Q & A: What's the Difference Between a FARBAR As-Is and Standard Contracts

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Real Estate Agent with Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales 3090099
https://activerain.com/droplet/4BnY

What's the Difference Between a FARBAR As-Is and Standard Contracts (Florida)

FARBAR As Is ContractFARBAR Standard Contract

 

 

 

 

 

In Florida, most real estate agents will use a FARBAR contract for writing an offer for the purchase and sale of real estate.  FARBAR stands for Florida Association of Realtors and the Florida Bar Association, as these forms have been reviewed and approved by both associations.  

There are two main types of contracts in use in Florida.  The 'As-Is' and the 'Standard'.   The two types of contracts are basically identical with one major difference.  The difference is in the way these two contracts 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 take it 'As-Is" or decide against the purchase.  The seller is not obligated to make any repairs.  In reality, if any undisclosed items come up during the inspection period the buyer will ask the seller for either repairs or concessions for those repairs.  Additionally the buyer has the right to cancel the offer for any reason during the inspection period.

In the Standard FARBAR contract, the buyer once again 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 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 must 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?  This is a subject that is often debated.  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.

Here's some real life examples as food for thought:

1.)  Inspections showed a 20 year old roof.  Inspector stated it had 3 or 4 more years of life.  Roof had no leaks and was working in the manner that it was designed for.   In an As-Is contract the buyer can ask for some credit for either a new roof.  In a Standard contract this is not a repairable issue.

2.) Inspection discloses an air conditioner that is not cooling properly.  In an As-Is contract the seller is under no obligation to repair this item, but neither is the buyer under obligation to go through with the purchase.  Buyer would need to agree to purchase a home with a faulty air conditioner.  In the Standard contract, the seller would be responsible to repair the air conditioner to within operational standards (provided the repair does not exceed 1.5% or the negotiated amount of the purchase price).

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Rainmaker
3,254,755
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

That IS a difference...we have just one here...and our "usual" inspection period is 10 days...reasons to withdraw the contract had better be very good ones..."for any reason" ...yikes !

Mar 30, 2013 10:33 PM #2
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Dee, when a customer sees 'As-Is' contracts only on the MLS, the invariable question is what's wrong with the home?

Mar 30, 2013 10:38 PM #3
Rainmaker
650,335
Bobbie Smith
Stroudsburg, PA
570-242-1891

Gabe, We don't have that option here in PA.  That would be the draw back, the consumer always asks, what's wrong with it and wanting to decrease the price.

Mar 30, 2013 10:53 PM #4
Ambassador
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Karen Kruschka
RE/MAX Executives - Woodbridge, VA
- "My Experience Isn't Expensive - It's PRICELESS"

Gabe  It is clear to me you have the knowledge about these two contract types to professionally counsel buyers and sellers

Mar 31, 2013 03:37 AM #5
Rainmaker
622,611
Morgan Evans
Douglas Elliman Real Estate - Manhattan, NY
LICENSED REAL ESTATE SALESPERSON
This distinction between the two types of contracts is very interesting and valuable information.
Mar 31, 2013 04:57 AM #6
Rainmaker
1,333,748
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL
REALTOR

Gabe - Great explanation! With all of the short sales and bank owned homes the as-is contract seems to be the norm these days, I don't think I've used a standard in about 3 years.

Mar 31, 2013 06:48 AM #7
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Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor

Wishing you a wonderful Easter 2013 and an extremely busy month of April!!!!

Mar 31, 2013 06:48 AM #8
Rainmaker
2,704,775
Lisa Von Domek
Lisa Von Domek Team - Dallas, TX
....Experience Isn't Expensive.... It's Priceless!

Hello Gabe,

Another wonderful and informative post - it also looks as if you have completed the March contest challenge too.  Well done!

Wishing you and yours a Very Happy Easter!

Mar 31, 2013 07:00 AM #9
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Debbie Reynolds
Platinum Properties - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Gabe, That is fascinating that you have two contract. We handle both situations in one contract with different clauses.

Mar 31, 2013 12:54 PM #10
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Thanks for your comments, always appreciated.

Nov 18, 2015 04:23 AM #11
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Dee, thanks for taking the time to comment it is always appreciated.

Oct 16, 2018 06:22 AM #13
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Sally, thanks for taking the time to comment it is always appreciated.

Oct 16, 2018 06:22 AM #14
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi David, thanks for taking the time to comment it is always appreciated.

Oct 16, 2018 06:23 AM #15
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Bobbie, thanks for taking the time to comment it is always appreciated.

Oct 16, 2018 06:23 AM #16
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Karen, thanks for taking the time to comment it is always appreciated.

Oct 16, 2018 06:23 AM #17
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Morgan, thanks for taking the time to comment it is always appreciated.

Oct 16, 2018 06:23 AM #18
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Michelle, thanks for taking the time to comment it is always appreciated.

Oct 16, 2018 06:23 AM #19
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Barbara-Jo, thanks for taking the time to comment it is always appreciated.

Oct 16, 2018 06:24 AM #20
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Lisa, thanks for taking the time to comment it is always appreciated.

Oct 16, 2018 06:24 AM #21
Rainmaker
4,797,361
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Hi Debbie, thanks for taking the time to comment it is always appreciated.

Oct 16, 2018 06:24 AM #22
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Gabe Sanders

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