Buying and selling of property in Australia for it to be legitimate must be backed up by contracts and agreements. You must be equipped with knowledge about these contracts before going ahead to carry out a real estate transaction.
What is a Real Estate Contract?
It is a legally binding agreement reached by two or more entities regarding the purchase, lease or exchange of properties as part of a real estate transaction. Its drafting is guided by the law of the land.
Types of Real Estate Agreements and Contracts Required
Some examples of real estate contracts you should know about before completing your real estate transaction are;
1. Contract of Sale
This is a statement of terms reached during the sale of a property. It details information about the property, personal information of the buyer and seller and agent (if any), considerations for sale and exact terms agreed by the buyer and seller. It should be prepared by a qualified legal practitioner to ensure compliance with the law of the state. Once the buyer and seller have appended their signature, it becomes binding on both of them.
2. Agent Agreement
Upon choosing an agent, you are supposed to sign an agreement with the person. This document will include information about the property, the seller and the agent. It will contain the duration of the agreement, the estimated selling price, the seller's chosen price, sale strategy, settlement period and the agent's commission and fees. This document is mostly open to negotiation especially the details about the type of listing (exclusive or open), length of agreement and agent's commission (which you can only do with an understanding of prevalent pricing strategy in the region. The real estate fees in Brisbane, for example, is different from that in Sydney). Having understood this, you must negotiate for something more agreeable with you. You may need to get a solicitor to be sure you don't miss out on any clauses that may have been hidden in plain sight.
3. Exclusive Right To Sell Contract
A seller can decide to confer upon the agent a right to sell on their behalf or in their absence. It can happen with people that change locations and have to leave their home behind. It can also be drafted in the case the seller is incapacitated to participate in the selling process. This contract allows the agent to act in the interest of the seller, and get the best possible price for the property.
4. Financing Addendum
When the payment for a house is to be made using a loan or money from a third party, a financing addendum is required. This document if available can be used by the buyer to cancel the agreement in a case where he is unable to get the required loan facility in the agreed time to make the purchase.
5. Lease Agreement
If you’re not selling outrightly, a lease agreement confers rights on the owner of the property and the tenant. The property is delivered to the tenant at a specified rate for a specified period of time, all of which must be stated in the contract.
It is in your best interest that you ensure you have the right contract documents for your real estate transaction. To ensure you are not alone, get yourself an agent who is familiar with the laws of contract in your state, and the documents required. Much more, if you need to use the services of a solicitor or conveyancer, by all means, go right ahead even if it means paying extra to secure your transactions. It will save you a lot of heartaches later on.