Do I have to use the ASR (Standard Agreement for the Sale of Real Estate) from the Pennsylvania Assoc. of Realtors.

7 Replies

I am a new RE investor and my Realtor is telling me that I have to use the ASR (Standard Agreement for the Sale of Real Estate) from the Pennsylvania Assoc. of Realtors.

Is this a requirement in PA, or simply a form this Realtor / Realtor's Office wants them to use? Can I use my own Contract?

I am in the process of having the Contract reviewed to see if it is suitable for my investment purposes, assigning of contract, wholesaling, flipping... and anticipate adding an Addendum for my company's needs.

Is there a Contract that is commonly used and accepted for Real Estate Investors in PA that could be shared?

Your comments and input are appreciated!

Mark

If you're making offers on listed properties, yes. If not, then no, but the standard contract will cover a lot of things the simpler contracts do not.

Promotion
Guaranteed Rate
Guaranteed Rate is a top mortgage lender
Save $1,290 on your next home – no lender fee*
Get special perks like $1,290 in lender fee savings when you buy a second home with Guaranteed Rate.
Apply Now

Mark, Wayne's correct. And it doesn't surprise me to hear that a realtor told you that you HAVE to use their forms. For some realtors that's simply all they know and all they've ever seen. I've even had a realtor tell me that you couldn't buy or sell UNLESS you used a realtor. Insane!

I wanted to add that I would never use the PAR forms (Pennsylvania Association of Realtors) when I'm dealing directly with a seller. There a lot of fluff and consumer protection stuff in there that isn't necessary for investor purchases. You should be able to cover all the basic provisions on a simple, easy to understand two-page agreement. I like to tell sellers that we'll make it incredibly easy, quick and painless for them to sell their house to us. Part of that promise involves having very simple and straightforward paperwork.

Many investors have never been to court concerning you sale contract, but it can certainly happen.

All RE is local. In most areas your Board of Realtors has developed their contracts over time, mush has to do with the experiences and court cases in that jurisdiction.

Those "consumer" covenants contained in a contract did not come out of thin air based on some bleeding heart Real Estate Broker, they came from findings in law, state court findings, attitudes and customs.

RE Brokers are very risk adverse, they don't want any stone left unturned where that snake may be that can bite them. Investors who are smart should be taking the same attitude!

I'd bet that the Realtor contract will have matters addressed that would simply be CYA pertaining to the brokerage relationship. Such probably can be omitted. Knowing what these matter might be is for an attorney to determine or perhaps a RE Broker who can identify the issue.

Condensing or modifying contracts is the practice of law, if one is a party to that contract, that party can effect changes, are you an attorney? Are you really qualified to draft and modify contracts that can stand the tests in court? Really????

Are you really aware of why each covenant has been adopted, do you know how that judge views different matters? Courts do strange things, have you ever heard of an attorney giving a guarantee as to the outcome of any court action? No, doing so is professionally unethical.

I don't know what is in your PA contract but a common issue is to the assignments of insurance in the event of a loss during the contract period. This paragraph alone can be a 1/3 or half a page long. I have had instances where every word was needed, there is a good reason for each aspect being there.

The only investors on this site that can actually drill down deep into contract issues are attorneys, Adam. Adrian, Jerry and John to name a few.

I am amazed at the lack of respect investors seem to have as to the importance of contracts, I have seen laypersons write some real junk with poor sentence structure attempting to write legal phraseology, use incomplete sentences and write ambiguous agreements.

You're betting that all the time, effort and money you have invested in trying to accomplish a transaction where you may have thousands of dollars at risk or perhaps profit, is to be held together by the legal understanding of someone who got their training in high school English and off the internet or from some guru. There are certainly educated, seasoned investors that have seen hundreds if not thousands of contracts who can draft a good agreement, they are few and far in between. When I write an agreement great care is taken as to fairness, it sticks to local customs and those common understands generally accepted. If any matter is more complex I may write it but it goes to my attorney to be blessed. I want my contracts to totally enforceable.

Biggest issue is with investors attempting to write contracts that are slanted in their favor thinking they have a better position afforded to them. These newbies have not yet learned that what's good for the goose is good for the gander so to speak. A contract that is slanted to the benefit of the party who wrote the contract will be viewed to the detriment of the party drafting the agreement. So many seem to think that you can contract for anything you can dream up, toss out disclosures thinking they are no longer responsible or that if they inform someone of some issue it is no longer an issue to them in getting the screwed party to agree. Doesn't work that way.

Bottom line of this rant, if you are new to real estate, you have no business writing contracts without an attorney familiar with local matters reviewing it as to form and its content. Use your local contract. Learn it, understand it so that you can explain it, the problem is with the investor who doesn't understand the standard contract and who lacks the ability to explain it well enough to accomplish the transaction. It's not that the contract is complicated, it's you that lacks the sufficiency of understandings and the ability to convey meanings to others. See a local attorney!

Nothing here is personal folks, it just goes to prevailing attitudes of those trying to get into RE. :)

Bill,

Thank you for your detailed repsonse. While I have 30 years worth of experience with construction contracts as a project manager, Real Estate contracts have a level of complexity that I am not that familiar so I "put it out there" in a forum where the group could provide insight, advice and direction".

I have reviewed their Contract in detail and found it to be satisfactory for the most part to my understanding. There is a section in the body of the Contract where I added my Additional Terms for consideration and review by the Seller. These are standard clauses which our industry commonly uses as I am told.

I appreciate your involvement and opinion and do not disagree, rather, I am enlightened by your information and recommendation. I did not mean to imply that I was writing my own contract, or editing areas where I have little legal knowledge. Yes, you gave very good advice!

Respectfully

No Mark, I didn't take it that way, as I said, not personal, it's that we get many posts on contracts and I simply elaborated on the topic. Good luck :)