Who Wants to Understand Real Estate Contracts?

Mention the word contract and images of expensive lawyers comes to mind. In real estate transactions, this is largely not the case anymore.

Owning a home is the American Dream. While the last few years have been more than a bit rocky for homeowners, the basic idea is still true. It can well be argued that homeownership is the central pillar to the middle class in this country. Given this fact, the legalities surround real estate transactions are surprisingly simple.

In most states, real estate transactions have been reduced to forms. There is a form for making an offer. There is a form for making a counter offer or accepting. Once you have a deal agreed upon, there is a form contract you can use. All of these forms can be purchased at your local office supply store.

Using real estate contract forms makes some people nervous. Rightly so! This is probably one of the biggest financial transactions you'll be entering to in your life. Are you really willing to trust doing it with a pre-printed form? Surprisingly, the use of these forms is generally the right move in most states. The forms are time tested and meet all legal requirements for the state. That being said, it is important to understand some basic legal issues surrounding contracts.

The biggest issue that arises in real estate transactions is the oral promise. A person should honor their handshake or promise, right? Well, maybe in a perfect world. We don't live in such a place. This means you need to get everything in writing. If you do not include all aspects of an agreement in the written contract, they are unenforceable. Oral promises are not enforceable in court, so don't rely on them.

Let's assume you get involved in a real estate transaction and realize you are in over your head. You don't really understand the contract process. What should you do? Go hire a real estate lawyer. Yes, they will cost you some money, but it is money well spend. Spending even a few grand on a lawyer to get advice on what the contract says, should say and so on is far better than committing to hundreds of thousands of dollars of debt under bad terms!

Millions of homes are sold each and every year. Don't let a fear of contracts stop you from getting involved. If you don't understand the process, talk to a lawyer. In most cases, however, forms will do the job for you without any problems.

Raynor James writes about issues surrounding real estate forms for FSBOAmerica.org where you can list your land for sale by owner for free for 1 month.

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