Consideration

Consideration is something of value exchanged between the parties. It is what makes a contract legally binding. Although people often think consideration means money, legally it refers to the promises each party makes to the other. Each party must give or promise something.In a real estate sales contract:The seller promises to sell and transfer the propertyThe buyer promises to pay the purchase priceImportant: The earnest money deposit is not the consideration. It only shows the buyer’s good faith and intent to proceed with the purchase.There are two main types: of ConsiderationValuable considerationMoney or something that can be measured in moneyCommon in regular, arms-length real estate transactionsGood considerationSomething that cannot be measured in money, such as love or affectionCommon in gifts, like a parent transferring property to a childEither type of consideration is enough to support a valid contract.