transaction, ask yourself if you know about the different types of contracts that exist in the market. Do you know how they work? If your answer is no, then you should definitely read this article. Below are some of the basic contracts that are usually seen in real estate.
1. Lease Contracts
This is a type of agreement that comes into play when an individual leases out their spare property to earn extra income. In a lease agreement, the landlord specifies the deal that they have agreed upon with the lessee (tenant), which includes the rent and the security deposit agreed upon by both parties.
2. Power Of Attorney
Power Of Attorney is an agreement that you sign when you give complete control of your transactions to a person of choice named in the document. This comes when you are ill or when you on a business trip halfway across the world. Note that, you will not lose the ownership of the property, you are only allowing a close associate act in your absence.
3. Purchase Agreements
Purchase Agreements are the ones you see the most. This is when a buyer/seller comes to an understanding before disposing off of their property and handing it over to the other party. This contract will have details of the buyer and seller along with the price that was agreed upon and the closing date of the deal.
4. Contract Deed
A Contract Deed is the riskiest arrangement of all real estate contracts. This is where you obtain a loan on your property from a local money lender, by offering the original documents as collateral. This is also where the loaner has complete advantage over you as the contract will not be transferred to your name, until the entire amount is repaid with interest. Defaulting on any payments would mean that the lender can foreclose your house and walk away with the documents.
These are the basic contracts that are most used by both veterans and real estate newbies. You can also make a contract template with terms and conditions you agree with, and just use it the next time you buy or sell a house. Overall, a basic knowledge of the real estate market does not account too much when you are handling a real estate transaction as it involves considerable sums of money. Which is why, you should probably hire an agent to represent you.