Real Estate: Buying a Home in Arizona

When home buyers come to our real estate office in Lake Havasu City, Arizona, many have never purchased property in Arizona. Real estate laws vary from state to state, and buyers often have no idea what to expect during the transaction. We also have buyers who have never purchased property. To help our clients feel more comfortable about the entire transaction, we like to explain, ahead of time, the process of a typical residential real estate contract in Arizona.

If you are the prospective homebuyer, first talk to a lender. Should you need to find one, ask your real estate agent to provide you with a list of proven lenders. Find out what you can afford. There is no reason to waste your time looking at property that is out of your price range.

If you are moving to a new area, you may discover you haven't been at your current job for a sufficient length of time to qualify for a loan. Yet, if you are in a similar profession (such as a teacher who has transferred from one state to another), lenders will look at that differently than starting a new job, where you have no career history.

After finding the home of your dreams, you and your agent will write up the purchase contract. In Arizona, REALTORS® normally use the standard purchase contract, sanctioned by the Arizona Association of REALTORS®. As your agent helps you complete the contract, there are some decisions you will need to make.

You will need to decide: How much do you want to offer for the property? What title company do you want to use? When do you want escrow to close? How much earnest deposit will you be putting down? How will you be financing the purchase?

Although the standard terms of the contract can be changed by the buyer and seller, I will explain the process as if you've made no changes to the contract, other than answering the above questions.

You, the buyer will be required to submit an earnest deposit with the purchase contract. There is no rule on the amount of the earnest deposit, yet a seller may request a higher earnest deposit if they feel the offering is too low. A buyer who puts down a $5,000 earnest looks like a serious buyer, whereas a seller might not consider an offer from a buyer only putting down $100 as an earnest deposit. Typically the earnest deposit is made out to the title company, and not deposited until the offer is accepted by both parties, and escrow opened. At the close of escrow, the earnest deposit is applied to the sale price.

It is important to immediately supply your lender with a copy of the purchase contract, and all the papers and documents required. If you delay in providing accurate and complete information, it could result in a delay in your escrow's close, and jeopardize your earnest deposit. Always be honest with your lender. Do not give false or misleading information regarding your financial and employment situation. If a lender suggests you do this, walk away, as this is lender fraud and can land you in jail.

Once the offer is accepted, you will have ten days to inspect the property. During that time, it is recommended to get a termite inspection and home inspection. Inspectors in Arizona must be licensed. Normally the buyers pay for their own inspections. If you want other inspections, such as for mold, they would need to be completed within this timeframe.

The seller should provide you with the seller's property disclosure during your inspection period. This is a report that discloses information on the property, such as past repairs or improvements. There is no guarantee a seller will provide this, and if it is an estate sale, where the sellers are not familiar with the property, you probably will not receive the completed disclosure form.

During your inspection period you should also check the availability of homeowner's insurance. In our Arizona contract, there is a request for the seller to deliver to the buyer a Comprehensive Loss Underwriting Exchange Report, known as a C.L.U.E. report. This will tell you of any past claims on the property.

Before the end of the inspection period (the standard is 10 days, but the buyer can request more when writing the initial contract) you will determine what items you want the seller to repair. This should not be cosmetic, such as painting a room. But, structural, such as repairing the roof or plumbing. It is important to deliver your repair request before your inspection period ends. If you fail to do this, you forfeit your rights to request repairs.

The seller then has five days to respond to your request. If they refuse to fix anything, or only agree to some of the repairs, you have the choice to accept or cancel the deal. If you cancel, you will receive your earnest deposit back. If you accept, the escrow continues, and you can no longer cancel without threat of losing your earnest deposit.

After your inspection period has ended, you would have the opportunity to cancel the contract, if the appraisal, ordered by your lender, comes in low.

Prior to your close of escrow, you will have a chance to do a final walk through the home, to make sure it is in the same condition as when you wrote the purchase contract.

If you have questions during your transaction, keep communications open with your real estate agent, escrow officer and lender.