A real estate contract can appear completely foreign to a first time
buyer or seller. It seems like some extensive legal document that only
experienced lawyers would understand. Anyone could get confused.
However, you can easily begin to understand the contract once you do a
little research and define the basic terms of the document.
The first contract you may run into as the seller is the listing
agreement. This is the real estate contract you will sign with the agent
who is going to put your house on the market. This agreement will state
the name, address, and other important information about the seller and
the property. It will also list the conditions of the listing. For
instance, how much the brokerage is charging for their assistance, how
much you are selling the house for, how long the house will stay with
the broker, and what is involved in the sale.
You will also see a lead paint disclosure form if your home was built
before 1978. This form simply states when the home was built and that
the seller either does or does not have documentation or information
related to the lead paint. If there is documentation, the seller is
obligated to turn it over for inspection. If there is no known
documentation, the buyer has a set amount of time to have a risk
assessment done to see if a hazardous condition exists.
Along with the lead paint disclosure is the seller's disclosure. This is
the form which lets the seller to tell about the property. For instance,
if the property is in good repair this can be stated. The seller is
responsible for releasing information on any damage which may have been
caused due to flooding or other problems. If there was an infestation of
any kind which had to be professionally treated, the seller will put it
on this form.
The seller will also see another form the real estate agent must do.
This is the agency disclosure form. This is the form which states the
agent is working for the seller. It is crucial to have this one because
some agents work for the buyer, while others are dual agents who work
for both. The seller needs to know who his agent is working for.
The buyer has an entirely different set of real estate contracts they
will encounter. The mortgage contract will be used to determine the loan
amount for buying the property. This will list the details of the
purchase. It will tell how much the buyer will put up and how much the
lender will contribute. There will also be an appraisal done so the
property can be properly assessed.
The purchase agreement is a contract both the buyer and seller will be
using. This is the form the buyer will use to make an offer on the
property. This will also consists of the amount the buyer is borrowing,
any closing costs they are asking the seller to pay, and the amount of
earnest money put down. The purchase agreement will also list what else
the buyer would like. For example, the window treatments or appliances
may be requested in the purchase of the home.
One of the last forms both parties will see is the title disclosure.
This is the paperwork which states the title is free and clear from all
encumbrances. It also says the seller is the property holder and is able
to sell the home.
One final contract is the mortgage paperwork at closing. This is where
the title will change hands, the money will exchange hands, and the
property now belongs to the new buyer.
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