The Insider’s Scoop On the New AAR Purchase Contract
January 24, 2017 |
P.R. ‘Randy’ Cooney
President, The Success Institute
Publisher, Arizona Journal of Real Estate & Business
Those who have been in real estate in Arizona for many years may recall a residential purchase contract that was one page. It included the property address, names of buyers/sellers, price, earnest money, down payment, loan amount and a lot of white space to write in any additional terms. There was also one addendum called the Counter Offer. On February 1st 2017, The Arizona Association of Realtors (AAR), shall officially publish the newest residential contract to be used statewide by all REALTORS®. It shall be ten pages in length with nearly seventy possible ancillary forms & addendums that could be applicable.
So how did we go from one page to ten? Below is the seven step process and protocol for contract revisions undertaken by AAR. This process of many years, has earned AAR national recognition for creating some of the very finest and most thorough contracts, forms and addendums in the country.
The Risk Management Committee at AAR determines, based on feedback from its members, that it is time to revise and update the residential purchase contract.
The Risk Management Committee at AAR creates a main work group and necessary sub-work groups.
So for example, for the 2016 Contract Revisions effective on February 1st 2017, there was the main work group chaired by Martha Appel, Designated Broker for Coldwell Bankers Residential Brokerage, and three sub-work groups. The three sub-work groups were as follows:
- Martha Appel chaired a sub-work group to review sections 2-3 in the current contract.
- Jim Sexton, past-president AAR, chaired a sub-work group to review sections 4-5-6 in the current contract.
- Gerry Russell, Designated Broker, Realty Executives, chaired a sub-work group to review sections 1-7-8-9 in the current contract.
Note: Scott Drucker, AAR’s legal counsel, was available to all work groups for questions.
The sub-work groups complete their work and make their recommendations to the main work group. This main work group for the latest revisions included the three chairs of the sub-work groups: Martha Appel, Jim Sexton, Gerry Russell, and 2 members from each of the above sub-work groups. Their role is to collectively review, discuss, and debate the recommendations of the sub-work groups and make, if necessary, additional changes and/or deletions.
A SAMPLE draft of the contract proposed by the above main work group is sent out to approximately 3600 REALTORS® throughout the state of Arizona. This selected group of 3600, nick-named “The LOOP”, are asked to review the SAMPLE contract and send in their written comments and suggestions. This time, the main work group received 36 pages of comments regarding the proposed contract.
The main work group reconvenes for a final meeting to review every single comment/suggestion submitted by “The Loop” and make any final changes.
The main work group then presents their recommended revised contract to AAR’s Risk Management Committee who may or may not make additional changes.
Once approved by Risk Management, the revised AAR Contract is presented to the Executive Committee of AAR, made up of AAR staff, elected AAR officers and AAR committee chairs. They are the final voice to approve and ratify the contract.
The AAR contract, form and addendum revision process is so rigorous and thorough, it has earned them recognition as one of the leading REALTOR® state associations in the country.