Different types of real estate contracts
The whole process of buying or selling real estate is complex. Who does this affect? What is the reason? When should I contact a lender (if needed) or an agent? Where will I move next (for the seller) or where do I want to live (for the buyer)? Why is this a good time for this transaction? How will I get this all done and stay sane??? On top of all that, one other piece is the real estate contract itself. There are four different types of real estate contracts.
Below is to review why different types of real estate contracts exist. In everyday terms, think why different types of real estate contracts as why does a person have different types of shirts? Dress shirt, polo shirt, t-shirt, patterns, etc. We have different types of shirts for different types of needs. Same with different types of real estate contracts. Every real estate transaction is unique. A lease agreement is not always the answer. Someone who is in a coma would not be able to sign for themselves.
- Purchase Agreement. This is when Party A has property for sale. Party B submits the offer. Party A agrees to the offer. Parties A and B sign a contract called The Purchase Agreement. Then the transaction proceeds. Party A sells. Party B buys. Everyone has a nice day!
- Real Estate Assignment Agreement. This is when Party A has property for sale. Party B submits the offer. Party A agrees to the offer. Parties A and B sign a contract called The Purchase Agreement. One key part of this agreement is Party B has a clause that says they want to assign the contract to someone else to ultimately purchase property from Party A. Now Party B goes out and finds Party C to take over the contract. The transaction proceeds. Party A sells. Party C buys. Everyone has a nice day!
- Lease Agreement. This is when Party A owns the property but wants Party B to rent-or lease- the space. Party A has a notice vacant space is available for lease. Party B states interest in the lease. Party A provides a Lease Agreement to Party B. Both sign. Payments are made as written in the Lease Agreement, typically a set lump sum on a monthly basis. Nobody buys property. Nobody sells property. Everyone has a nice day!
- Power of Attorney Agreement. A person may not have the mental capacity to make decisions for themselves, therefore a legal agreement is drawn up appointing another person to make decisions. For example, an elderly person appoints their adult child to be the Power of Attorney. That adult child will then be the person to decide how to handle the real estate transaction. Let’s say the elderly person has a farm of 150 acres that is rented to a specific entity. The elderly person develops dementia. Now the adult child makes and signs decisions on behalf of the elderly person. Another example is what if a person does not have a Power of Attorney but cannot make big decisions? Then a judge in the court of law will appoint a Power of Attorney.
These are why different types of real estate contracts. The contracts themselves have various parts to ensure a binding, legal, executed contract. For further discussion, connect with Reel Property Solutions, LLC which is brokered by eXp Realty. Since Rochelle is a licensed real estate agent, there are many options for you and your specific situation. Reel Property Solutions, LLC can work with distressed properties, homeowners/Power of Attorneys in distressed situations, list the property… there’s a long list of options! Note that no matter what, Reel Property Solutions, LLC has extensive real estate investing education from Fortune Builders. Besides reaching out to eXp Realty brokers, other agents, and Rochelle’s mentor, there’s thousands of professionals within the Fortune Builders family who would have insight and guide to answers. We can review the best-case contract, timeframe to review your real estate goals, and the steps to achieve your goals!
Together we will CATCH A WINNER!
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