In Silicon Valley, there are two real estate purchase agreements, and sets of forms, in use: the PRDS and the CAR contracts and forms (Peninsula Regional Data Service and California Association of Realtors). Both of these are updated periodically. The PRDS contract’s latest revision was in June 2013, so a couple of days ago I attended a training session to go over the new form and to have the highlights pointed out.
To me, one of the most striking changes is found in paragraph 2I on page one of the contract. Have a look – one of the changes is highlighted in yellow so that it stands out:
In the past, the value and condition of the property were part of separate contingencies, the appraisal and property condition contingencies. Now, however, if the bank or lender won’t lend (or won’t lend the needed amount) based on either of these issues, the buyer is protected by the loan contingency. That’s huge!
What will be the impact of these modifications to the contract? In a balanced market, where buyers have their normal contingencies, I suspect there’d be no change at all. In an overheated seller’s market, though, we may see some listing agents demanding that all offers come in on the CAR form instead, as that purchase agreement does not have such a clause as this.
