A Real Estate Contract: is a legally-binding document that outlines the agreed upon terms between two or more parties in a real estate transaction and becomes legally binding when signed by all parties.

4 Types of Real Estate Contracts:

  • Purchase Agreement Contracts
  • Assignment Contracts
  • Lease Agreements
  • Power of Attorney Contracts


Contracts Should:

  • Be written in clear language (avoid abbreviations)
  • Include deadlines and specify what happens if not met.
  • List all agreed terms of sale – such as included appliances or home warranty information.
  • Have a written contingency that outlines what will happen after the home inspection.  Can the buyer walk away?  Does the seller need to fix according to the inspection report?
  • Include a Financing Clause – This allows the buyer to back out if they can’t obtain financing or cannot sell their current home.
  • Specify who pays what in closing costs.
  • Outline a default plan – What happens to each party if one of them walks away.  Is there a monetary penalty?  This can help avoid a court case.


Common Types of Real Estate Transactions for the Investor:

  • Buying a Home
  • Selling a Home
  • Buying a Property To Rent
  • Fix and Filp
  • Wholesaling A Property
  • Prehabbing a Property
  • Serving as a Lender

Key Points:

  • 1There must be a contingency in the real estate contract that allows people to walk away if the inspection goes awry.
  • 2You need to ask to find out who is in charge of closing costs.
  • 3A lot of sellers need to include a home warranty when selling a property.

There are essentially four types of real estate contracts: purchase agreement contracts, contracts for deed, lease agreements and power of attorney contracts. They each have different uses and stipulations