Real Estate Glossary

What is Consideration?

In legal terms, consideration refers to something of value that is given or promised in exchange for something else. In real estate, consideration might be the money paid for a property, or the promise to perform certain tasks or obligations in a contract. Consideration is an essential element of a contract, and is required for the contract to be legally enforceable. Without consideration, a contract may not be binding. Consideration can take many forms, including money, goods, services, or a promise to do or not do something. It does not have to be equal to the value of the thing being exchanged, but it must be something of value to the person giving it. In real estate transactions, the consideration is typically the purchase price of the property. The consideration must be agreed upon by both parties and clearly stated in the contract in order for the contract to be valid.