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The real estate business is a tricky affair. People are not apprehensive about getting into real estate for no good reason. There are a lot of intricacies involved and someone new to the trade can easily be taken for a ride if he or she is not careful enough. In order to reduce the risk you run in this business you should understand real estate contracts.

In order to understand real estate contracts, what you’ve got to do is first understand common contract law. If you understand concepts like offer, counteroffer and acceptance, you’re on your way to getting a better understanding of everything involved in real estate contract law.

The practice in most states is that of using standardized contracts, which are drafted in the form of an offer letter from the buyer to the seller. Of course, for the contract to take effect, it first has to be approved of and signed by the seller.

If the seller agrees to go with the terms and conditions in the contract, the deal is carried forward. If, on the other hand, the seller doesn’t agree with the terms and asks for certain changes to be made, this is called a counteroffer. This process will go on until both the parties come reach some sort of consensus.

Also, if the offer made by the buyer is not accepted by the seller in the particular time frame and in the particular manner specified, it means that the contract will not hold. For instance, a telephone call or mail will not do if it is specified that an acceptance has to be made by facsimile.

Real estate contracts are bilateral in nature, i.e. they are two-way contracts. There is a mutual agreement between both parties based on which the contract is made. An option, on the other hand, is a unilateral agreement. In the case of an option, the seller is obligated to sell, as opposed to the buyer, who has no such obligation on him.

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