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3 Tips For Stronger Real Estate Contracts

3 Tips For Stronger Real Estate Contracts

If you are getting into the business of real estate investing sooner or later you will need a contract. You are spending your hard-earned money to invest in a valuable asset. A strong contract is your shield and one of your strongest lines of defense. Your first should be due diligence. A weak contract can be the difference between you making an outsized profit or being left holding the bag on behalf of someone else’s negligence.

In the ideal world we could rely on credibility or reputation to make a binding verbal agreement. All involved parties would keep their word, and all expectations would match reality. Unfortunately in the real-world “life” happens. And when reality falls short of expectations, blame gets thrown around and it is easy to forget what expectations even were. Written contracts bridge this gap.

Contracts are a series of lessons

When people say “life happens” this often carries the negative connotation of a failure or mistake. In reality, it is not a failure but rather a lesson, an opportunity for growth. In reality “lessons happen!” Contracts are built on summaries of these many lessons and precedents. Lessons someone else has already learned so you do not have to learn them the hard way.

The next time “lessons” happen, take notes and update your contracts so you will be better prepared for future transactions. It’s a good idea to have a standard contract that you use and update with each transaction and can draw from when the other party is providing the contract.

Reading someone else’s contract may give you some clues as to lessons they may have learned (keep this in mind when negotiating). Having a trained attorney look over your contracts will help as attorneys are reviewing many contracts, have learned many lessons and can clue you in on the most important high yield lessons. Ones