Types of Real Estate Contracts — Definitions, Examples, and Exam Tips

Types of real estate contracts are classifications that govern legally binding agreements in property transactions, distinguishing contracts by how obligations are exchanged, the stage of performance, and their legal validity. The real estate license exam tests contract types under Contracts & Agency, covering 7-8 distinct classifications that appear in both the national and state portions. This article breaks down bilateral and unilateral contracts, implied contracts, executed and executory contracts, option contracts, void and voidable contracts, creation requirements, and exam-specific tips. A purchase and sale agreement is bilateral AND executory until closing — a dual classification the exam frequently tests.

What Are the Types of Real Estate Contracts?

Types of real estate contracts fall into several categories tested on the real estate licensing exam, classified by obligation structure, performance stage, and legal status.

Three classification axes organize every contract question you will see on the exam. Obligation flow separates bilateral contracts (both parties bound) from unilateral contracts (one party bound). Performance stage separates executed contracts (fully performed) from executory contracts (performance pending). Legal status separates void contracts (never valid) from voidable contracts (valid until cancelled).

Implied contracts and option contracts are distinct types that cross these axes. Understanding all three axes lets you classify any contract scenario the exam presents. Each type connects back to the valid real estate contract elements that make an agreement legally binding.

What Is a Bilateral Contract?

A bilateral contract is a type of real estate contract where both parties exchange promises to perform specific obligations.

The purchase and sale agreement is the most common bilateral contract in real estate. The seller promises to convey title. The buyer promises to pay the purchase price. An exclusive right-to-sell listing agreement is also bilateral — the agent promises to market the property, and the seller promises to pay a commission.

Both parties are bound from the moment of acceptance. Neither can withdraw without breaching the contract. On the exam, you will likely see: “Is a purchase agreement bilateral?” The answer is yes — both buyer and seller have binding obligations.

What Is a Unilateral Contract?

A unilateral contract is a type of real estate contract where only one party makes a promise, which becomes binding only when the other party performs.

The option contract is the classic unilateral example. The seller promises to sell at a set price if the buyer exercises the option. The seller is bound; the buyer is not. An open listing works the same way — the seller promises to pay a commission only to the agent who actually produces a buyer.

The key exam distinction: unilateral = one party is bound; bilateral = both are bound. On the exam, you will likely see: “Is an option contract unilateral?” The answer is yes — the buyer has the right but not the obligation to purchase.

What Is an Implied Contract?

An implied contract is a type of real estate contract created by the conduct or actions of the parties rather than by a written or verbal agreement.

Implied contracts arise from behavior that creates a reasonable expectation of a contractual relationship. In real estate, the Statute of Frauds requires most contracts to be in writing to be enforceable. This makes implied contracts rare and difficult to enforce in property transactions. On the exam, this tests whether you know that real estate contracts generally must be written.

What Is an Executed vs Executory Contract?

An executed contract is a type of real estate contract where all parties have fully performed their obligations, while an executory contract is one where at least one party’s performance is still pending.

A purchase agreement at signing is executory. The buyer has not paid. The seller has not transferred title. Obligations remain outstanding. A purchase agreement at closing is executed. The deed is delivered, funds are paid, all obligations are complete.

Most real estate contracts exist in an executory state between signing and closing. On the exam, you will likely see: “Is a signed purchase agreement executed or executory?” The answer is executory — obligations remain outstanding until closing.

What Is an Option Contract?

An option contract is a type of real estate contract that gives the buyer the exclusive right to purchase a property at a set price within a specified period, without the obligation to do so.

The buyer pays an option fee (consideration) to keep the offer open. This fee is typically non-refundable. If the buyer exercises the option, the contract becomes bilateral — both parties are now bound. If the buyer does not exercise, the contract expires and the seller keeps the fee.

On the exam, remember: option contract = unilateral until exercised.

What Are Void vs Voidable Contracts?

A void contract is a type of real estate contract that has no legal effect because it lacks an essential element, while a voidable contract is valid but can be cancelled by one of the parties.

Void contracts are missing an essential element. A contract with an illegal purpose has no legal effect. A contract without consideration cannot be enforced. Neither party is bound because the agreement was never valid.

Voidable contracts are valid until the affected party chooses to disaffirm. Common reasons include: a minor signed the contract, fraud was involved, duress was applied, or misrepresentation occurred. On the exam, you will likely see: “Can a minor disaffirm a contract?” The answer is yes — a contract signed by a minor is voidable.

What Is the Most Common Type of Real Estate Contract?

The most common type of real estate contract is the bilateral contract — specifically the purchase and sale agreement, which binds both buyer and seller to exchange property for consideration.

The purchase agreement is bilateral from signing and executory until closing. This dual classification is tested frequently. Listing agreements using the exclusive right-to-sell form are also bilateral — binding both agent and seller to mutual obligations.

Here is how to remember the default classification: when a question says “real estate contract” without further qualification, assume bilateral and executory. That covers the vast majority of active real estate contracts.

How Are Types of Real Estate Contracts Created?

Types of real estate contracts in real estate are created when the 5 essential elements — competent parties, offer and acceptance, legal purpose, adequate consideration, and consent — are present.

1. Offer — one party proposes specific terms including price, property, and conditions
2. Acceptance — the other party accepts without modification (a counter-offer kills the original offer and creates a new one)
3. Consideration — something of value is exchanged: money, a promise to perform, or property
4. Competent parties — both parties must be of legal age, of sound mind, and authorized to contract
5. Legal purpose — the contract cannot require illegal acts or serve an unlawful objective

The mnemonic COLAC helps you remember all five. Missing any single element makes the contract void or voidable depending on which element is absent. The Statute of Frauds adds one more requirement for real estate: the contract must be in writing to be enforceable.

For a deeper breakdown of each element, see listing agreement types — listing agreements follow these same creation requirements.

What Types of Contract Questions Appear on the Real Estate Exam?

Types of real estate contract questions appear on both the national and state portions of the real estate salesperson exam under Contracts & Agency.

Common question patterns you will encounter:

• “Which type requires both parties to perform?” — bilateral
• “What makes a contract void?” — missing an essential element such as legal purpose or consideration
• “What is the difference between void and voidable?” — void = never valid; voidable = valid until disaffirmed
• “What type of contract is a purchase agreement?” — bilateral and executory until closing

Here is how to approach contract classification questions: classify every contract on two axes — obligation type (bilateral or unilateral) AND performance stage (executed or executory). This two-axis approach eliminates most wrong answers immediately.

Practice real estate contract questions on our free real estate practice exam to see these patterns in action.

How Are Types of Real Estate Contracts Related to Listing Agreements?

Types of real estate contracts relate to listing agreement types because listing agreements are themselves contracts — classified as bilateral in the exclusive right-to-sell and exclusive agency forms, and unilateral in the open listing form.

Understanding bilateral vs unilateral contract classification explains why an exclusive right-to-sell listing is more protective for the agent than an open listing. Both listing agreements and purchase agreements are governed by the same contract formation rules and tested together under Contracts & Agency.

Explore more contract and licensing concepts in our real estate exam terms study guide.

This information is for educational purposes. Requirements may change — always verify with your state’s Real Estate Commission.