I was wondering if any real estate agent/investors could give me some insight into the contracts they use when purchasing direct from a seller. I recently passed my real estate exam in Pennsylvania, though I have not hung my license with a broker yet. I understand that when I'm doing transactions with a buyer or seller that I'm representing, that the Pennsylvania "stock" agreement of sale must be used.
That said, like many investors I have a much shorter and simpler two page agreement that I have used up to this point when purchasing properties direct. My question is, if I am the end buyer in the transaction and not representing anyone as a real estate agent, can I continue to use my simplified agreement?
Any insight from experienced agent/investors would be welcome.
I am a licensed agent in CO. We have to use the Real Estate Commission approved forms as agents. Since they were drawn up by attorneys for the state of CO, my using them does not constitute practicing law. If you write up your own, you are practicing law, which is expressly forbidden once you are an agent. At least in CO. But probably in PA as well.
There should be state approved contracts online. I would use one of them. It would be awful to spend so much time and effort to get a license, only to lose it because you didn't follow the law.
I'm a licensed PA Realtor. As far as I know, there is no real requirement as far as the sales agreement used. The Pennsylvania Association of Realtors has its own form you can use which certainly simplifies the process, but, to my knowledge, there is no official "stock" PA Sales Agreement. As long as it holds up with the closing company, and lawyer if any problem should arise, you should be okay.
I just read @Mindy Jensen 's comment. I did not think of that. She is correct, writing your own contract would be practicing law of sorts and is illegal. Unless you had a lawyer write your contract for you.
As an example, I do not always use the PAR standard lease, sometimes I use a lease written up by friend of mine who is a lawyer and property owner. So, it is not required to use the "standard forms" but you cannot write up the contracts yourself. Only fill-in-the-blanks on already drafted contracts.
I have to disagree. The "practicing as an attorney" I believe only applies when you are drafting/modifying a contract "for another". Here you are doing it for yourself. Having said that, I still prefer the standard contract as it conforms to state law, and is designed to be fair to both parties, and covers a lot of the "what ifs" that can occur. A RE professional using a one sided contract will be harder to defend.
@Wayne Brooks , that makes sense, but I cannot find anything to support it for CO. I think it is better to be safe than sorry, but I also don't want to give out incorrect information. I'll keep looking.
I'm a broker in CA. I've used a piece of binder paper. Identifiers, price, contingencies with dates (cash/loan/closing cost, appraisal, inspection/ title co). Options/Assignable. Sign/date. EMD.
Thanks for weighing in everyone! As I suspected the issue may not be all that cut and dry...