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