Buying or selling a home can be intimidating, even if you’ve done it before. That’s why we recommend using a real estate professional–a Realtor®–to guide you through the process. Even if you elect not to use a Realtor® and strike out on your own, the more informed you are as a real estate seller or buyer, the more pleasant your experience is likely to be. The Pennsylvania Association of Realtors® (PAR) publishes a number of forms that are designed to help guide the consumer (and your Realtor®) through the steps of the home buying/selling process. While a large number of real estate professionals in the state do use these forms, you should be aware that you will not necessarily see the exact forms referenced here.

Legal Stuff

Please keep in mind that this document is only meant to familiarize you with some of the basic elements of a real estate transaction. In no way is it meant to present a comprehensive explanation of all the various laws, regulations and business practices involved in buying or selling a home–there may be certain things that are not discussed at all, and the explanations that are given are often simplified. Further, this document is not intended to provide legal advice to consumers, and it should not be relied on in place of seeking professional advice from a Realtor® and/or attorney if you are unsure of any of the terms or concepts involved, or if you have questions about any aspect of the process. Obtaining the services of a Realtor® and a real estate attorney are always encouraged.

Agency and Business Relationships

Whether you are buying or selling a home, it is important to understand what relationships exist–or can exist–between you and a real estate professional. Even if you have chosen to go it alone (i.e., buy or sell without the help of a Realtor®), chances of escaping this experience are pretty slim. Here’s why: every real estate licensee that you meet during the course of your transaction (open houses, listing appointments, phone calls to brokerages, etc.) is under a legal obligation to explain to you the various business relationships you can have with him or her–even if you do not wish to work with them at all. This explanation will come by way of a written Consumer Notice if the meeting is in person, or via an Oral Consumer Notice if it’s by telephone. By law, the Notice must be given before you start discussing your real estate needs and, in effect, puts you on notice not to mention anything that might hurt your negotiating position until you know who the real estate licensee works for. The written Notice must be delivered to you at the first personal meeting where a discussion of your needs takes place OR, if the original Notice was given orally, at the first face-to-face meeting. You’ll have to sign the Notice so the real estate licensee has proof that it was presented to you.

Your options for working with the real estate licensee will be limited by two things: whether he or she is already working with the “other side” in the transaction and the internal policies of the broker that the licensee works for. The full slate of possible relationships are as follows: buyer agency, seller agency, dual agency, designated agency and transaction licensee.

The Paper Parade: Agency/Employment Contracts

Once you have read the Consumer Notice and have made a decision to work with a Realtor®, you will be required to reduce your relationship with him or her to writing.

If you are a seller, this will be in the form of a Listing Contract, where you define your relationship with the Realtor® and outline the terms under which he or she will market your property, including the fee to be paid to the broker. As a seller, you also are required under Pennsylvania law to fill out a Seller’s Property Disclosure Statement. This Statement must be delivered to all prospective buyers before an offer is made.

If you are a buyer, the form you sign will depend on the relationship you choose to create with the Realtor®. A very common form used for this purpose is the Business Relationship Between Broker and Buyer. This form deals with three types of business relationships. First, if the Realtor® is already working with the seller, or as a subagent of the seller, this form gives you an opportunity to acknowledge Seller Agency and provides important notices on the back. You will encounter this most often if you are not opting to work with a Realtor® during your buying process.

Second, if you choose to work with a Realtor® as a Transaction Licensee, this form allows you to create that relationship; again, the notices on the back come into play.

Finally, if you choose Buyer Agency, an Exclusive Buyer Agency Contract is contained in the form, allowing you to create a relationship with a Realtor® who will look out for your interests through the entire process of searching for and buying a home. You also have the option to create a Non-Exclusive Buyer Agency relationship, in which you are obligated to work with the broker only if you end up buying a property that he or she showed to you, but not if you purchase a property shown by another broker. You should discuss with your Realtor® what he or she offers and what will work best for you.

Dual Agency

As you might expect, there will be occasions when a buyer and seller, represented by the same broker, enter into a transaction together. When this occurs, the broker, having duties to both the buyer and the seller, takes on the role of a dual agent. Most brokers have policies that allow them to serve as both seller and buyer agents in the same transaction. Brokers whose practices include dual agency may designate separate agents to represent the separate interests of the buyer and seller. The designated agent for the seller will continue to act as a seller’s agent, advocating on behalf of the seller; similarly, the designated buyer agent will work to serve the buyer in that transaction. As a buyer or seller, you have the right to choose the designated agent with whom you will work. When the same designated agent represents the seller and buyer in the same transaction, he/she will be a dual agent.


Whether you are buying or selling, you’ll probably want to know how your Realtor® is being compensated. Most fees are usually paid by a seller, and the PAR listing contract contains a provision setting the fees for your broker as either a flat fee or a percentage of the sale price. Most listing brokers have policies under which they will pay a portion of their fee to another broker who brings a buyer to the property; this is also covered in the Listing Contract.

If you choose to sell your property yourself and are approached by a broker who represents a possible buyer, you will probably be asked to fill out a Broker Fee Agreement stating that you will pay a certain fee to the buyer’s broker only if his or her client ends up purchasing the property.

Buyers are frequently charged with a “transaction” or “conveyancing” fee by the selling broker (the office working with the buyer). These fees generally are charged in connection with the many miscellaneous services provided to the buyer such as coordinating inspections, assisting with the loan application and placement for the order of title insurance, etc. Like any fee imposed by a real estate licensee, it is payable only when it has been agreed to in writing. This rule holds true for sellers as well: no fee can be charged unless you agree to it in writing.

The Paper Parade: Committing to Buy or Sell

Offers to purchase real estate must be in writing and generally are submitted to sellers via an Agreement of Sale. Before you get to that point, though, there are a few more forms you might encounter.

All sellers and buyers must receive their estimated closing costs before an Agreement of Sale is signed. Buyers whose deposit is being transferred to another broker (a common practice when the agent taking your check is not the listing broker) must be informed of the transfer generally via a Deposit Money Notice. The buyer also must have received a Seller’s Property Disclosure Statement. The buyer and seller have a chance to acknowledge receipt of these and other forms that may be required as they fill out an Agreement of Sale.

Until a written offer is received and accepted (all terms agreed to and acknowledged by signature or initials by both parties), the property is still “on the market”. That means that if a second offer is received from another buyer before the first offer is “signed, sealed and delivered”, the seller could very well accept that second offer. The seller is not under an obligation to review offers in the order in which they are received; so if more than one offer comes in during the window of time that seller has for approval, offers can be compared. Sellers should consult their Realtor® and attorney for guidance if they are receiving multiple offers.

Buyers can put a little pressure on the seller to accept or reject an offer quickly. When an offer is made, the buyer stipulates in the Agreement of Sale how long the seller has to review it. In a competitive situation, the buyer may consider keeping that period short. The buyer’s Realtor® can help determine an advisable time-frame by taking market conditions, desirability of neighborhood and other factors into account.

All offers and counteroffers should contain a time period for acceptance. If the time period passes with no action, the offer (or counteroffer) dies.

More information is available to potential buyers about the Agreement of Sale in a booklet titled “The Buyer’s Guide to the Agreement of Sale”. The booklet should be available through your Realtor® or your local association of Realtors®.

Inspections, Contingencies, Etc.

Buyers can make their offers contingent on the property passing certain inspections. The PAR Agreement of Sale contains pre-printed inspection contingencies for the property in general, for wood boring insect (termite) infestation, for radon, for lead-based paint hazards, for the water service and for the sewage system. Notices regarding these inspections and giving other useful information are found on the backs of most pages of this form. Some of these Notices are required by law, so both the seller and buyer should read them.

Buyers and sellers should be aware that if the property was built before 1978, a federal law regarding lead-paint hazards applies. The seller must disclose any knowledge of lead paint, and the buyer has the right to inspect and/or assess the property for lead. A pamphlet titled “Protect Your Family from Lead in Your Home” must be given to the buyer of pre-1978 properties.

The Agreement of Sale also contains other non-inspection contingencies that may affect the sale of the property. For example, there is a Mortgage Contingency which gives one or both parties the option to cancel the agreement if the buyer is unable to get financing for the purchase. There are also several frequently requested contingencies, the most common of which makes the purchase contingent upon the buyer being able to sell his or her current home, that can be added to the contract by filling out one of the many available addenda. If you have special conditions that need to be met to make you comfortable with the sale or purchase of a home, talk to your Realtor® about setting up special contingencies to cover those conditions. Keep in mind that you cannot enforce a promise if it has not been written into the Agreement of Sale, an Addendum (written “add-on” to the Agreement), or an Amendment to the Agreement (usually written sometime after the original Agreement).

When the Offer is Accepted

If you are using a Realtor®, he or she will assist with the scheduling of any agreed upon inspections and will work with you in meeting the requirements imposed upon you as a buyer or seller. During this time, a title search will be performed to make sure there are no “clouds on the title” (meaning there are no legal impediments to the seller providing the marketable title that buyers and their lenders usually require).

Most buyers have an opportunity for a pre-settlement “walk-through” of the property, where they make sure everything is there that should be there, and where they have an opportunity to check that required repairs were made, etc. It’s important that buyers take advantage of this opportunity so that any outstanding issues can be dealt with properly at settlement. It is also important to remember that the property was bought “as is” or in the condition it was when the Agreement of Sale was executed. Improvements that were not specifically spelled out in the agreement will not have occurred, and normal wear and tear from the time of the agreement to settlement are acceptable.


When all contingencies have been fulfilled, title searches completed and monies secured, settlement can occur. Settlement, or closing, is when the property actually changes hands and the title, or deed, is transferred. In most transactions, sellers are required to be out of the property by settlement and the property is to be in “broom-clean condition”. Occasionally, with advanced planning and by special arrnagement, sellers may remain in the property after settlement, or buyers may move into the property prior to settlement. When these special circumstances occur, arrangements are made for the payment of security deposits and the payment of appropriate sums in exchange for the privilege of having possession before or after settlement. There is a form to accommodate those times when the seller will remain in the property after settlement, or to allow the buyer to move in early or to at least gain access to the property to store materials or to prepare it for the buyer’s move.

If Something Doesn’t Work Out

As a seller, if you find yourself in a listing contract with a real estate agent who is just not doing the job you expected, what are your options? Your first act should be to call the broker and or office manager and discuss your dissatisfaction. The broker is responsible for the actions of salespeople in the office and may be able to offer some solutions. If discussions with the broker or manager are unsuccessful, you may seek to be released from the listing contract. This requires the agreement of the broker. Some brokers offer a period of time where the seller can walk away from the contract; others will charge the seller a fee for costs incurred marketing the property. Because it is a service contract, you do have the option of cancelling the contract, without the broker’s consent, but it may not be without some cost to you. If a broker believes that the cancellation was unjust, he/she may seek a legal remedy. And remember, if a buyer who was introduced to the property during the term of the broker’s listing contract ends up buying the property, you may be liable for the broker’s fee.

If you are a buyer in a buyer agency contract with a real estate agent whose style is not suited to your personality, or if you are dissatisfied for some other reasons, you should first call the broker or office manager to give him or her the opportunity to fix the situation. If that doesn’t resolve the problem, you may terminate your buyer agency contract. Whether the broker has any remedy will depend upon the reasons for your terminating the Agreement. Remember, though, if you buy a property that you looked at with the agent (or, if you signed an exclusive buyer agency agreement and you buy a property that you looked at during the term of your buyers agency contract), the agent will still be entitled to the agreed upon compensation.

If the buyer or seller has a problem with the other party in the transaction, there are always several options available to resolve the problems (informal agreement, mediation, court proceedings, etc.). Near the end of the Agreement of Sale is a contract term giving the buyer and seller the option to mediate any disputes they may have over the transaction instead of taking them directly to court. There is an in-depth Notice explaining this option on the back of the last page of the agreement, but you should discuss with your Realtor® and/or attorney if you wish to elect this option. You should look upon mediation as a service offered by the local association of Realtors® as a benefit to the buyer and seller. Though it is the rare occasion when a transaction ends up in a dispute, having the dispute resolved quickly, inexpensively and out of the courtroom is to everyone’s advantage. The mediation system has been working for nearly a decade in Pennsylvania with a high percentage of the cases having been amicably resolved quickly and inexpensively.

As for your relationship with the real estate professionals involved in a transaction, it’s important to remember that licensees using the term Realtor® belong to the National Association of Realtors® and subscribe to a Code of Ethics that holds their behavior to a higher standard than Pennsylvania law requires of them. If you are working with a Realtor® and you feel your agent has acted unethically, you can file an ethics complaint with the local association of Realtors®. If any licensee has violated the license laws, you can file a complaint with the State Real Estate Commission. The Commission is the government agency that issues and maintains licenses and writes the Rules and Regulations that all Pennsylvania licensees must follow. The Commission will investigate the complaint and can impose sancations ranging from fines to license revocation if violations against the license law are found.

Source: Pennsylvania Association of Realtors®