The Pennsylvania Agreement of Sale is the standard residential real estate contract used throughout the state. It is a multi-page standardized form published by the Pennsylvania Association of Realtors — not a bespoke contract drafted by attorneys for each transaction. Buyers relocating from New York, New Jersey, Washington D.C., or other states often encounter it for the first time at the offer stage and find it more detailed and structured than what they expected. Understanding the key sections before you make an offer avoids surprises at a moment when the timeline is moving fast.
What makes the PA Agreement of Sale different
Most states use some form of standardized residential purchase agreement, but Pennsylvania’s is notably comprehensive. The PAR form covers contingencies, timelines, inspection rights, financing conditions, and property-specific details in a single binding document that both parties sign simultaneously.
There is no attorney review period in Pennsylvania. In New Jersey, either party’s attorney has three business days after signing to cancel the contract without penalty. Pennsylvania has no equivalent. Once both parties sign the Agreement of Sale, it is binding immediately. Buyers who are accustomed to NJ’s review period should understand that the PA Agreement of Sale is final upon execution.
The deposit
The Agreement of Sale requires an earnest money deposit — typically 1% to 5% of the purchase price in the Philadelphia suburbs, though the specific amount is negotiated. The deposit is held in escrow by the listing broker and credited toward the purchase price at settlement.
The deposit is at risk if the buyer defaults without a valid contingency. If a buyer backs out after all contingencies have been removed, the seller is typically entitled to retain the deposit as liquidated damages. If a buyer backs out under a valid contingency — financing, inspection, appraisal — the deposit is returned.
The amount of the deposit matters in competitive offers. In multiple-offer situations, a larger deposit signals commitment and can differentiate an otherwise equivalent offer.
Inspection contingencies
Pennsylvania’s Agreement of Sale provides for several types of inspections, each separately negotiable:
Home inspection. The general inspection covers the structural components, systems, and overall condition of the property. The buyer typically has 7 to 15 days from the fully-executed agreement to complete inspections and respond. If the inspection reveals unsatisfactory conditions, the buyer can request repairs or credits, accept the property as-is, or in some cases terminate.
Wood-destroying insect (WDI) inspection. Commonly called a termite inspection. Required by most lenders and a routine part of nearly every PA transaction.
Radon test. Radon is a naturally occurring gas present in significant concentrations in many Pennsylvania homes. Testing is standard and inexpensive. Radon mitigation systems are common and effective.
Water test. Required for properties on private well water. Tests for bacteria, nitrates, and other contaminants.
Septic inspection. Required for properties on private septic systems. Involves pumping and inspection of the system’s components.
Each inspection is a separate negotiating point. Buyers can elect some or all of them. In competitive markets, buyers sometimes waive certain inspections to strengthen an offer — a decision with real risk that should be made with clear eyes.
Financing contingency
If the buyer’s purchase is contingent on obtaining a mortgage, the Agreement of Sale includes a financing contingency specifying the loan amount, interest rate cap, and the deadline by which financing must be confirmed. If financing falls through for reasons beyond the buyer’s control before the deadline, the buyer can terminate and recover the deposit.
After the financing deadline passes, the buyer is committed regardless of whether the mortgage closes as expected. Monitoring lender progress against that deadline is a critical part of the agent’s role in the PA transaction.
Appraisal contingency and appraisal gap
In a competitive market, appraisals sometimes come in below the agreed purchase price. The Agreement of Sale can include an appraisal contingency that allows the buyer to renegotiate or exit if the property appraises low.
In strong seller’s markets, many buyers waive the appraisal contingency — or include an appraisal gap clause committing to pay a specified amount above the appraised value out of pocket. This is now common in the Philadelphia suburbs for competitively priced properties in high-demand school districts.
Settlement date
Pennsylvania calls closing “settlement.” The Agreement of Sale specifies a settlement date, typically 30 to 60 days from execution. Settlement is handled by a title company — not a law office closing as in some other states. The buyer and seller (or their representatives) sign documents, funds are transferred, and the deed is recorded.
Inclusions and exclusions
The Agreement of Sale specifies what is included and excluded from the sale. Fixtures — items permanently attached to the property — are generally included by default. Appliances, light fixtures, window treatments, and other items must be specifically listed as included or excluded to avoid disputes. Sellers sometimes exclude items they plan to take: a dining room chandelier, a built-in refrigerator, or outdoor furniture.
Buyers should walk through the property with the inclusion/exclusion list in mind and confirm any specific items in writing before the agreement is executed.
Seller’s disclosure
Pennsylvania law requires sellers to provide a written disclosure of known property conditions before the Agreement of Sale is signed. The disclosure covers structural components, systems, environmental conditions, and legal matters affecting the property. It does not replace the buyer’s own inspection — it documents what the seller knows, not what an inspection might discover.
What changes after the NAR settlement
Following the 2024 National Association of Realtors settlement, buyer’s agent compensation is no longer automatically structured through the listing. Buyers now enter into a separate written buyer representation agreement specifying the buyer’s agent’s compensation before touring homes. The PA Agreement of Sale may include a term addressing whether the seller is contributing toward buyer’s agent compensation, or it may not — that is now a negotiated element of each transaction rather than a market default.
Working with Karen
Karen Langsfeld is a REALTOR® and Pricing Strategy Advisor (P.S.A.) with Berkshire Hathaway HomeServices Fox & Roach in Blue Bell. She guides buyers through every section of the PA Agreement of Sale before an offer is submitted, so there are no surprises at execution. For a full walkthrough of the buying process from pre-approval through settlement, the steps to buying a home in Montgomery County covers the complete sequence. For a breakdown of what the PA Agreement of Sale costs the buyer at closing, the guide to what it costs to buy a home in Pennsylvania covers transfer tax, lender fees, and all closing costs.
Contact Karen at (215) 495-2914 or through the contact page.