As a real estate investor, landing a deal means dealing with a contract. While real estate contracts may seem intimidating, taking the time to familiarize yourself with the terminology you’ll encounter is worth it. You’ll want to have a full grasp of contracts or a trusted guide to review everything on your behalf before you enter into any agreements. This knowledge will help you feel confident and assist you in making wise choices. Understanding the different purposes of these styles of real estate contracts is very beneficial in the long run. Here is our guide to Louisville real estate contracts.
Contract Assignments
While it may sound complicated, Louisville real estate contracts are often assigned to another buyer. In this way, real estate investors facilitate sales as a wholesaler between the seller and the end buyer. In other words, the original buyer has sold the rights to buy the house to another buyer. The end buyer pays an assignment fee, which is typically very small. Then, they proceed with the purchase of the home from the seller.
“Subject To”
Selling property as “subject to” an existing loan is yet another way that Louisville contracts may be written. This clause in a real estate contract allows a distressed seller, who may otherwise lose the property, to assign payments and right of residency to the buyer. Ownership of the property remains with the seller, who is still responsible for the original mortgage with the lender. The buyer is under no obligation to the lender. So should the worst happen and they fail to make the payments, regrettably, it is possible for the property to end up in foreclosure.
Purchase Agreements
A purchase agreement is probably the most common style of Louisville real estate contracts. This is a fairly simple and straightforward sale between the seller and buyer and contains all the elements of a legally binding contract. If you are working with an agent, it will likely be a state or association contract. If the sale is directly between the seller and the buyer, they typically use the general purchase agreement. As for properties other than single-family, you may need to make use of a property-specific form.
Lease Agreements
If your plans involve becoming a landlord, your Louisville real estate contracts will involve lease agreements. This guarantees the tenant the use of the property for a specified period, while at the same time providing you with a guaranteed monthly income. These contracts are carefully laid out. They help avoid any confusion or misunderstanding of any issues that may arise. You’ll want to be certain that you’re meeting all local, state and federal guidelines.
Power of Attorney
While not commonly thought of, the power of attorney can be extremely useful in real estate contracts. Through the use of the power of attorney, rights to conduct business are conveyed to someone who is entrusted with your finances, like an attorney or agent. Power of attorney is used when the owner is not available to conduct business because of incapacitation or seriously declining health.
Rent to Own
The rent-to-own strategy is advantageous in real estate contracts for Louisville investors. As the seller, you collect monthly rent along with additional monies. The buyer can try the house out for a specified time period. There are two types of these contracts: the option to buy or the agreement to buy. The agreement to buy tends to be much more desirable to sellers because the renter must purchase the home at the end of the agreement period. This strategy allows buyers time to build savings toward a deposit on a conventional loan and find financing. If your buyers choose the option contract, they are not obligated as part of the agreement to buy. If they can’t qualify for a mortgage loan, the renter can simply walk away at the end of the agreement.
Let Us Help You!
Do not let intimidating contracts stop you from moving forward with your house plans. The professionals at We Buy Houses in Kentucky are the best guides you could have to walk you through real estate contracts. Husband and wife team Daniel and Catherine Close will take the time to listen and help plan for your future.
Our company offers cash for houses in Louisville, Kentucky and surrounding areas, including: Bardstown, Fern Creek, Highview, Jeffersontown, La Grange, Lyndon, Mount Washington, Newburg, Okolona, Shelbyville, Shepherdsville, Shively, St. Matthews, Taylorsville and Valley Station. We also buy homes in Southern Indiana, including these areas: Clarksville, Jeffersonville and New Albany.
Start now. If you’re looking for an as-is home sale or are thinking about selling a house without a realtor, just send us a message or call us at (502) 383-1484 today!
