Main Line Homes Blog

How will the new Pennsylvania Agreement of Sale be viewed by agents, buyers and sellers. Where does the balance lie between buyer and seller?  

There have been some major changes and the agreement looks very different. One agent asked me while we were going over these changes in a class "Is this Agreement more in favor of the buyer?" My response was to ask how she viewed the current agreement. Many of those present agreed that the current, the 2005 version is very favorable to the buyer and leaves the seller without many teeth.

I think going over this new agreement that several of the changes are improvements on the sellers favor. Deadlines are tightened up, causing the buyer to take action earlier and respond quicker so that if an agreement is going to not proceed the sellers home can be returned to the market place quicker. The mortgage blocks have changed in that there is now an option for loans to match loan to value ratios, a quasi appraisal contingency, although of course you can use the old appraisal contingency if you wish. Deadlines for mortgage applications are tightened up including payment for appraisals and application fees. Buyers pay when they apply for their mortgage and cannot put off arranging the appraisal.

But I think many of the changes being made are more for clarity for both parties. Sellers assists are moved to where the offer of compensation is and not tucked away further in the agreement a big improvement allowing the seller to clearly see what is actually being offered.

Inspections are more defined and grouped all together, including insurance, which had been stranded when it was introduced. I still think that there has been no definition of what is 'reasonably acceptable" terms but as this does not seem to have been addressed obviously it has not caused problems for sellers or buyers that have resulted in law suits. Several more inspections are defined and buyers now initial to acknowledge the inspections being carried out, a more significant step of selection. Gone are the two options with a combined result that allows buyers to accept the property, terminate or propose a written corrective proposal within the deadlines of the contingency.

There is a large section on distribution of deposits in the case of disputes allowing both buyer and seller to come to an agreement ahead of time on how to distribute deposits in the case of a dispute and what happens to deposits if a dispute does go to litigation.

These are just a few of the major changes, but what do you think of the new agreement? In whose favor does it fall or is it more evenly balanced between buyer and seller?

The American Dream has always been to buy your own home. However with the current housing crisis many people are reassesing whether this is the best thing for them. This housing crisis has and will change things going forward so what are some of the steps you should take before you start looking.

1. Make sure you get a copy of your credit report. You can easily obtain this free online once a year. Check your credit report over to make sure there are no errors. If there are contact both the bank or creditor to sort it out and the credit reporting agencies. There are three, Transunion, Equifax and Experian
2. Make a budget and stick to it, pay your bills on time and don't spend everything you earn.
3. The last few years mortgages were easy to obtain, that has changed with banks demanding more money as a down payment. Start saving now! That may mean revising your budget and making some sacrifices so you can build up a sizeable down payment, but it will help you later.
4. Don't forget you will also require money for closing costs these vary from state to state and township to township, a realtor can advise you on these for your area.
5. Lastly consider if buying is right for you now. It may make more sense to postpone buying and renting or staying with family instead. It is easy for a Realtor to draw up a rent versus buy comparison that takes into consideration tax breaks you get for owning a home, make sure it includes homeowner association fees if there are any to get a true comparison.

It may be right for you to buy a home, but it may not, so make sure you get good advice and don't be pushed to buy before you are ready. But taking these few steps now may help when you do decide to buy a home.

Every year the Pennsylvania Association of Realtors reviews different forms. Last year the Pennsylvania Agreement of Sale was given a review in light of comments from Realtors using the form. These changes are just about to be released with the new version of the Agreement of Sale in 2010. There are a lot of changes to language but let's discuss a few of the highlights.

How will these changes affect you as an agent, a seller or as a buyer? As an agent you need to become conversant with the new forms and what changes have been made and how these affect your customers.

As a seller or buyer the forms now have all parties involved in the transaction located on the front page with the address of the property, zip and school district noted as well. Not only is broker information provided but also all contact information for the agent handling the transaction for each party.

The seller assist has been moved to right below the offer price, so it is now more obvious to a seller if they are being asked to provide any monetary assistance to the buyer. Whilst this does not show the net the seller will receive it does make it more understandable and gives less chance of being missed in a review of the agreement terms.

The mortgage block now includes a loan to value appraisal option for both the first and second mortgages if this contingency is selected, alternatively you can still use a separate appraisal addendum. Buyers if using the defaults are now required to act quicker to apply for their mortgages and arrange appraisals. Also buyers are required if given the option by their mortgage provider to lock their loan rate not less than 15 days before settlement.

Under inspections gone is the confusion between option 1 and 2. There is now only one option that requires the buyer to either terminate the transaction or submit a written corrective proposal to the seller within the agreed time lines. Each inspection is now initialed to select or waive, making it much clearer what inspections are being selected, these include an option for a survey, not usually done in Pennsylvania but not a bad idea if you want to be certain of what you are buying. Again time lines have been tightened up.

New language has been inserted to cover the oil, mineral and gas rights that have become a large issue in many parts of the state due to the Marcellus Shale and the natural gas rights being leased.

All paperwork, other than homeowner and condominium documents if delievered to the agent for the buyer or seller is considered delivered to the seller or buyer. However, condominium and home owner association documents must be delivered to the buyer direct before time lines take effect.

Another big change is the information regarding deposits and how they will be distributed in case of a dispute and how this can actually be decided by both parties before there is a dispute.

Mediation is a now a default rather than being selected.

As I said these are just a few of the changes to the new agreement of sale, when writing an agreement make sure you understand fully what you are agreeing to and take time to read over the notes as well as the agreement itself.

Upper Providence Township in Delaware County is holding a meeting next week to disucss raising the Real Estate Transfer Tax by 0.5% making it the highest suburban Philadelphia Transfer Tax. With home sales already suffering the township is considering raising taxes on home sales? What are they thinking?

This will affect all sellers and buyers of homes in the township making their transaction more expensive. The state legislature along with many other townships has seen the light relaizing that Real Estate Transfer tax is unreliable and very narrowly focused. It being far better to tax on a broad base rather than a narrow base. But Upper Providence is going against the grain. With home prices dropping and economists predicting further price drops in 2010 this township simply ignores what is best for their residents and future residents by making the cost of transferring a home more expensive.

Feburary 11th is the hearing come out and make yur voice heard.