Real Estate Contract Between Buyers and Sellers

If you are going to buy a home, there are a number of issues you need to consider. Here we look at a real estate contract between buyers and sellers.

Real Estate Contract Between Buyers and Sellers

A real estate contract between buyers and sellers is simply a mutual agreement to take certain actions. The action to be taken by each party is known as consideration. In the case of the seller, he or she is agreeing to transfer the home to the buyer. The buyer, on the other hand, is agreeing to pay a certain price in exchange for the transfer of the party. Obviously, there are a lot of other elements involved such as down payments, inspections and such, but this is the basic idea.

To get a grasp of a real estate contract, it makes sense to focus on a mortgage loan as an example. When I apply for a mortgage, I am responding to an offer from the lender to lend money at a certain rate and amount. The lender, of course, makes the offer subject to various contingencies such as my credit score, debt payment history, income level and so on. If the lender believes I am a good risk, it will agree to lend me the money and we enter into a written agreement. The consideration in the agreement is twofold. The bank lends me money, and I agree to pay it back each month for a number of years at a certain interest rate.

Whether you are buyers or sellers, the sale of a home should always be backed up by a real estate contract. Any verbal agreement you enter into on the sale is next to worthless. The law does not favor oral agreements.

In fact, there is a legal authority called the Statute of Frauds that controls the issue. This catch name comes from the fact that oral agreements are difficult to interpret because it is difficult for the judge or jury to tell which party is telling the truth about the agreement and which is a fraud. In most states, oral agreement detailing payments of more than $500 are unenforceable. Unless you are buying an insanely cheap home, this means you need a real estate contract.

Real estate contracts for buyers and sellers should be a must. If you enter an oral agreement for the purchase or sale of a home, you are asking for major problems.

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