Home Buying in Phoenixville>Question Details

Denise, Both Buyer and Seller in Phoenixville, PA

Should I use a realtor or attorney to review a new construction contract?

Asked by Denise, Phoenixville, PA Wed May 28, 2008

My realtor has stated that it's a pretty standard contract for PA. She also had her mortgage broker look at it.

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Denise,

Other than a promulgated form (one that is published by an organization and used without changes), with respect to contracts, there is nothing "pretty standard". If you understand that your agent and their broker are unlikely to assume any liability with respect to any future contract dispute, but you trust their judgement, then use it. But if you want a trained set of eyes who is going to presume some liability with respect to protecting your legal interests in any future contract dispute, then use an attorney. To say they charge too much is a little like calling the kettle black. Note, I'm one of the kettles!

Note that in a new home purchase, you're pretty much at the disadvantage and the builder holds most of the cards, that's why they have a contract. It's not there to help you, it's there to help them.

In the entire process, do not allow any significant decision that you are making, rely on the verbal responses to your questions. Get every answer in writing and get it from the source who is going to take the legal responsibility if the answer is wrong.

Also, consider putting any earnest money in the hands of a truly impartial third party, not the builders title/escrow company, or builder's attorney. And watch out for attempts by the builder to make additional money off of you with offers of paying your title policy, or origination fee, if you commit to use their lender.

Good luck,

Jeffrey
2 votes Thank Flag Link Wed May 28, 2008
Well, being a REALTOR and having gone through TWO WHOLE WEEKS of school to get here (Followed up by another 2 and then Broker school) I can tell you that we are not attorneys. But then Attorneys are not REALTORS either.

Why did I go through that explanation....Easy, because most Attorneys don't know enough about Real Estate Contracts and the companies behind them. A builder’s contract is written to protect the builder as much as possible. It is written in an extremely one sided fashion and made to be very concrete. If you go to your local Family law practice, there is a good chance that your attorney is going to make several changes and rightfully charge you for his/her time. But when you go back to the builder, they may simply scoff and now you have a invalid piece of paper that the builder refuses to sign or honor.

The only correct thing to do is find an attorney who specializes in Real Estate, if your REALTOR doesn't have one, then you may have the wrong REALTOR. Take the contract to him/her and get a review. I have found that when my clients call upon my attorney, he can ask who the builder is and often will be familiar with the contract used by that builder and also know the reputation of the builder, which saves him time and my client’s money.

Lastly, if you feel comfortable with your REALTOR and her Mortgage broker (3 day class in most states) protecting your largest investment...OK... but after ten+ years in the business, and having written or reviewed thousands of contracts, I still call my attorney on a regular basis.

Gary De Pury
Broker-Owner
Bay Vista Realty
Director, Florida Association of REALTORS®
Chairman, Communications Committee; GTAR
1 vote Thank Flag Link Wed May 28, 2008
Having bought several new construction sites for myself and clients recently in Phoenixville, the contracts resemble the PAR contracts commonly used by PA Realtors with a few amendments from the builder. If you signed in with an agent to be your representative, ask him/her to review the contract with you prior to signing. If you did not, ask the sales site manager. If neither option is available and you would like clarification with the contract, seek the services of a real estate attorney.
0 votes Thank Flag Link Thu May 29, 2008
Hi Denise:

You can do whichever you choose. If in doubt, have an attorney review. I can recommend an attorney here in Lancaster who specializes in real estate, and has modest fees. He could review your contract via fax if you like, I'm sure.

Alternately, if you are confident in your agent and his/her knowledge of the business, that's certainly fine as well. Follow your instinct on this one. :)

Here in PA, and I believe also in Phoenixville, most Realtor associations are using standard new construction contracts from PAR (Pennsylvania Assoc. of Realtors). It gets muddled a bit of the agent(s) have made changes to the contract. You are always welcome to seek legal advice, of course! Let me know if you need further assistance with that. Not all attorneys are exorbitant! :)

Happy home buying!
Jennifer
0 votes Thank Flag Link Wed May 28, 2008
While I agree with Paul on the Standard forms this is a Builder or New Construction contract. Please don't confuse the two. They are as similar as an Ostrich and a Seagull.

Gary De Pury
Broker-Owner
Bay Vista Realty
Director, Florida Association of REALTORS®
Chairman, Communications Committee; GTAR
0 votes Thank Flag Link Wed May 28, 2008
As a Realtor I like to think that we can rely on our purchase and sale agreement which is usually a standard form for your area. If a buyer has any doubts about the contract and what they are signing it is always a good idea to have the contract reviewed by an attorney. Real estate agents are not allowed to practice law all they can do is fill in the blanks of a purchase and sale agreement. If you are not comfortable with the advice of your real esate agent consult with an attorney. Mortgage brokers should not be giving advice about a purchase and sale agreement.

Ultimately you are the one who will own the home and you need to be sure that you get what you bargined for. Addition comment: Be sure to have a professional home inspector go with you to do the final walk through. It is amazing how many things even on a new home can be done badly or not to code.

Best of luck,
Paul Holzman, CRS
Broker Assocate
Northpointe Realty Group
Poulsbo WA 98110
paul@northpointerg.com
0 votes Thank Flag Link Wed May 28, 2008
Denise,

This is a personal preference. If you trust your realtor and mortgage broker than I would not worry about it. The problem with attorneys is that 1 they charge to much and 2 they get very nit picky with wordings. If they don't like the word loan vs. the work financing they'll make you change it then charge you for it. I just had one attorney make me write up an addendum stating that if the loan didn't close I didn't get paid which is just the obvious and then charged my client $500 just for reviewing the preliminary documents. I hope this helps and if you need further assistance please feel free to contact me.
0 votes Thank Flag Link Wed May 28, 2008
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