Frisco TX First Time Home Buyer Series – A Real Estate contract is a Legal Binding Contract (Part 7)

by Mike Yeo on October 12, 2010

Frisco TX First Time Home Buyers

If you missed the previous articles prior to this:

Part 1 – Your First Steps to Homeownership
Part 2 – Difference between Pre-Qualification and Pre-Approval and how to strategize a better negotiation
Part 3 – What makes up a house payment in Frisco TX
Part 4 – How much funds are needed to buy a house in Frisco TX
Part 5 – Setting yourself for real estate success with tools you need
Part 6 – Should you use a Realtor(R) when buying your first time home?

In this part, you will read about:

In this part, you will read about:

Frisco TX First Time Home Buyer Series – Real Estate is a Legal Binding Contract (Part 7)

**************************************************************************************

Besides getting yourself ready for financing approval, this step (real estate is a legal binding contract) may be the next most important step in understanding the first time home buying strategy. Most home buyers are excited about house hunting and when they find “the house”, they are ready to submit an offer to the Seller.

The most important thing to know is that once your signature is on the doted line along with some specific performances, the contract is a legal binding contract between the Buyers and Sellers.

What Makes a Contract Legally Binding in Texas?

Just submitting an “offer” may not necessarily make it legally binding. However, with the next components of the contract, it makes it legally binding.

A real estate transaction is a complex transaction. Consult a Texas real estate attorney if you do not understand what you are signing to. Do NOT rely on your Texas real estate agents for answers.

OFFER – An “offer” must be extended. An offer may be extended in writing or spoken. However, most “verbal” offers are not taken seriously by Sellers. It may be viewed that Verbal offers are just possible “options”. Also, due to the Statute of Frauds, contracts are required to be in writing to be enforceable. An offer that is extended should be held to a specific action upon acceptance of the offer. Here are some considerations to an offer made:

  • Has the offer define the parties to the transaction? Noted the subject of the offer? Specified a timeline?

  • Is the offer “serious”?

  • Does the offer spell out the terms of the “offer”/ contract?

ACCEPTANCE – An “offer” that was extended must be accepted by the other party. Acknowledgement by the accepting party may be in writing or verbal unless noted otherwise. An offer must be accepted in its entirety (including terms to the contract). If one term/ item is not agreeable between the two parties, then the offer is “rejected”. If the party “rejects” and amend the offer, it becomes a “counter-offer”. The final acceptance must be the “meeting of the minds”.

CONSIDERATION – For a contract to be legally binding, it must have consideration. Otherwise, it is considered as a gift. In a real estate transaction, part of the consideration is the exchange of monetary compensation (called Earnest Money) as part of the consideration although it is NOT required. However, when making an offer in good faith, it is almost impossible for a Seller to accept a contract with no “show” of good faith other than a signed contract.

The contract needs to address the items below:

  • Parties to the contract

  • Legal description of the real estate property (to specific which property is bought/sold)

  • Performance on the terms of the contract

  • Breach of contract should either party fail to fulfill performance

TIME IS OF AN ESSENCE in a Real Estate Contract

This is where most buyers and Sellers fail to see the importance of an offer extended, an offer accepted and the execution of specific tasks in the real estate contract. Most buyers and sellers only harp on the sales price. They “forget”, “ignore” or “disregard” the specific datelines on the contract. More importantly, failure to adhere to these datelines result in a breach of contract.

When Time is of an essence is specified in the contract, complete adherence by the dateline must be fully respected. When it is not specified in the contract, both parties can expect for reasonable times to perform. This is where buyers and sellers step into the “grey areas”. CONSULT a real estate about using this clause.

Some of the dates to note in a real estate contract are (not limited to):

  • Option period

  • Buyer financing approval

  • Title commitment acceptance

  • Survey delivery

  • Homeowners association bylaws acceptance (if applicable)

When a real estate contract is signed by both the buyers and sellers, it becomes a legal binding contract. The failure to adhere can result in liquidated damages and alot of heartache. Hence, be respectful of the contract.

Articles in the Frisco Texas First Time Home Buyer series:

Related Articles:

*************************************************************

All contents are original. Consider subscribing to my blog for more real estate commentaries.

Systematic market approach to selling your home – an intentionally unique proposal that most real estate agents do not use. Find out why it is our differentiator and how past clients are on their way to the closing table with this proposition to home selling.

Call Loreena Today (214) 783-2210

Contact:
Loreena Yeo
Realtor®/ Broker of 3:16 team REALTY
(214) 783-2210
loreena@loreenayeo.com

Super-serving Frisco, Plano, Dallas, McKinney, Allen, Little Elm, Prosper, Celina, Richardson, Dallas M-Streets, Dallas White Rock Lake area communities and other surrounding areas.

Copyright © 2009 by Loreena Yeo (3:16 team REALTY).
Frisco TX First Time Home Buyers – A Real Estate Contract is a Legal Binding Contract (Part 7).

Comments on this entry are closed.

Previous post:

Next post: