Real estate transactions involve contracts that are based on mutual agreement between two business parties. A real estate contract takes place to mark the legal understanding and agreement on purchase, sale, exchange or renting of real estate. Ideally a real estate contract should include the full name of two or more parties, their workplace addresses, sales price amount, valid signatures of both the parties, consideration in the form of money or any other property or a legally accepted letter written mentioning a promise to pay, and so on.
Having mentioned the inclusions in a real estate contract, let us now take a quick look at the various types of real estate contracts below:
Exclusive Contracts: Exclusive agreement grants the licensed real estate agents the opportunity to represent the buyer and the seller in the transactions. The seller has to sign a contract named ‘Exclusive Right to Sell Contract’, which provides the agent exclusive rights to list and sell the property for a fixed period of time. The agent shall still receive the decided commission even if the seller sells the property on his own and the agent is not involved in the sale. Necessary information like nature of the contract, the time period that it covers, consequences in case the property is sold by another person etc. has to be embedded in the contract.
Sole Agency Agreement: Quite similar to exclusive listing agreement, sole agency agreement gives you the facility to sell your property without having to pay full commission to the broker. The contract shall include relevant information such as the type of contract, the time period and also the penalties that have to be faced if the property is sold by another person.
Open Listing agreement: In open listing agreement, any agent can list the property of the seller and has the right to get prospective buyers who can take a look at the property. The open listing can be given to multiple brokers at the same time and once the property is purchased, the agent gets a commission. This kind of agreement can be cancelled at any point of time by writing to the agents.
Auction Agency Agreement: The auction agency agreement grants the rights to the agency to take the property of the seller to auction publicly, where prospective buyers shall bid for the property. A commission has to be paid to the real estate agent if the property is sold at the auction.