When is it necessary for a real estate professional to use written contracts?

The necessity for using written contracts in real estate transactions is fundamentally tied to the nature of the agreements and the legal protections involved. When transactions include compensation—meaning that there is financial consideration involved—written contracts are essential to clearly define the terms of the agreement, the obligations of each party, and the compensation arrangements.

Written contracts serve as formal documentation of the agreement between parties, which helps mitigate misunderstandings and disputes that can arise from verbal agreements. They also provide the necessary legal framework for enforcement if one party fails to fulfill their obligations. In jurisdictions like Virginia, the law typically requires written contracts for real estate transactions that are compensatory in nature to ensure all parties are protected.

Other contexts, such as verbal agreements or representing only buyers, may not necessitate a written contract upon initial conversations, but written agreements become crucial once compensation is involved. Therefore, the correct answer highlights the importance of formal written contracts in real estate transactions that include compensation as a key element.