What is the FAR and FAR/BAR contracts (Florida Assoication of Realtors and the Florida Bar Approved Contract)
In Florida, buyers have more power and less risk when using a FAR/BAR (Florida Association of Realtors and the Florida Bar Approved Contract) "As-Is" contract when making an offer.
The main difference between a FAR/BAR "As-Is" contract and the FAR/BAR contract (with repair limits) is inspections rights and how to deal with matters relating to possible repair issues found during the home inspection. Buyers pay for the home inspections. Often, there are various issues found during the inspection that must be repaired and always at a cost to the seller or buyer. Not all inspection issues are deal breakers but there are some that are!
The language in a FAR/BAR "As-Is" contract allows the buyer to escape the contract for any reason during the inspection period which is typically ten (10) days from the date all parties sign the contract. With a FAR/BAR (with repair limits) contract, there are repair limits (default is 1.5% of the contract amount for warranted items; 1.5% for WDO (termites); 1.5% for open permits) which set parameters or limits, that a buyer and seller can "negotiate" and still keep the deal together. The repair limits are not readily enforceable on the seller or buyer but do call for discussion between the buyer and seller (and their Realtors) about the possible repair costs found to exist within the scope of the inspection report.
This is where the power shifts towards the seller. At first glance, a buyer might think great, I have 1.5% of the contract amount to fix things, but what if the buyer, after reviewing the inspection report, decides not to buy? A savvy aggressive listing agent may advise their seller, or vice-versa, that they want the buyer to close the transaction and are willing to give the stated 1.5% repair limits to the buyer. What then? If this situation occurs, then the contract language calls for a second inspection to verify that the first was correct followed by more dialogs between the buyer and the seller.
Herein lies the problem. Why would a buyer want to give a seller, or their overly aggressive listing, any power or control over their decision to escape a contract? They wouldn't. Furthermore, a buyer can always request that a seller do repairs with an "As-Is" contract. If the seller refuses, the buyer has the right to accept the property or go find another more suitable property.
As a broker and buyer's agent, I want control over when I escape a contract. I want to insulate my buyer from an aggressive listing agent. A FAR/BAR contract with "repair limits" affords the seller and listing agent too much control.
Inspections are valuable and a critical component when buying a home. Inspectors find water intrusion not readily noticeable to a buyer or buyer's agent. Structures may have termites, un-permitted work, improper application of construction materials, mold, or other issues that are not easily remedied.
Before I make an offer using a FAR/BAR "As-Is" contract, I thoroughly review the seller's disclosure. If I feel there will be an issue with a particular repair issue, and it is in the report, I can request that it be repaired by seller before closing. When selling real estate in Tampa Bay, I have escaped many contracts because of issues found during inspections.