What does a real estate contract cost? If you are participating in a real estate transaction, you may want to know how much this contract will cost. Let’s explore this question and review some general information about real estate contracts.
How Much Does a Real Estate Contract Cost?
A real estate contract is a legally binding agreement that outlines the terms and conditions surrounding the sale and purchase of a property. This document is executed by the party selling the property and the party agreeing to buy the property.
This contract will cover important details about the real estate transaction including:
- Finance terms
- Home inspection
- Fixtures and appliances
- Closing date
The contingency clauses in a real estate contract are especially important because if a contingency is not met during the specified period, the real estate contract may be voided, and the seller could walk away from the deal along with their deposit.
Real estate contracts are vital documents for buying or selling a home and they must be in writing to be legally enforceable. It is common for a parties involved in a real estate transaction to hire an attorney to draft this contract.
A real estate lawyer will have the knowledge and experience needed to draft a comprehensive real estate contract that protects both the buyer and the seller throughout this process.
Based on ContractsCounsel’s marketplace data, the average cost of a project involving a real estate contract is $608.97.
What’s Included in a Real Estate Contract
Real estate contracts can be complicated and need to include various provisions to protect each party and ensure a smooth transition of ownership of property. Even the simplest real estate contracts should include these important clauses:
- Purchase Price. The cost of the property is usually the biggest concern for both the buyer and the seller and should be clearly noted.
- Financing Terms. Most real estate transactions involve the buyer taking out a mortgage to purchase the property. A buyers offer will be contingent upon obtaining financing. If the buyer is paying cash, this should be included in the contract because cash deals simplify the process.
- Seller Assist. It is common for real estate contracts to ask that the seller pays some or all the closing costs. The contract should specify how much of the closing costs the buyer is requesting whether it is a dollar amount or percentage of the purchase price.
Contingency clauses are important in a real estate contract. These requirements must be met before the closing date and can include stipulations like:
- The buyer must sell their current home
- Repairing issues found in the home inspection
- Obtaining financing
- Home Inspection. Before a house can be sold, it needs to undergo a home inspection. The inspection will reveal any structural issues or damage that need to be repaired before the sale can go through.
- Fixtures and Appliances. Some real estate transactions will include appliances and fixtures with the house. This can include the refrigerator, dishwasher, stove, washing machine, or light fixtures. If the buyer and seller agree on what fixtures will be included in the home sale, it needs to be in writing.
- Closing Date. The closing date is the day that the deal will be finalized, and the real estate transaction is complete. Common closing date time frames are 30, 45, or 60 days. This gives buyers and sellers enough time to work through contingencies, secure financing, and move out.
Types of Real Estate Contracts
There are four main types of real estate contracts, purchase agreement contracts, contracts for deed, lease agreements, and power of attorney contracts.
- Purchase Agreement Contract. This is the most used real estate contract – a purchase and sale agreement. It lays out the terms and conditions surrounding the sale and purchase of a house between a buyer and seller. There are several types of purchase agreements that can be used for a real estate transaction but a lawyer can help you choose which contract is best for you.
- Real Estate Assignment Contract. Real estate assignment contracts are not typical home purchase agreements. These contracts are used for wholesale investment purchases. Assignment contracts require additional terms than a basic purchase agreement and this contract should be drafted by an experienced attorney.
- Lease Agreement. A lease agreement isn’t used for the sale of real estate, but for renting real estate. The contract is executed between a landlord (owner) and tenant (renter). The tenant agrees to pay a monthly rent and sometimes additional fees for utilities.
- Power of Attorney. When a party is unable to sign a contract (not in the area, for example) they can appoint another party to act as the power of attorney to sign the contract on their behalf. This isn’t very common in real estate transactions but there are circumstances in which a power of attorney is necessary.
Examples of Real Estate Contract Projects
Real Estate Contract Drafting Services
Real estate contracts can be complicated documents and it may be difficult to determine which type of contract you need for your transaction. If you plan to buy a home and need a real estate contract, it is recommended that you consult with a real estate attorney for drafting services.
A real estate attorney will know the laws that surround real estate transactions, draft a contract specific to your needs, and typically will even attend closing with you.
Real Estate Contract Review Services
It is customary for the buyer to provide the real estate contract, so the seller should be prepared to hire a real estate lawyer to review the contract on their behalf. Contracts generally favor the writer, so it is important for a buyer to have their own attorney review the contract to ensure it is fair and protects their interests.
An experienced contract lawyer can review the terms of the contract and make sure that the seller is protected. The lawyer will also explain the contract to the seller if they are confused about any terms.
Real Estate Contract Drafting Cost
If you hire a lawyer to draft a real estate contract, it will come with costs. Your lawyer may charge a consultation fee, drafting fees, and for their time at the closing.
ContractsCounsel’s marketplace data shows real estate contract drafting costs to be $875 across all states.
Real Estate Contract Review Cost
As a seller, if you choose to hire your own attorney to review the real estate contract, you will be responsible for those legal fees.
ContractsCounsel’s marketplace data shows the average real estate contract review costs to be $575 across all states.
How Do Lawyers Charge for a Real Estate Contract?
Hourly Rates for Real Estate Contracts
Real estate lawyers typically bill clients using an hourly rate fee agreement. The attorney will keep track of their time working on the contract and any other tasks that they complete related to the real estate transaction. After closing, the lawyer will bill their client for the total hours spent working on their case.
ContractsCounsel’s marketplace data shows the average hourly rate for a real estate lawyer ranges from $250 - $350 per hour.
Flat Fee Rates for Real Estate Contracts
When a lawyer is hired for a specific task like reviewing a real estate contract, they may choose to bill their client using a flat fee rate. The lawyer will estimate the length the project will take to complete then quote an appropriate price. If the client agrees, they will pay the fee upfront and the lawyer will complete the project.
It is important that a client asks the attorney what is covered in the flat rate. Sometimes extra meetings, communications, or revisions are not included and could cost more.
ContractsCounsel’s marketplace data shows the average flat fee rate for a real estate contract is $608.97.
Get Help with a Real Estate Contract
Do you need help with a real estate contract project? If so, post a project in ContractsCounsel’s marketplace to receive flat fee bids from business lawyers to handle your project. All lawyers on the ContractsCounsel’s platform are vetted by our team to make sure you are provided with top tier service.