As with any industry, real estate has its own vernacular. It includes terms like title or escrow, and acronyms like DOM (days on market) or PITI (principal, interest, taxes, and insurance). Then there are abbreviations for documents used throughout the transaction, like the AOS. While saying AOS as opposed to “the Standard Agreement for the Sale of Real Estate written by the Pennsylvania Association of REALTORS®” saves you a mouthful, let’s not skip over its importance or content.
In PA, the standardized forms used by real estate agents are written by the Pennsylvania Association of REALTORS®, aka PAR. One of many differences between purchasing or selling real estate in PA is that hiring an attorney is not required, and REALTORS® can explain and guide you through PAR’s authored contracts.
What is an AOS?
The purchase agreement written by PAR is often referred to as the AOS (for agreement of sale). It’s a legally binding contract between a buyer and a seller that establishes the terms and conditions of purchasing real property. It ensures both parties understand their obligations and protect their interests during the transaction. While there are separate PAR AOS contracts for new construction homes, commercial property, and vacant land, the AOS most commonly used is for residential property (up to 4 units including mixed-use). Its formal name is the Standard Agreement for the Sale of Real Estate. It details what is needed to sell and buy a property in the entire state of Pennsylvania. While it includes terms that apply to everyone, like the purchase price, what fixtures or appliances are included, payment methods, HOA rules, and the settlement date, about 10% of the contract only applies to rural areas.
As part of our process, your Philly Home Girls REALTOR® will walk you through every inch of the AOS in addition to every document necessary to purchase or sell a home. In the meantime, here are some key items to help you prepare.
Financial viability
The Preapproval
The second step of the home purchasing process after meeting with a Philly Home Girls agent is being introduced directly to a lender with a proven record of successfully working with and closing loans for our clients. We call it a “warm introduction” between you and a mortgage provider who has the best financing programs for your individual needs. After filling out an application, this lender will provide you with a document called a preapproval that we attach to the agreement of sale. It will disclose what type of financing you’re using and provide terms that mirror the financing contingency in your AOS. The preapproval process shouldn’t take more than 24 hours, and does involve a credit check. Depending on the type of lender you choose affects your credit score on a spectrum of hard to soft.
The Buyer’s Information Form
Because the lender and your agent both owe you confidentiality, the pre-approval only provides a confirmation that you qualify for a mortgage, how much, and what type. It doesn’t disclose any personal information about you and why or how you qualify. It is up to you to provide that information to a seller in another PAR authored document called The Buyer’s Financial Information Form. With this form, you are in control of disclosing to the sellers how you’re financially viable to purchase their home.
It’s your only opportunity to communicate to the seller important nuances such as: paying cash when a preapproval wouldn’t apply, if you’re waiving the mortgage contingency and using mortgage to finance, whether you can bridge an appraisal gap, and/or need a seller’s assist or grant.
Terms
Before you review the AOS with your Philly Home Girls agent paragraph by paragraph, you are typically able to or have already decided on the following terms of the agreement which your agent can enter into the document in advance:
Offer Price
Deposit amounts and delivery schedule
Closing date (needs to be M-F, 9am - 5pm and cannot be a federal holiday)
If your agent’s commission is being paid by the seller
Financing contingencies (including assists) and schedule
Inspection contingencies and schedule (whole house, termite, radon, and/or others)
Contingencies
Contingencies are agreed upon opportunities to cancel your purchase contract and protect your deposits. Due Diligence are the steps taken to exercise those contingencies. They typically include the following:
Disclosures
Before your purchase contract is signed you’ll have reviewed another PAR document called “The Seller’s Property Disclosure” where the seller can disclose any known defects in the property. The AOS indicates you’ve reviewed it, and is accompanied by the form with your signed acknowledgement.
Inspections
At this point in the process, you’ve viewed the property with your agent in person or by video call. You may know the heater is old, or the roof leaks, but until your due diligence period starts you have yet to hire a professional inspector to verify that the condition of the house is what you expect, better, or worse.
Your AOS will define what inspections you choose to base your obligation to purchase on, and by when they need to be done. After that your options are: A) accept the property in its current condition, B) reject it and terminate the agreement. Deposits are returned to you. C) negotiate credits and/or repairs.
Mortgage
If you are purchasing a home with financing, you’ll need to set a mortgage commitment date. By this date, your lender will need to provide a formal document stating you’re approved for the loan. If you can’t close on the precise mortgage indicated in the AOS, the sellers can cancel/terminate the contract and return your deposits to you. It’s important that this contingency be written correctly, and that you choose a professional lender who knows the nuances of the PA AOS if you ever want a smooth exit from the contract.
Title
If the sellers owe more in liens and encumbrances than they can afford, or if they are not the rightful owners per the chain of title, you will have to terminate the contract. This is a rare situation and most likely wouldn’t arise until just before the finish line of the process. In this case, not only are your deposits returned to you, but the contract states the seller must reimburse you for any expenses you’ve incurred pertaining to the terms of the agreement so far. That can include mortgage application fees, inspection costs, and appraisals. However, this revelation would be very shocking to the seller and they’re most likely not going to be forthcoming with this refund. Pursuing the enforceability of this term would involve an attorney.
Let us be your guide
As licensed real estate agents, we’re dedicated to helping buyers and sellers understand the nuances of every part of these processes. As REALTORS®, we can save you time and money, reduce your stress, empower you to be in control of your transaction, and most importantly, get the property you want at the price you can afford.
We’re looking forward to meeting with you, hearing about your real estate goals, listening to your personal needs, learning about your fears and anxieties, and ultimately curating a plan that works for you on all of these levels and ensures a successful experience.
