For years now we’ve been advised by real estate attorneys to use the FAR BAR AS IS purchase contract with right to inspect. The reason for this is that while it does protect the buyer, it takes some of the ambiguity out in determining if an item in the home is functioning as intended. To give you an example of why this has been the contract of choice, several years ago we had a client looking to purchase a condominium that had been renovated due to damages stemming from Chinese drywall. During the home inspection we found the granite counter top in the kitchen had been cracked in half around the sink during installation. The seller epoxied the seams, but the buyers were not pleased, as while the seam was cleverly joined with the epoxy, the joint was still very rough to the touch. The seller said he wasn’t going to replace the counter top and the buyer didn’t want to take it “as is,” so the buyer used their right during the inspection period to cancel the contract and get a full refund of their deposit. When speaking with the law firm who suggested we use this purchase agreement, the attorney stated, “this is why we tell you to use this purchase agreement as while the buyer wasn’t pleased with the look of the repaired granite, it was still functioning as intended as it was supporting weight and wasn’t leaking, thus it was performing as designed. If your buyer hadn’t used this “AS IS” contract that we have suggested, they wouldn’t have had the ability to cancel their contract and receive a full refund of their deposit.”
However, during this market this “AS IS” contract is being used in a manner that wasn’t originally intended. Since homes have been selling at such a frantic pace, many buyers who are out of town are using this contract to purchase properties sight unseen, or only seen virtually. Then once they arrive they use their inspection period to determine if they want to continue moving forward with the purchase of the property or cancel the contract now that they are viewing the property in person. Some buyers have even submitted contracts on several properties, had them accepted, and then used their inspection period to cancel off those properties that didn’t appeal to them and keep the one that does.
To counter this approach many sellers are starting to request the contract with repair terms that can be capped be used as it takes away the buyers ability to cancel the contract in “the buyer’s sole discretion.” Since offers have accelerated at the pace they have due to low inventory levels, bidding wars are more commonplace, resulting in purchase offers where the purchase price cannot be supported by an appraisal. To avoid a contract being cancelled by the buyer due to the offer they made not being supported by an appraisal, sellers are now requesting appraisal contingencies to be removed from the contract in many cases.
As much as I intended to embrace this theme, I found I was continually approached by many asking how to navigate a real estate market that seems more like a runaway train. What started as their euphoric journey to a new beginning has become anything but, as we are experiencing what has become a feeding frenzy. Wasn’t March supposed to come in like a lion, marking the beginning of spring, and exiting like a lamb? If that is the case, then April and May must be monsters and our “Spring” has more than sprung. Of course, I am referencing the real estate market and not the weather, as by all accounts our temperatures this season have been some of the most enjoyable we’ve experienced in a long time.
Spring is a wonderful time of year and this year it is even more special as not only are flowers and trees coming into full bloom but so are we as a community now that many of the restrictions that have governed much of our lives for the past year are being lifted. The lesson we learned from the “pause” the pandemic forced on us was to enjoy each other and the pleasures life gives us. If we’ve learned our lessons from the past we don’t need to panic every time we encounter something we’ve never experienced before. Spring is in full bloom this season and perhaps more bright and full of appreciation and hope than ever before.
Recently we had dinner with a couple who introduced Gail and me on a blind date 35 years ago. They are from New York where the husband has had a jewelry business in the heart of New York’s Diamond District for many years. We were dining outside in St. Armand’s Circle in Sarasota and this couple was looking around like two kids entering Disney World, amazed at the number of people out and about enjoying the shops, restaurants, and beautiful evening weather. They had been to Florida many times before but this time was extra special as New York has been shut down to a large degree, and according to the husband, New York City has become a ghost town of sorts with rising crime rates and the closure of many businesses. However, despite the depressing news from New York, our conversations are always full of laughter as the husband has an uncanny sense of humor and like most wives, she just rolls her eyes.
While many have grown depressed being quarantined in their homes for months up north, the husband has maintained his sense of humor. He said, “You try to get creative, and when weather permits, you try to make the most of your time outdoors.” Being an avid tennis player who also enjoys the game of golf I asked, what other things he had tried. He replied, “Skeet shooting.” Detecting the puzzled look on my face he said, “I thought I’d give it a try….As a Jew we don’t hunt, we order in, but I figured it was something new and different. Unfortunately, birds were dropping from the trees and a plane fell out of the sky, but while I seemed to hit everything else, I couldn’t hit those clay pigeons.” I was so glad he hadn’t lost his sense of humor!
found it amazing to see the change in perspective as years ago Florida was only seen as a place to retire, and now couples like our friends are giving serious consideration to possibly making the move themselves in the not too distant future, which we couldn’t be happier if they did. What I also found interesting is most of the husband’s Florida clients are in the Palm Beach area, which years ago seemed like the place they would eventually relocate, however, they shared with us how they wanted to get away from the stress, congestion, and the “personalities” they deal with daily and are finding southwest Florida provides everything they could want. I have to agree as I still find myself wondering in amazement that we live in a place people come to vacation.
While most people would like to talk about themselves, Gary and Gail have always put their clients first, and their diverse backgrounds have provided their clients an unparalleled level of service and knowledge throughout the past years.