The Investor's Guide To Residential Home Transactions
By Pierre Mouchette | Bits-n-Pieces
Types Of Real Estate Transactions Reviewed In This Guide
Within this guide, there are several types of real estate transactions that we will cover. These are:
Real Estate Contract Inclusions
Contracts are used to close real estate transactions, and agreements vary accordingly. However, there are essential elements to any real estate contract, and you should be familiar with them. In understanding, you will help to ensure that each agreement you enter is comprehensive and precise. The following list outlines items to include:
Agreements, Offers to Purchase, and Contracts
As a real estate investor, it is necessary to be well-versed in real estate agreements, offers to purchase, and contracts. They are 'the tools of your trade.'
These tools can be designed to serve your interests, protect your investments and minimize your liability and risk. It will also behoove you to understand how these tools protect the other parties in your transactions. Four standard real estate contracts that you should be familiar with are:
A purchase agreement, or sales contract, is the most common real estate contract. As the name suggests, this is a real estate contract that lays out an agreement between the Buyer and Seller of a specific property. This type of real estate contract includes all the typical elements of a contract:
Real Estate Assignment Contract
A real estate assignment contract is a 'wholesaling investment strategy.' Here you find a distressed property, secure it under contract, and assign that contract over to a second buyer for a profit.
A real estate Assignment Contract's content is similar to a Purchase Agreement. Often, an assignment contract only has the addition of some extra wording. For example, you might add the following phrase to the purchase agreement: "John J. Smith, and/or assigns." An assignment contract is the document referenced when speaking of a 'wholesale real estate contract.'
The 'assigns' part allows the investor to lock up a property with a purchase contract and pass along that property to someone else. The 'words and/or assigns' provides flexibility to the investor.
These contracts outline an agreement between the lessor (property owner or landlord) and a lessee (tenant). In this contract, the landlord agrees to offer the property to the tenant at a 'specific monthly rate for a particular time.' Agreements of this kind specify the rent amount, security deposit, and who pays for utilities. Lease agreements aim to avoid issues between the lessor and lessee, protecting both parties if something unforeseen happens.
Power of Attorney
A document that gives another party the power to sign on your behalf. Used in real estate, a power of attorney can be quite beneficial if you are the owner of rental properties or caring for an elderly parent or relative, who may encounter a situation when they cannot sign a real estate contract. The principal or party permitted to act on their behalf can have someone sign in their stead. The principal may be someone who is: