Rich Dad Education – Real Estate Blog

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Real Estate Contracts

Contracts in Real Estate

With each class I teach, I find most students have concerns about the contracts: writing them, signing them, deciding if they should be hand written or computer generated? Can they get out of them? What about earnest money deposits? Each time I teach contracts to the class the same “what ifs” come out.

In my opinion, the contract is the easiest part of the real estate offering/buying step. I want to put my offer in writing and once the seller accepts it (signs and dates), I lock up the property. This simple acceptance of the contract gives me, the buyer, control of the deal. Now I get to figure out what I have put under contract, and what I will be working with. In the contracts that I write, I have given myself the ability to complete my inspections over a specified period of time and if the property does not meet my requirements, I can back out of the contract.

Perhaps what is so terrifying to new investors is the seller saying yes to the offer and what to do next? Especially if you have never purchased a property and just had an offer accepted. Every class you attend, it’s likely your trainer is pulling out a contract to go over in class. So which one do you use?

I suggest you use a contract you understand yourself. This will give you great confidence with the seller. Think about it. If the seller asks you about any part of the contract they do not understand, it is your job to explain it to them. If you can’t explain it, you’re probably going to lose rapport with the seller.

I like an easy one or two page contract that my attorney has reviewed. You do need your attorney to review your contract and yes, there will be a fee for that. But don’t step over dollars to pick up pennies. The few hundred dollars it will cost you for an attorney review can save you thousands if you ever end up in court over a disagreement between both parties.

To be legally binding, contracts don’t have to be overly complicated, confusing, or a multi-page document, but it must be in writing. There are no verbal acceptances or handshakes in real estate.

Based on my years of experience, as a former Realtor and now real estate investor, my favorite contracts are short, simple, and easy to understand for both parties.

Margie Cromwell
Rich Dad Education Elite Trainer

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6 responses to “Real Estate Contracts

  1. hasaun June 17, 2013 at 4:10 pm

    Greetings, I would like for some basic help and determine what should be the offer of a commercial property has the following figures:

    1. This commercial property has two lots. First lot has an annual property tax of $19,684 and its assessed value is: $176,850. Its market value is $393,000.

    2. The owner has divided this lot into two properties which currently rents to one business and collects a total of $1,800 a month. The other side of the divided lot is empty ( the owner says that he can rent it for $3,500) a month.

    The second lot has annual property tax of $23,379 and its assessed value is: $239,400. Its market value is $532,000. This lot consists of one lot which currently is rented to a business for $3,600 hundred a month.

    3. Building built in 1936, in my opinion, the property is in fair to poor condition.

  2. dengxh6 June 18, 2013 at 8:22 am

    感谢富爸爸教育精英教练玛吉克伦威尔把多年的经验用来分享,这房地产合同即简单又重要,只要方法对头.我想一个简单的一个律师审阅。你需要你的律师会有一个费。会花费你几百块钱可以为你节省数千,

  3. Brenda Register June 18, 2013 at 10:37 am

    Your email is blank in the body, until you use the “reply” feature, and even then, when the body shows up, I can’t click on any links. I wanted you to know, because this started a week ago, and it’s not just your blog, it is also the same with another blog I get emails from, and both are coming directly from WordPress. FYI

    

    • Rich Dad Education June 18, 2013 at 10:49 am

      Hi Brenda, Thanks for letting us know! We checked our subscription emails on various browsers and they seem to working just fine. Perhaps it is a glitch with WordPress and your email client. Let us know if you run into any more problems.

  4. mike July 4, 2013 at 12:29 am

    this site looks to be a good place to get incite into a great amount of real estate information. I like it. thank you

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