Real estate contract is a legal agreement that involves the transfer of title and ownership of a property from one person to another. It involves two parties, one offering to sell his property and the other one who accepts to buy. The date of transfer of title is fixed and so is the value of the property. Also, the mode of payment and all the detailed terms and conditions are added to the contract with requisite evidences.
Real Estate contracts can be complex but the extent of terms involved depends on the nature of the transaction under consideration. If the property is purchased in return for the entire sale price paid at once during the execution of the transfer of ownership, then the contract would be invariably simple in its context. And apart from verification of the source of finance, the seller need not be concerned with any other formalities. To this end, the buyer is required to produce a bank verification note or copy of statements. Entering the contract and closing of the transaction takes place at the same time. Under such purchase contracts, where the entire price of the property is paid for and settled by the buyer, understanding the entire transaction in terms of documentation does not account for much of an issue.
However, only about 20 percent of the real estate transactions are of such nature. Most of the contracts involve some or the other kind of contingency that eventually leads to the closing of the transaction. Real estate contracts are signed by the parties to be closed on a particular date on which the buyer settles his obligation by paying off the sale price. The buyer may borrow the amount from a bank or a private financer. Most of the times it turns out to be a mortgage agreement. In such cases, the buyer arranges for the loan once the real estate contract is secured. And on the basis of this contract the buyer avails for a loan. The whole procedure might take 30 to 45 days in usual cases. Such a contract might contain extensive clauses and terms and understanding each of them is quite essential. In some cases the buyers may also agree to pay in parts. Thus, a transaction can have many variations and the contract is flexed to suit the needs of both the seller and the buyer. Nevertheless, more than the buyer the seller is required to understand the contract and its ingredients in their complete significance.
Reading the contract prepared for the transaction is the key step towards learning the conditions indicated therein. Many of them just skim through the statements because legal jargon and phrases might often seem quite cumbersome for an unprofessional individual. This sort of negligence can land up either of the parties in trouble in case of an untoward turn of events. Sometimes one might have to reread the contract in order to understand it thoroughly. If you are selling through a middleman, then you can discuss the meaning of the clauses with your agent. Anyhow, before putting your signature, verifying whatever you understood from your contract is very essential.