In Florida, we have two Contracts, the AS-IS Contract and Standard Contract For Sale and Purchase primarily used for the purchase of a resale home. Your REALTOR® will prepare your offer by using one of the two Contracts. Your offer can be withdrawn at any time up until the Seller signs it. The offer needs to be in writing to be enforceable. Once all the terms of your offer are mutually agreed upon between both parties, then all of the changes are initialed which at this time you will have a fully executed Contract with an established Effective Date. The effective date is the start date to all of your contractual obligations and Contract contingencies.
A Contract for a new home being purchased from a builder (new construction) is prepared by the builder’s attorney/representative and is totally different than the two Contracts mentioned above.
The As-Is Contract differs from the Standard Contract in several significant ways. The biggest difference is the way the As-Is Contract handles the Buyer’s and Seller’s obligations as to the condition and inspection of the property.
Under the Standard Contract, the Seller has repair requirements (there is a percentage or amount that is negotiable (typically the amount is 1.5% of the Purchase Price) noted in Paragraph 9 of the Contract. Then Paragraph 12 of the Standard Contract provides the inspection process (Seller’s obligations are to repair items in working condition and not to cosmetic items) and spells out the Buyer’s ability to conduct inspections and deliver a written report to the Seller within the inspection period. Additionally, the Standard Contract provides reassurances to the Seller that you are locked in and there is no “free look’ period.
Under the As-Is Contract, the Seller is only responsible for maintaining the property in the same condition that it was in as of the effective date of the Contract. The last statistic known indicates the As-Is Contract was used 97% of the time and is more attractive to Sellers because a Seller has no repair obligations beyond the maintenance requirement set forth in Paragraph 11. The Seller may prefer the AS-IS Contract as Seller does not have repair items, however, the Buyer can, and often will, make a demand for repairs and ask for a credit to handle repairs after closing during the inspection period. The Buyer may threaten to terminate the Contract if the Seller does not agree to the requests. It also provides the Buyer with a ‘FREE LOOK” and unilateral right, at Buyer’s “sole discretion” to terminate the contract anytime during the inspection period which is attractive to a Buyer.
TIP: In this multiple offer environment, your offer needs to be in writing to be considered. I urge you to submit the most favorable terms to have a chance to compete with other offers under consideration by the Seller.
Call me today for a copy of these Contracts and recommendations of local Attorneys that can help you navigate and explain all the nuances of each Contract in more detail.
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