Real estate transactions take place over many months, sometimes years, so it is critical that the details are included in real estate closings and contract negotiations. When negotiating property purchases, it is vitally important that all parties involved be clear on all details of the agreement. Without this understanding at the inception of the transaction, property acquisition can become a contentious and expensive process. Closing costs can run into thousands of dollars. Understanding when property acquisition costs will begin is as simple as knowing the price of the property will increase over time.
Timing and price: The two key components needed to any real estate transaction are the down payment and the closing date of the sale. This part of the closing contract needs to clearly define when the title will change and who will receive title insurance premiums. Some real estate transactions are handled by the buyer’s agent, while others are handled by the seller’s agent. Be clear on who will ultimately pay for these expenses from the very start of the transaction.
Deed-in-Lieu of trust: This part of real estate transactions refers to the legal transfer of ownership. It refers to the transfer of physical property from the buyer to the seller and to whomever is named on the deed as an additional party or as an additional person in the event the personal property is transferred by a power of sale. A deed-in-lieu of trust is used in real estate closings to provide protection from a third party. There are rarely any costs associated with this type of agreement and no liens or interests need to be recorded. This type of agreement is used to protect real estate when there is little chance of gaining title or if there is a substantial value or benefit to the seller to transfer.
Broker Closing: All real estate transactions in Florida are processed through licensed real estate brokers. All broker-closing requirements must be met by all parties involved in the closing. If a party is not a licensed broker, they must use the services of a non-licensed broker. A certificate of title is required for most brokers, and real estate documents must be executed by a power of sale.
Property Transaction Costs: The property transaction costs in real estate transactions differ depending on the type of property involved and the value of the property involved. The amount of down payment required and closing costs for properties vary according to the type of property involved. In all real estate transactions, the buyer’s earnest monies are deposited with a seller’s account. All other costs of a real estate transaction are paid by the seller, unless a prepayment penalty is included in the contract. This prepayment penalty can significantly increase the total cost of a property transaction. The buyer’s earnest monies are deposited into their own personal accounts after they close the real estate transaction.
Real Estate Brokers: In most real estate transactions involving residential real estate, it is the responsibility of the Realtor to provide the necessary background information and understanding of local laws. It is also the responsibility of the Realtor to provide the seller with accurate contact information. In all metropolitan areas, real estate agents can be found by searching the internet, making a minimum of searches required to find qualified real estate agents in your area. Some metropolitan areas may require a minimum commission, which will typically be higher than other cities.
Deed in Lieu of Foreclosure Agreement: Most homeowners who enter into real estate assignments are unaware that a deed in Lieu of Foreclosure Agreement allows the home owner to sell their property even if the home is in foreclosure. A deed in Lieu of Foreclosure Agreement allows the property to be sold even if the mortgage on the property has been assigned by a third party. The mortgage company does not have authority to sell the property under any circumstances. These types of agreements can be entered into for short sales, land contracts, or long term sales.
Lease Agreements and Option Terms: Real estate contracts often include lease agreements and option terms that may not be included in the purchase contract. The lease agreements and option terms are usually part of the disclosure document for the property. Many sellers try to avoid using this type of contract because they believe that it has a higher cost. While the purchase contract costs more initially, a lease agreement and option term only cost the seller when the property is not sold.