Buying A House in Arizona– Tips

	David A. Durfee	Buying A House in Arizona – Tips Inside Tips
	Gallagher Kennedy Law Office AV Preeminent Peer Review Rating, Martindale-Hubbell Listed, Arizona’s Finest Lawyers Email: [email protected] Web: www.gknet.com	Tweet

Buying A House in Arizona– Tips

As is well known, Arizona’s housing situation took a big hit in the recent and current economic slowdown.  Speculation on housing caused a significant runup of prices in the major metropolitan areas in Arizona, which caused the production of more new homes than could reasonably be absorbed by home occupants, which ultimately resulted in a significant decrease in home prices when the economy sputtered.  The good news is that rock-bottom housing prices have made this a great time to purchase a home in Arizona, especially if a buyer plans to live in it at least seven years or so.  Here are some tips and thoughts specifically related to buying a house in Arizona.  Some are tied to the current economic situation.  But most apply just because it is Arizona.

1.      Look at lots of homes. The market has plenty and, because prices are low, you may well afford a place with the extras you’ve always wanted: granite countertops, an outdoor kitchen or a home theater.

2.      The vast majority of resales (not new) of homes in Arizona use the Residential Resale Purchase Contract created by the Arizona Association of Realtors (AAR).   This is actually a pretty good form.

3.      Unlike many other States, in Arizona lawyers are not required be involved in residential real estate transactions. Normally in Arizona, your Realtor will draft and negotiate the contract under your direction without the involvement or expense of a lawyer.  Many people nonetheless are more comfortable having a lawyer look over all documents.

4.      Arizona has an unusual feature in our typical contracts. 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.  Instead, 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 may include a copy of the Loan Status Report when submitting your purchase offer. Including the Loan Status Report strengthens your offer.

5.      It is 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.  In contract negotiations, being flexible on the closing date is often a good cost-free concession that a buyer can give to 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.

6.      The range/oven, dishwasher and draperies are typically 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.

7.      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.

8.      Selection of the escrow company is negotiable.  Realtors tend to think that the buyer should be able to choose, but sellers are typically going to buy a title insurance policy for the buyer and have a good argument that the party who is paying most of the escrow costs should be able to choose the escrow agent.

9.      Sellers in Arizona will often agree to pay for a 12-month home warranty for the buyer. 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.

10.  True “mortgages” are extremely rare in the State of Arizona. Instead of a mortgage, lenders will generally have you execute a “deed of trust” as collateral for your loan.

11.  There effectively is no usury law. Lenders may charge whatever interest rate they feel appropriate for your particular lending situation.

12.  Homes constructed in metropolitan areas of Arizona during the past two decades or so will generally be located in so-called planned communities.  There are lots of advantages to living in these communities, but a buyer is well advised to ask lots of questions, especially at a time when economic circumstances impact whether the community is able to function as the buyer would expect.  Here are some questions that might be asked:

a.       How many homes total are planned for all of the phases?

b.      How many have been built?

c.       What is the plan to build out the remainder of the community if not complete?

d.      How is the community being funded if there are not enough homeowners to support the common areas that are already installed?

e.       Are all of the common areas installed and complete?

f.       Are all of the builders building?

g.      Is there a built out budget for the community?

h.      Is there a cash flow budget for the community?

i.        What percentage of homeowners are currently delinquent?

j.        What is the total delinquency amount?

k.      How many bank owned properties are there in the community?

l.        Is there a reserve study by a third party?

m.    What does the reserve study recommend for funding?

n.      Are the reserve study numbers taken into consideration in either budget?

o.      What is the current assessment and how is it collected (monthly/quarterly)?

p.      When was the last increase and how much was it?

q.      Is there an anticipated increase for the next year?

r.        What does the public report (issued by the Department of Real Estate) say about assessments, if it is available?

s.       Does it sound to good to be true when you hear what the assessment is compared to the amenities that are available?

t.        Who controls the Board of Directors (developer or homeowners)?

u.      If the developer, how much longer will it control the Board?

v.      If the Board is controlled by homeowners, what is the date, time and place of the next board meeting?

w.    How is the meeting run? Is it professional?