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Using contracts to protect assets in real estate

The real estate industry in Florida is constantly experiencing ebbs and flows of productivity and can be a thrilling resource to invest in. Outside of real estate investments, there are people who engage in transactions simply to buy or purchase a property for their family to live on. Regardless of a person's reason for becoming involved in real estate, contracts play a critical role in protecting both the buyer and the seller. 

A contract functions a bit like a dictionary by defining terms, providing explanations and giving scenarios. A well-written contract will provide both parties who sign the agreement with a valuable resource to reference when questions arise about responsibilities, obligations and benefits. If one party suspects the other of breaching the contract and failing to uphold their agreed-upon responsibilities, they can use the contract that was signed to back their claim and provide evidence. 

According to The Mortgage Reports, all real estate contracts should include four central components including the following:

  • A concise purpose.
  • A mutual agreement. 
  • A definition of the exchange that will take place. 
  • A clear offer from one party and a clear acceptance from the other party. 

When all aspects of a contract are present, it is time for both parties to negotiate the terms to agree upon a strategy that will be beneficial for everyone involved. Property Metrics suggests that no two real estate contracts will look the same. Rather, depending on the nature of the agreement, the location of the property and a host of other considerations, each contract will be unique. The more customized a contract is, the more purposeful and functional it will be for the parties that sign it.  

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