New types of real estate purchase agreement: which one to choose?

real estate purchase agreement

Buying a house is always an important decision and a particularly delicate moment in everyone’s life. If you are even just thinking of taking this path, trust me, there are many variations and types of real estate sales that you probably do not know yet…

During the reading, we will address the issue related to the canonical real estate sales contracts, focusing however on all those new types of real estate sales that it is good to know in order to have a complete range of options and arrive prepared when buying a house.

At the end of the reading, you will realize that, fortunately, there is no longer only classic and traditional trading. To make sure you don’t miss any of the buying possibilities in the real estate world, having an expert and prepared consultant follow you up and advise you, it can open up new and, why not, even convenient scenarios on the subject.

If you agree, let’s get started right away without getting lost in the chatter! 

Purchase contract: from the withdrawal of the purchase proposal to the notarial deed

It is understood that anyone who approaches the real estate world, and in particular that of buying and selling, must be aware of the steps to follow to reach the goal in the shortest possible time, obtaining the best result. Here then, the most classic and traditional type of buying and selling must necessarily be mentioned before going further, proposing different solutions that require a broader vision of the “buying a house” issue.

By traditional type of sale, we mean that practice that is as close to the definition of sale in its broadest sense as possible, applicable to various commercial sectors.

That is (and we come to some simple technical term): the sales contract, pursuant to art. 1470 cc, is that by which a party (which is defined as “seller” or “alienator”), transfers the ownership of a good or another right to another party (called “buyer” or “buyer”), which undertakes to pay a consideration called “price”.

In the case of a real estate sale, in fact, the selling party corresponds to the homeowner who has decided to put his real estate on the market, while the second interested party is the buyer that is you who are looking for a house to buy.

The traditional process which constitutes a traditional sales contract usually provides for the signing of a purchase proposal to which a deposit check is attached to increase the value on the part of the buyer;

Subsequently, the negotiation begins, and therefore the actual negotiation.

Once an agreement has been reached between the parties, thanks to the intermediation of a real estate consultant, or “between private individuals”, as they say, we move on to the next step.

The preliminary sale actually constitutes a real contract, which both parties undertake before arriving before the notary and completing everything with the signing of the official deed of sale.

During the last phase, the title of ownership of the property is passed to all effects from the seller to the new owner that is the buyer.

After that moment, the parties return to be disconnected from each other and the negotiation can be considered concluded.

What you may not know yet, however, is that the real estate sector is actually made up of many arteries that allow the diversification of the negotiation, which is why today there are new types of real estate buying and selling.

If you are waiting to find out what new possibilities you have to buy your new home and, why not, maybe even get some tax and logistical benefits, then keep reading…

… What if that’s not all? Here are the new types of sales contracts!

To buy a house, to date, do you necessarily need to have all the available liquidity? The answer to this question is no, you don’t need to.

If the entire necessary amount in liquidity is not available, then we can hypothesize to resort to all those new types of trading that we will now talk about.

  1. Rent to buy
  2. Preliminary sale agreement with anticipated effects (Help to buy)
  3. Buy to rent

The aforementioned formulas all three fully fall within those that in the real estate sector is now defined as the new types of real estate sales contract.

It is good to clarify that compared to the classic traditional negotiation, these latter methods are not always suitable, but there are cases in which it can be really convenient to use them, and cases in which obviously they are not needed. That’s why it’s so important, though, to at least get to know them.

1. Rent to buy

Probably the best known of the new types of real estate, even by those like you who are only now approaching this sector.

This is a particular purchase formula that guarantees significant benefits to both the seller and the buyer.

The rent with redemption provides in its most generic formula, the stipulation of a lease contract which then, following the agreed timing, turns into a real deed of sale. The amounts paid monthly for the rent will then be deducted when the final amount must be paid, which will also determine the actual transfer of ownership of the property.

Rent to buy could be an excellent solution for those looking for their first home to buy, but:

  • he is not yet sure how and if the dynamics of his life could change;
  • does not have the full amount of cash to purchase an asset;
  • He could not get a mortgage for the full amount of the purchase.

These are just a few examples that could lead a potentially interested buyer to choose rent to buy. Although this is a new purchase formula, still little known in Italy, the rent with redemption however provides, in turn, a series of sub-types of contracts that it is good to know in order to avoid making wrong choices.

2. Preliminary sale agreement with anticipated effects (Help to buy)

As you will have understood by now, this second trading formula also provides for an agreement between the parties that is different from the “normal” one, both in terms of amounts to be paid and timing.

In this case, choosing from the new types of a real estate sale, the help to buy is as if you were helping the buyer to be able to have the sums paid out by a credit institution. How?

Let’s explain: this particular formula provides for the stipulation of a regular preliminary real estate contract in the presence of a notary, in which, however, the potential buyer pays down payments up to a maximum of 30% of the price of the property , and a once that figure has been reached, he asks for a mortgage to finance the balance.

Still some doubts? The preliminary contract that is stipulated at the time of the agreement between the parties, gives rise to the anticipated possession of the property for the buyer, even if for all intents and purposes, it is not so clear when the moment of the final balance will take place.

This type of sale, compared to the other two protagonists of the reading, turns out to be the most cumbersome from a fiscal and bureaucratic point of view, but not therefore impossible to implement.

The advantages of choosing the help to buy are certain that the buyer has the possibility to transcribe the contract, the possession of the property and the instalment payment, while the seller does not leave the property unused and collects periodic deposits.

3. Buy to rent

We get to talk about the latest among the new types of real estate buying and selling, and we do it by introducing you to what you probably haven’t even heard of yet… buy to rent.

It too, a sub-category arriving directly from America, is not only still little known in Italy, but also too little used among professionals.

What is it about? How is it articulated? Now we explain it to you…

This is an immediate sale with a deferred price. The seller is guaranteed to return the owner in case of default by the buyer. It favours the sale in the event that there is a need for the buyer to make a deferred payment over time.

It can be a smart choice for those who have to sell the property immediately but want guarantees on the balance of the deferred amount, as well as for those who want to benefit from a staggering of amount over time.

This deed can be constructed as a sale subject to termination conditions. Taxes are paid according to the law in force and as if it were a normal sale, plus taxes for the act of ascertaining the fulfilment of the termination condition.

New types of real estate: now you know everything, you just have to choose

Let’s say that if you approached the real estate world to start the search for your new home, it was essential to put yourself in front of all the various possibilities to choose from.

From traditional buying and selling to help to buy, as you can see, you have a not just range of paths to take.

If you think that your credit institution does not grant you the total disbursement of the sums, know that there are these alternative ways.

The advice, however, is to rely on an expert in the sector, because never as in this case, knowledge of the subject will be fundamental in order not to make mistakes. Here is where a licensed real estate agent can really make a difference.

Do not deprive yourself of the joy of being able to buy a house just because you may not be aware of the possible paths to take…