What Are All the Types of Real Estate Transactions?

real estate transactions

Of the four types of real estate contracts, purchase agreements are for real estate transactions. You may have noticed that among the four types of contracts, there were several subtypes of contracts, with different transactions they would each be used for. That begs the question, how many different types of real estate transactions are there?

The real estate attorneys at Mazzoni Valvano Szewczyk & Karam can break down the different transactions you can participate in if you have an interest in real estate. If you need help writing or reviewing a contract for one of these real estate transactions, our attorneys can help.

What is a Real Estate Transaction?

Real estate transactions are processes that happen when an entity puts a real estate property on sale, and a buyer agrees to buy a property. This may sound really simple, but there are various stages to it. Every real estate transaction has at least four stages.

  • 1st: Pre-entry
  • 2nd: Signing of the contract
  • 3rd: Working out the details of the transaction
  • 4th: Closing and post-closing

What Are the Different Types of Real Estate Transactions?

With so many reasons for buying a property, there are different types of real estate transactions. There’s more to a real estate purchase than having a new home or a new place of business.

Buying & Selling a Home

While buying and selling require different things of you, we’ve combined them together because they’re the default reasons for being in a real estate transaction. This type of real estate transaction occurs whenever someone wants to sell their home and there’s someone who wants to buy it. It’s the simplest type of real estate transaction.

It’s moderately different when it comes to buying and selling a business location. There are different inspections and laws that must be followed, but they’re not drastically different in terms of what kind of real estate transaction they are.

Buying a Property to Rent

It’s more common than ever to see people buy property to turn it into a property to rent out. Currently, there are around 50 million rental housing units in the United States, and the average landlord owns three properties. When you purchase a property to rent, your purchase agreement can include clauses that help with the transition.

Fix and Flip

A lot of real estate transactions nowadays are not about finding a new home, but turning a profit. When someone doesn’t want to become a landlord, but still wants to turn a profit, they can purchase a property that’s being sold under its market value. These are usually homes in foreclosure or in distress, which means they’re being sold by a bank or another entity that isn’t the original homeowner.

In these cases, the transaction part can proceed differently than it would with an individual homeowner. You’ll also need more financial, legal, and construction help going into the purchase so you can begin renovations as soon as possible. Once the property’s value has increased, you can try to sell it for a profit.

Wholesaling a Property

When buying and flipping real estate properties is a main and consistent source of income for you, you can eventually become or have what’s called a wholesaler. Wholesalers find off-market properties that would fix and flip and assign a purchase contract to their end buyer or you.

The main difference between this kind of real estate transaction and the typical fix and flips is that there’s a middleman.

Serving as a Lender

If you’ve made a career out of investing in real estate properties or plan to, you’ll eventually have significant cash flow that you can use to lend money to other real estate investors. This way, you can help others flip real estate properties and they pay you interest or a percent of the profits. This necessitates extra contracts on top of the usual contracts that go with real estate transactions.

Contact the Real Estate Transaction Attorneys at MVSK Law

Our real estate attorneys have been overseeing, reviewing, and writing contracts for real estate transactions for decades. We have extensive experience with all types of real estate transactions, so you can trust that we’re prepared to handle any transaction you have.

Whether you’re trying to purchase or sell your home or make a career out of fixing and flipping houses, the attorneys at Mazzoni Valvano Szewczyk & Karam can help you. Contact us today.

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