Making An Offer On A Phoenix Home
Putting in an offer in Arizona this is done through a Realtor, a lawyer
is not necessary like in many other states: a Realtor has the authority
to fill out the forms and advise clients on the offer.
An offer in Arizona is made using the Arizona Residential Resale
Purchase Contract (opens in PDF) and related forms: the related forms
can be seen in the Arizona Association of Realtors forms library. Most
offers are made using these forms.
There quite a few important elements of a purchase offer, listed below
are the more pertinent though not exclusive terms to discuss.
Buyer:
Who is the buyer? This seem simple but when financing is involved, it's not. If you are buying with leverage then it's going to be in the name of the people obtaining the loan. In other words, you can get a "normal" loan and buy it in a Trust or an LLC.
Purchase Offer:
This is the price which you are offering to buy the house for. Any concessions will be addressed else where. I won't go into how to establish a purchase price but suffice it to say that it depends on a lot of variables.
Earnest Deposit:
There is no rule on how much to offer, but conventions, in Phoenix, seems to be about 1% of the purchase price. Some sellers require more, but this depends on the market as well. The earnest deposit can be in many forms, from a check to a wire and it goes to an escrow company for holding while the transaction takes its course. There is a risk of loss of the earnest deposit if buyer does not perform per the contract terms. The earnest deposit must be make within 24 hours of contract acceptance unless otherwise agreed.
Down-Payment:
What ever your necessary capital input to obtain the loan is, goes here, i.e. 3.5%, 10% in a dollar format. This is also important because changing the amount you put down in the middle of the transaction puts your earnest deposit at risk. This is additional reason to be well into the pre-approval process before you submit an offer.
Closing Date:
Depending on your requirements and the lenders requirements the date is set here. In a busy market the time to obtain a loan is longer, say 45 days or if you are paying cash it can be done in a few days. I've done a contract, escrow and closing in one day, but that was cash and everyone was in a hurry. Pick the date carefully because extensions are not easy to obtain.
Personal Property Inclusions or Exclusions:
Often a property will contain personal property. What is personal property: in general it's anything that can be removed from the property without the use of tools, like a refrigerator or washer and dryer. Other items that are negotiable are anything else int home. If you want that Plasma TV then it needs to be negotiated in. Sometimes a sellers will specifically note in the contracts that certain things are or are not included.
Financing Type:
What type of financing you are obtaining is important. If you submit a
contract for cash and later change your mind that you are getting a
loan, you earnest deposit will be at risk if you don't close the
transaction because you failed to qualify for a loan. The same goes with
other terms that are changed.
A very pertinent and required related document is: LSR: Loan Status
Report. It's a form which spells out that you have spoken with a lender.
If you are buying the property with a loan then you must provide this
document or some type of letter from lender that you are qualified and
able to get a loan.
Escrow Company:
Who is going to handle the escrow is usually the buyers choice. While most companies have similar fees and results the service is important, so choose your escrow company carefully.
Due Diligence:
After the acceptance of a purchase offer there is a time from for you to
check out anything that is pertinent about the property and area: all
inspecions are done in this period. The time frame in the contract to do
this is 10 days, but it's negotiable. If you find something that you
reasonable disapprove of it will be during this period or toward the end
of it that you either cancel the contract, accept it or give the seller
an opportunity to correct item.
The due diligence period is not an opportunity to further negotiate the
price. If the disapproved items are excessive then there is, but not
otherwise.
Home Warranty:
This does not have to be decided at contract submission unless you are asking the seller to pay for it.
Additional Terms and Conditions:
This section allow you to put in any additional pertinent terms. This
can be seller concessions or clarification of close dates...
...and commonly seen additional forms.
Counter Offer:
By far the most common additional document is the counter offer. In this
document a seller reply to your offer if he/she decides to change any
terms like price. There can be many of these before a contract is
finally accepted but usually 0-2 us most common.
In the markets of 2008 and 2009 some common addenda included like: Short
Sale Addendum or AS-IS Addendum:
Then there are very specific addenda like the 1-4 unit Addendum for
small multifamily properties amongst others.
The viability and strength of your offer depends on your motivation and
perception of the market vs the sellers. There is play in the terms and
it's often worth discussing each of the parties needs.
This is a goal to be adversarial but an attempt to come to a common goal and sometimes there is give and take. It's important to keep in mind what is a need or a want and the terms most valuable to you.
Phoenix Home Buyer's Guide
