Which Type Of Contract Should I Use When Writing An Offer?

There are two basic contracts Florida realtors will use, "FARBAR" (Florida Association of Realtors and the Florida Bar Association) and "AS-IS". The opinions from realtors and brokers as to which one is best for purchasing property is often debated. Most realtors will use a FARBAR contract for writing an offer for the purchase and sale of real estate. The major difference between these two contracts is in the way they handle inspections and repairs.

The 'As-Is' contract basically gives the buyer a negotiated time period (the default is 15 days) to inspect the property and either except the property 'As-Is" or exercise their right to cancel the contract. The seller is not obligated to make any repairs. If any "undisclosed" items evolve during the inspection period, the buyer may ask the seller for either repairs or concessions for those repairs. The buyer has the right to cancel the offer for "any reason" during the inspection period.

In the Standard FARBAR contract, the buyer has an inspection period (once again 15 days is the default). However, the seller is now obligated to fix repairable items (as defined by the contract and standards of real estate in FL). The default amount is up to 1.5% (negotiable, 1.5 % is the default) of the purchase price for each of the following: repairable items, wood destroying organisms, and permit issues. The buyer is required to use a licensed home inspector or contractor. The buyer does not have the right to cancel the contract unless any repairable items exceed the 1.5% or negotiated amount of the purchase price and the seller is unwilling to make the repairs.

Which contract is better? I would recommend, if you're about to make or receive an offer, to have your real estate professional or attorney explain the differences and their implications to you.


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