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The largest source of homes for sale in metro Phoenix is the Arizona Regional Multiple Listings Service which is our local "MLS".

The Multiple Listings Service

The MLS is an association of licensed real estate agents who work together to help each other sell real estate. The MLS makes it easy for a member Realtor to promote a seller client’s home, or "listing", to all other MLS members.

The MLS also makes it easy for members who represent buyers like you to find detailed information on tens of thousands of homes for sale.

To become a member of the local MLS you must be licensed by the State of Arizona as a real estate agent and you must be a member of the Arizona Association of Realtors.

No National MLS

The United State does not have a national MLS like the one in Canada. There are many hundreds of local MLS's each with its own rules and regulations.

Within Arizona, there is an MLS for metro Phoenix, another for metro Tucson and separate MLS's for Flagstaff, Prescott, and several other smaller towns.

MLS Information Online

Today, MLS information on individual homes for sale is available online to the general public. However, they don’t share all their information with the public.

Phoenix Area MLS

The metro Phoenix MLS does not have its own web site showing homes for sale. However, you can find MLS information on hundreds or perhaps thousands of web sites of individual Arizona Realtors who are members of the MLS.

For example, you can find metro Phoenix MLS listings on my web site at http://searchazrepos.com

2) How to Find Your Loan

Most Canadians who buy Arizona homes pay all in cash, however some can and will finance part of the purchase.

The requirements are constantly changing. These were the requirements for one loan available for foreign nationals to purchase Arizona real estate.  This will give you a rough idea of the paperwork involved in getting a loan to buy an Arizona home.

Foreign National Requirements For Arizona Loans

1. International credit report – It is ordered here in Arizona.

If the lender needs to build a credit history, the lender may require a 12-month history for 3 trade lines which are credit cards, mortgages, car payments, or other charge accounts. Cost is $40 per bureau, and takes 1-3 days for Canadians and 10-15 days for buyers from other countries.

2. Copies of passport and visa
3. Last two pay checks
4. Bank statements for the last 2 months
5. Assets – most recent quarterly statements
6. Last two years tax returns.

If self employed, the lender may need the business tax returns and a letter from an accountant stating number of years in business.

3) How to Find Your Arizona Realtor

Great!

You've done some basic research on the Arizona real estate market and you've talked to a lender and understand how to get your loan.

The next step, if you haven't done it already, is to select a Realtor to work with in Arizona.

Real Estate Agents and Realtors

In Arizona, all real estate agents must be licensed by the State of Arizona Department of Real Estate.

Many real estate agents licensed in Arizona are also Realtors. Only real estate licensees who are members of the National Association of Realtors are properly called Realtors. Realtors are committed to treat all parties to a transaction honestly and subscribe to a strict Realtor Code of Ethics.

The two most important qualities most people look for in a Realtor are 1) Knowledge, and 2) Trust.

You will want to look for a Realtor who is knowledgeable in the specific type of transaction you are planning and with whom you feel comfortable working.

Ask your friends in Arizona if they would recommend a Realtor for you to use. Research Realtors online.

You should contact Realtors until you find one you feel comfortable working with.

I want to be your Realtor!

I've been a licensed real estate agent for more than twenty-five years and a personal investor in single-family homes and land for most of that time. I've worked with many Canadians to find and purchase their dream vacation homes—and I've also helped Canadians who are interested in investing in US properties.

I'd love the opportunity to answer any questions you may have, or clarify any information you find here. Feel free to call or email me directly.

Randy Duncan

Realty Executives

480.839.2600

602.377.0896 (cell)
Email:  AZRepos@Gmail.com

4) How Much Do I Pay My Arizona Realtor?

Normally, nothing.

Realtors can get paid many different ways. Below is the most common scenario in Arizona.

First, let’s take a step back. A home seller and a Realtor reach an agreement to have the Realtor sell the home. In return, the seller agrees to pay the Realtor – usually a percentage of the final sale price – when, and if, the Realtor sells the home. This written agreement is called a “Listing Agreement.”

With the signed Listing Agreement, the seller’s Realtor can now promote the home in the MLS and reach many thousands of other MLS Realtors who in turn reach many thousands of home buyers.

The seller’s Realtor will state in the MLS that he will pay X% of the final sales price (or sometimes a flat fee) to any other member of the local MLS who represents the buyer of the home.

Therefore, in most home sales in Arizona, the seller has a Realtor and the buyer has a separate Realtor.

Since you are a buyer, your Realtor is usually free to you because your Realtor will be paid by the seller’s Realtor.

Don’t worry about a conflict of interest arising because your Realtor is being paid by the seller’s Realtor. By Arizona law, your Realtor is your “fiduciary” and is obligated to represent your best interests and not the best interests of the seller.

5: How to find your future Arizona home

Now you’re working closely with an Arizona Realtor so buying an Arizona home is starting to look very real indeed.

Selecting Your Home Criteria

It is important that your Realtor completely understand what your goals are in purchasing your home in Arizona;

·        Why you want to buy an Arizona home (vacation home, investment property, new primary residence, etc.) and how it will be used

·        Type of home (single family residence, condo/townhouse, loft)

·        Price range

·        Location

·        Minimum bedrooms

·        Minimum bathrooms

·        Home size

·        Type and amount of parking

·        Whether the home includes a pool or spa

·        Anything else important to you

The better your Realtor understands your goals, the smoother the purchase will go for you.

By the way, home size in Arizona is measured in square feet. Here is a web page to convert square feet to square meters and back.

Listings That Meet Your Criteria

Your Realtor will then email you MLS listings of homes for sale that meet your criteria. Your Realtor may also ask you if you would like to receive new listings that meet your criteria whenever they hit the MLS.

Fine Tuning Your Criteria

You may find after looking at the homes emailed to you that you would like to change your criteria; a different location, a different price, a different size, or whatever you like. This is easy for your Realtor to change for you.

In no time you will narrow down your home search to the best locations and best homes that meet your goals.

Your Trip to Arizona

Now, it’s time for the real fun to begin. You will want to take a trip to sunny Arizona to buy your new home.

If you have communicated well with your Arizona Realtor and your Realtor has worked hard, you will to able to find your Arizona home in just one or two days of home shopping. That will leave plenty of time for you and your spouse to relax by the hotel pool, play golf, go shopping or whatever.

An experienced and knowledgeable Realtor will be able to narrow down the many tens of thousands of homes for sale in metro Phoenix to the small number of homes that best fit your individual needs.

Do Your Home Shopping First

Do your home shopping at the beginning of your stay in Arizona.

Although all of the negotiations with the Seller can be done when you are back home in Canada, the negotiations are more likely to be successful if you are still in Arizona and can be reached quickly.

Attending the Home Inspection

In addition, if you reach an agreement with a home Seller early in your trip, you may be able to attend the home inspection while you are still in Arizona. It’s nice to be able to meet the home inspector you hired and ask him questions about the home after he’s finished the inspection.

6: How to Make an Offer

Okay, you started out back home in Canada by researching Arizona real estate and how you would finance your Arizona home. Then you found an experienced Arizona Realtor you trust and took a trip to Arizona where you found a gorgeous, sunny home you want to buy.

Now, you want to make an offer to buy that home.

The vast majority of resale (not new) homes in Arizona use the Residential Resale Purchase Contract created by the Arizona Association of Realtors (AAR). Whenever I say “contract” I am referring to this contract.

After talking to your Realtor, you will instruct your Realtor on how to prepare your offer for the home.

Unlike many states, lawyers are not required be involved in residential real estate transactions in Arizona. Normally your Realtor will draft and negotiate the contract under your direction without the involvement or expense of a lawyer.

An offer is just a Purchase Contract with only your signature on it. It’s not a contract until the Seller signs it.

Some of the most important points in the offer are;

·        Offer price

·        Earnest money

·        Down payment

·        Loan Status Report

·        Closing date

·        Personal property included

·        Seller contribution to Buyer expenses

·        Escrow Company

·        Home Warranty

·        Additional Terms

·        Offer Expiration

·        Counter Offers

Offer Price

Your Realtor can research recent comparable sales and help you decide on the price you would like to offer.

Earnest Money

The earnest money is usually a personal check written by you and made out to the escrow company you have chosen. The earnest money check is then temporarily held by your Realtor.

If you and the seller eventually reach an agreement, your Realtor will give your earnest money check along with the contract to the escrow company. This is called “opening escrow”. The escrow company will deposit your earnest money check immediately so be sure you have enough money in that account to cover the check.

If ultimately you can’t reach an agreement with the seller, your Realtor will either return the earnest money check to you or destroy it.

The Importance of Being Earnest… Money

The larger the earnest money amount, the stronger the offer.

In Arizona, earnest money of around 1% percent of the purchase price is common, up to perhaps $10,000 for luxury homes.

A buyer who offers earnest money significantly less than 1% is often interpreted by sellers as not being very serious about the purchase. Conversely, earnest money significantly more than 1% is often interpreted as a sign of a serious buyer. (FYI: In California, earnest money is customarily much higher than 1%.)

The earnest money provides the seller a small—very small—assurance that if you, the buyer, breach the contract that the seller may be able to keep your earnest money. In fact, the seller does not often keep the buyer's earnest money when a purchase contract does not close because there are several contingencies in the contract.

Down Payment Amount

In the end, the seller will be paid in cash whether the money comes from the your bank account (the down payment) or from your lender and the new loan you just took out.

However, if a buyer plans to borrow 100% of the purchase price it will raise a red flag to the seller. The seller should be worried about what will happen if the buyer cannot ultimately borrow the money. If the buyer can’t get a loan as described in the contract, the buyer can terminate the contract and receive back all his earnest money. The seller’s fear is that while the home is off the market, the seller could miss out on another offer from another buyer.

An all cash offer combined with a quick close (let's say three weeks) can make a very strong offer IF the seller wants to close quickly. If the seller doesn’t want to close quickly, a quick-close, all cash offer is of  little or no benefit in negotiations with that seller.

Be careful: If you as a buyer promise in the contract to put cash down at closing (down payment) but then it turns out that you cannot close because you don’t have the promised cash, you could very well lose you earnest money to the seller.

Arizona’s Loan Status Report

Arizona has an unusual feature in our contract. We don’t normally use pre-approval or pre-qualification letters from lenders to judge a buyer’s ability to borrow the money as stated on the offer.

In Arizona, we have a special form called a Loan Status Report. The report gives the seller more detailed information about where the buyer stands in getting approval for a loan.

The Loan Status Report is prepared by your lender and a copy should be sent to your Realtor. Your Realtor will include a copy of the Loan Status Report when submitting your purchase offer. Including the Loan Status Report greatly strengthens your offer.

The Loan Status Report is another reason why you should contact a lender before shopping for homes.

Closing Date

In Arizona, it’s common for the closing date to be about a month to 45 days after an offer is made. That is, if you make an offer on January 1, you might put in the offer that the closing date will be February 1 or February 15. However, closings longer than 45 days are not uncommon.

The processing of your loan by your lender is usually the item that takes the longest to complete.

Be careful: Buyers should be aware that you are responsible for having the loan ready by the closing date agreed to in the contract. If your loan is not ready at closing because your lender is incompetent or because your didn’t give your lender the paperwork he needed on time, then you, the buyer, could end up in breach of contract and at risk of losing your earnest money.

The guidelines here are: 1) Choose a reliable Arizona lender, not your aunt’s college friend in Minnesota, 2) When your lender asks you for any documents, get those documents back to the lender as soon as possible, and 3) Ask your lender how long he will need to process your loan before you and your Realtor write an offer.

Tip: In contract negotiations, being flexible on the closing date is often a cost-free concession a buyer can give a seller. If a seller needs an unusually long, unusually short, or unusually specific closing date, the seller may look favorably on offers that accommodate their situation.

Personal Property Included

Is the refrigerator part of the house or is the refrigerator the seller’s personal property like furniture? How about the stove? The drapes?

The AAR Residential Resale Purchase Contract (the "contract") on lines 28 to 39 gives many examples of items that are part of the house, also called "fixtures." These items are included in the sale unless specifically excluded elsewhere in the contract.

In Arizona, the refrigerator, clothes washer and dryer are not usually considered part of the house. It is very common, however, for a buyer to state in an offer that the refrigerator, washer and dryer will indeed be included in the sale. If the seller does not want to include those items in the sale, he may want to make a counter offer that says those items are not included in the sale and have the buyer approve it.

A big problem today is confusion over large expensive, flat panel televisions. If a television is just plugged into an outlet and placed in an entertainment center, it is clearly personal property and not part of the house. However, if that same television is attached to the wall, it is considered to be part of the house and therefore included in the sale.

In Arizona, the stove/oven, dishwasher and draperies are considered to be included in the sale unless otherwise stated in the contract. However, the refrigerator, clothes washer and dryer are usually considered personal property and are not included in the sale unless otherwise stated in the contract.

Seller Contribution to Buyer Expenses

It is not uncommon for buyers to ask sellers to pay for some of the buyer’s closing costs. This has the effect of reducing the offer price.

Escrow Company

The buyer selects the escrow company. I recommend buyers choose a company that has an established relationship with their Realtor.

Home Warranty

Sellers in Arizona will often agree to pay for a 12-month home warranty for the buyer, so you should ask for it. A home warranty will cover different items depending on the warranty company used and the specific warranty purchased. Major items like the air conditioner are almost always covered. Home warranty companies typically charge the buyer a flat trip charge of about $50 to $70 per warranty service performed.

Additional Terms

This is where you might add custom clauses such as, "Seller to remove shed in backyard before close of escrow."

Offer Expiration

It is not uncommon for offers to be valid for only about 24 hours.

Counter Offers

After the buyer summits an offer to the seller (in fact, it will be the buyer's Realtor submitting the buyer's offer to the seller's Realtor), the seller may accept the offer in which case the buyer and seller have a fully executed, valid contract. On the other hand, the seller may reject the offer outright and the negotiations may be over.

Or the seller may make a counter offer. Counter offers typically propose changing the sales price but they can attempt to change anything in the offer, such as the closing date or personal property included in the sale.

For example, if the buyer's original offer included the refrigerator, washer and dryer, the seller's counter offer might simply say, "Refrigerator, washer and dryer not included."

The buyer could accept that counter offer in which case the buyer and seller have a fully execute, valid contract. On the other hand, the buyer may reject Counter Offer #1 outright in which case the negotiations may be over.

Or, the buyer could write Counter Offer #2, ("Washer and dryer to be included") and so on until agreement is reached or the negotiations fail.

If the negotiations succeed, the original offer and all counter offers become part of the purchase contract.

Once an agreement is reached, your Realtor will take the purchase contract, all counter offers and the earnest money check to the escrow company to "open escrow".

Escrow companies are private companies that act as neutral third party intermediaries. They represent the buyer and seller equally but their real "boss" is the contract. They look to the contract for their instructions.

Escrow companies also sell title insurance.

7: Buyer Inspections During Escrow

Congratulations! You’ve come to an agreement with the seller on price and terms and now the home is, as we say, “in escrow,” “under contract,” or “pending”—they’re all the same thing.

There are many protections for buyers in the “Residential Resale Purchase Contract” of the Arizona Association of Realtors, referred to here as the contract. The goal is to give buyers the opportunity to thoroughly inspect and investigate the property before being "locked in" to the purchase.

10-Day Inspection Period

You have 10 days to do all of your inspections and investigations of the home. You can inspect anything to do with the home – its condition, the neighborhood, the schools, the zoning, the development plans for the area, just about anything related to the home.

The Arizona Association of Realtors has a comprehensive list of items you may want to inspect or investigate during the inspection period.

Cancellation

It is very easy for you, the Buyer, to cancel a contract during the inspection period and receive a full refund of your earnest money, if you find anything at all that you don’t like about the house – its condition, the neighborhood, the roads, the schools or just about anything related to the home and the surrounding area.

The inspection period is by far the most likely time a contract will be canceled or "fall out of escrow."

Home Inspectors

I recommend as strongly as I can that you hire a licensed home inspector (typically $250 to $350) to inspect the physical condition of the home. The inspector will give you a report that will detail just about every little thing wrong with the home.

I recommend that you try to meet the inspector at the end of the inspection so the you can go over his findings with him in person. It is much easier to understand a problem after the home inspector has personally shown it to you.

Scheduling Home Inspection

I also recommend that you call the home inspection company within 24 hours of having reached agreement with the seller. The home inspection company may not be able to schedule your home inspection right away.

You want the inspection done as early as possible in case the home inspector recommends further inspections. For example, if the home inspector recommends a full roof inspection, you want to be able to schedule a roofer before the end of the 10-day inspection period.

Inspection Report

Okay, you just received the detailed report from the home inspector, now what?

If you don’t like what the inspector found or what you found in your own investigations of the house and the surrounding area, you can simply cancel the contract and receive a full refund of your earnest money. You will be out the cost of the home inspection.

Buyer’s Inspection Notice

It’s more likely that you will ask the seller to make some repairs.

First, you will have to decide what, if anything, from the inspection report you will ask the seller to repair. Your Realtor will prepare the “Buyer’s Inspection Notice” which buyers often call the “request for repairs.” This request for repairs has to occur within the 10-day inspection period and can only occur once.

If you don’t ask for any repairs within the 10-day inspection period, you have agreed to buy the home as is.

Seller’s Response

After your Realtor sends your request for repairs to the seller, the seller has 5 days to respond to you.

If the Seller agrees to make all the repairs you requested, the inspection period is over and you are locked into the contract, subject to any outstanding contingencies.

If the Seller agrees to make some of the repairs but not all of the repairs you requested, you will have 5 days to decide whether you want to take it or leave it.

If you decide to "leave it," you can cancel the contract and receive back your full earnest money deposit.

If you decide to "take it," the seller is obligated to make the agreed upon repairs by at least 3 days before close of escrow.

End of Inspection Period

After you and the Seller come to an agreement on repairs, the inspection process is over and you are now locked into the contract, subject to any remaining contingencies in the contract.

Seller Property Disclosure Statement

The AAR Purchase Contract includes a provision that says the seller will give the buyer, within 5 days of contract acceptance, a "Seller Property Disclosure Statement."

The SPDS ("spuds") can give you a lot of extra information to consider during the inspection period. Sellers sometimes only fill out part of the form if that don’t have all the information requested.

If you don’t like something in the SPDS, you can cancel the contract (within 5 days of your receipt of the SPDS) and receive a full refund of your earnest money.

Insurance Claims History

The Seller will also give the Buyer within 5 days of contract acceptance, a 5-year insurance claims history on the home.

Here’s how seeing the insurance claims history helps you.

Let’s say a Seller "accidentally" forgets to mention in the Seller Property Disclosure Statement that he had a roof leak in 2005. You will still find out about the roof leak from the insurance claims history report, if the Seller made an insurance claim for the damages from the roof leak.

If you don’t like something in the Insurance Claims History, you can cancel the contract (within 5 days of your receipt of the Insurance Claims History) and receive a full refund of your earnest money.

As always, your Realtor is your representative and the 5 day clock starts ticking when your Realtor receives the Insurance Claims History. When a document is delivered to your Realtor, it is considered to have been delivered to you.

Few other states include the insurance claims history requirement on their purchase contracts.

Appraisal

After the inspection period, the odds of a transaction closing successfully are very high. If you are borrowing money to purchase the home and using the AAR contract, your offer is contingent upon the home appraising for at least the sales price. After the inspection period if ended, your lender will order an appraisal and charge you in advance (typically $300 to $400). This fee is in addition to any other fees you pay your lender.

Walk-Through

Your Realtor will arrange for you to "walk though" the home a day or two before closing so you can verify that the agreed upon repairs have been completed and that no damage has occurred to the home since the date the contract was accepted.

8: How Escrow is Closed

Once your lender is finished approving you for a loan, the lender will send all the loan documents to the escrow company and the escrow officer will add your loan documents to all the other documents you’ll need to sign. You’ll be able to sign all the documents at one time.

If you are in Canada, the escrow officer will overnight the documents to you for your signatures with a prepaid envelope back to the escrow company included. Some of your signatures will need to be notarized.

If you are in Arizona, you can do the signing at the office of the escrow company.

The escrow company will send the signed loan documents back to your lender.

Escrow Account Deposits

Earnest Money – The escrow company already has your earnest money and has ever since escrow was opened.

Down Payment – You will order your bank in Canada to wire your down payment to the Arizona escrow company on the day before or the morning of closing.

Loan – Your lender will wire the money you are borrowing to the escrow company the day before or the morning of closing.

Recordation

On the closing date given in the purchase contract, and when all of your purchase money is in the escrow account, the escrow officer will create a new deed with you as the owner, and send the deed electronically to the Maricopa County Recorder’s office.

When the new deed is recorded at the county, escrow is closed and you are the new owner.

Congratulations!