Five Pitfalls to Avoid on the Road to Mastering the RPC

Posted on February 2, 2010 by AAR

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Make the AAR Residential Resale Purchase Contract (RPC) Your Go-To Tool


 

Even in the foreclosure age, with addendum-riddled transactions, the AAR Residential Resale Purchase Contract (RPC) is still the go-to tool of the Arizona REALTOR®. If you’re working in residential real estate, chances are it’s an integral part of your business. Here are five pitfalls to avoid on your road to mastering the RPC:

1. Don’t forget to read the RPC.
Obvious as it may be, it’s worth stating. It is your job to understand the contract and review it with your client. The better you know it, the easier that will be.

After you’ve read and re-read the contract, read it again and keep a copy close by for reference. When in doubt, take it out and review whatever sections pertain to the question at hand.

2. Don’t write stuff that doesn’t belong.
Directly beneath the big, bold “ADDITIONAL TERMS AND CONDITIONS” on page 7, sit a bunch of blank lines that are so inviting, many agents are drawn to filling them with verbiage that doesn’t belong.

Before adding something to the contract, check to see if it’s already covered in the boiler plate language. There are certainly appropriate times to add verbiage, but keep in mind that doing so will supersede the pre-printed portion of the contract.

3. Don’t reinvent the wheel.
Section 1f of the contract, entitled “Addenda Incorporated,” lists a variety of AAR forms designed to supplement an offer, when appropriate, by addressing common situations. Before drafting your own language for something the contract doesn’t cover, look for an existing AAR addendum that might.

Of particular interest is the often-overlooked AAR Additional Clause Addendum. It has clauses that address back-up offers, proof of funds for all-cash sales and non-refundable earnest money, just to name a few. Check off the appropriate clauses and save yourself the trouble (and potential liability) of drafting your own language.

4. Don’t forget the Loan Status Report (LSR).
For offers that involve financing, Section 2d states that the LSR is “attached hereto and incorporated by reference.” Yet we routinely find agents using lender prequalification letters instead or ignoring this requirement entirely.

What do you suppose happens when a contract references a document that doesn’t exist? That’s a question for an attorney—or worse, a judge. At the very least it creates ambiguity, and that’s a bad thing. So get that LSR completed by the buyer and the lender when submitting an offer.

5. Don’t be afraid to admit when you don’t know something.
At some point after our teens, most of us realize we do not, in fact, know everything. The best agents I know have the following phrase in their arsenal and are not afraid to wield it at will: “I don’t know the answer to that, but let me find out and get back to you.”

Using this approach instead of “winging it” will help keep you out of trouble while earning your client’s trust. Also keep in mind that operating outside your field of competence is a violation of the Code of Ethics and possibly the Commissioner’s Rules.

When faced with a question you can’t or shouldn’t answer, take the opportunity to be a truly reliable source of help for your client by referring them to an appropriate expert—or simply offering to get back to them after talking to your broker.

Career-minded real estate professionals never stop learning. They have a foundation of knowledge that they build on with every transaction, but they start with the fundamentals. For the residential REALTOR®, nothing is more fundamental than the AAR Residential Resale Purchase Contract.

We live and work in an age when learning opportunities are abundant. Take a class or sign up for an upcoming conference. In the meanwhile, take out the RPC and give it another read.

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