11 Steps to Buying a Phoenix Home Series-Accepted Offer!

This is a very happy day in the Phoenix home buying process

Buying a Phoenix home process in escrow
Each buyers experience leading up to an acceptance on their Phoenix Home is unique. The acceptance of terms by both parties is a very delightful milestone when rejections, multiple offers and multiple counters are the norm.

Next up: Open escrow on your Phoenix home

The amount of earnest money is obviously negotiated before you get to this point.  Typically you will have up to 24 hours to open escrow unless of course this term has been changed during negotiations, such as the case with many bank addenda that allow up to 48 hours to open escrow.  Arizona is a title state (versus attorney state) which means you will be opening escrow on your Phoenix home with a title/escrow company which is a third party that holds the funds according to the contractual terms negotiated. Typically, unless otherwise negotiated, your earnest money remains refundable through the inspection period as well through various other contingencies that must be removed such as qualifying for your loan if applicable and the Phoenix home appraising at value.

Know your obligations as a Buyer upon acceptance of your Phoenix home negotiations

Opening escrow is your first order or business once your Phoenix home offer is accepted but that’s just the start. Once you are under contract there are several things you must do as a Buyer that requires your timely attention as you may hear and read in your contract that ‘time is of the essence. If you do not already have a full loan application in with your lender you will be required to do so within 5 days if not negotiated sooner such as in a bank addenda for a Phoenix foreclosure home.  Your inspection will start so it will be time to conduct your due diligence on the property typically within 10 days.  You will want to have your loan paperwork complete as soon as possible so once your Phoenix home appraisal comes in your file can go to underwriting ASAP to ensure you meet your close of escrow (COE).

Understand your Phoenix home transaction is very time sensitive

Time is of the essence when buying your Phoenix home and with this in mind all parties are required to proceed in a timely fashion to complete their obligations to avoid complications from nonperformance.  Your Realtor will help guide your through each phase of the transaction. A great resource that you will be given when you write your initial Phoenix home offer is the Arizona Dept. of Real Estate Buyer Advisory.  This serves as a great reference tool throughout your Phoenix home transaction and you can click on the link above to bookmark it for future use.

11 Steps to Buying a Phoenix Home Series-Contract Negotiations

Time to negotiate your Phoenix home offer and make a deal!

Negotiating Your Phoenix Home Offer
You found the perfect Phoenix home and wrote a competitive offer and now the fun begins.  One thing to keep in mind is that each Sellers– whether bank owned Phoenix home or otherwise–operate on a case by case basis. The Phoenix housing market currently hosts Sellers that are overall in unique varying situations resulting largely in five types of sales 1.) bank owned foreclosures, 2.) Short sales, 3.) Investor fixer uppers, 4.) Government owned foreclosures and 5.) Traditional sales. Each Seller is unique, however, there are common negotiations strategies that may help you increase the strength of your offer.

Entrust your Realtor when negotiating your Phoenix home contractual terms

Without going into specifics I will touch on the key elements that may strengthen your offer or help during the negotiation process. Each term and how it should be negotiated depends on your individual wants and needs and what is in your best interest. It is important to also keep in mind that sometimes you may want to compromise on one term to get another you deem more necessary to your great good. Each Phoenix Home Seller is different and will negotiate in their best interest. Some negotiable terms carry more weight than others with a particular Seller

  • Purchase Price
  • Loan Type
  • Earnest Money
  • Inspection Period
  • Closing Date
  • Contingencies

Price is not the only term to consider when strengthening negotiations on your Phoenix Home

For example; if you are a cash buyer the closing date can be much sooner, if your asking for Seller concessions you may want to offer a competitive purchase price to offset the contribution, the higher the earnest money amount the better, the inspection period by default is 10 days but you may not need (or want) that much time. It is a misconception that the higher the purchase price the stronger your offer. Many times the ‘highest’ offer on the table for consideration is not the ‘best’ offer. In this distressed real estate market, multiple offers and competition among Phoenix Home Buyers is common and to be expected.

The biggest obstacle for Phoenix Home Buyers is eliminating emotion from negotiations

Many times Buyers feel entitled and state that the Sellers are already getting a deal and that the Sellers should just be happy to sell their home in this market. While Sellers on the other hand already lost so much equity and value the past few years that they feel they have lost enough. Thus the emotions are high and that sometimes can make the negotiation process more stressful. Working with an experienced Realtor will give you peace of mind while thet guide you on the best way strengthen your offer and negotiate in order to secure the accepted contract with your Phoenix home offer.

11 Steps to Buying a Phoenix Home Series-Writing Your Offer

Negotiating your Phoenix home offer can be a very exciting time

Writing an offer on an Arizona Phoenix HomeIn today’s Phoenix real estate housing market it is important that when you find that perfect home that you really love you do not hesitate to write an offer. Prior to writing an offer on a Phoenix home you should understand the nuts and bolts of the purchase contract.  Your Realtor should be available to help guide you through the real estate purchase contract but they will not interpret it for you. You are expected to read the real estate purchase contract thoroughly and ask any questions you may have for clarification.

The main terms to consider when writing an offer on a Phoenix home are:

  • Purchase price
  • Earnest money
  • Contingency terms
  • Inspection period

Want to review a copy of the Arizona Residential Real Estate Purchase Contract?  Just drop in your email below and we’ll send you a copy.

The purchase price is obviously something your Realtor will consult with you about and will also be no higher than your pre-approved loan limit at your desired down payment amount.

The default inspection period in the Arizona Residential Real Estate Purchase Contract is 10 Calendar days.  If you do not change or waive this in your offer you will be asking for a 10 day inspection period.

Contingencies are clauses in a contract that give either the buyer or seller a way to get out of the contract if certain conditions are not met. There are endless types of contingencies and they are negotiable but the three most common that are default when writing your offer on your Phoenix home are;

  • loan–regarding Buyers ability to qualify for financing
  • appraisal–regarding purchase price vs. appraised value
  • inspection–regarding completion/satisfactory home inspection

Your Realtor will help you through the entire offer writing process on your Phoenix home

The right Realtor for you is one that is knowledgeable, accountable and helps you understand the the home buying process.  It is important to find a Realtor that you trust and feel comfortable with that will represent you and your best interests. Our team of real estate agents in the Phoenix-Metro area are ready to assist you with all of your Phoenix home buying needs.

11 Steps to Buying a Phoenix Home Series-Selecting a Realtor

Selecting a Phoenix Realtor is the first step of the home search process

Phoenix RealtorIf you are not already working with a Realtor while you are getting pre-qualified for your home loan than it will be the next step in your Phoenix home search once you have completed, or better yet while you are completing the home loan application process. The Loan Status Report (LSR) as mentioned in our previous post in this 11 Steps to Buying a Phoenix Home Series–Financing, is the Arizona letter that will be required to accompany any offer you write on a property requiring financing.  It is also one of the requirements most Realtors like to see prior to scheduling private showings at any Phoenix-area homes that are for sale.

Neighborhood knowledge is an important consideration when selecting a Phoenix Realtor

It is important that you select a Phoenix Realtor that is familiar with the specific neighborhoods you are interested in and is knowledgeable of the current market trends within that community, neighboring communities, and the Phoenix-Metro real estate housing market overall.  In today’s Phoenix real estate market, it is more important now than ever to have a Phoenix Realtor with their finger on the pulse of the housing market, distressed sales within a given city, community or neighborhood and that can provide the most recent sales trends with their advanced technology capabilities. For example, the Multiple Listing Service, Cromford Reports and various other advanced real estate technologies are not available to every real estate agent and are great resources to aide in your home search.

Employ a Phoenix Realtor with strong negotiating skills and foreclosure experience

In this market, everyone is looking for a deal and understandably so. In today’s Phoenix housing market, 9 out of 10 times the best value in any given neighborhood is likely to be a Phoenix foreclosure home for sale. Our last series, Phoenix Bank Owned Foreclosure Process Explained goes into detail about the process of buying a Phoenix foreclosure home and similarly for this series it is important to note that employing a Phoenix Realtor that has knowledge in foreclosures will benefit you greatly.  In addition to foreclosure experience, effective negotiating should be a skill that your Phoenix Realtor possesses. Making sure you have an experienced Phoenix Realtor that is looking out for your best interest and know how to negotiate effectively can be the difference between a successful closing and a cancellation or fallout.

Overall you want to make sure your Phoenix Realtor is accountable

Timely responses, professional demeanor, attention to detail and a high level of accuracy are all great signs that your Phoenix Realtor is accountable and highly capable to handle your home search and transaction with attentiveness and accuracy in respect to your best interests.

To recap you want to make sure you employ a Phoenix Realtor that;

  • possess in-depth knowledge of the neighborhoods of interest to you
  • is familiar with current Phoenix real estate market trends
  • has access to cutting edge real estate technologies
  • has extensive foreclosure (bank owned) experience
  • implements sharp and skillful negotiation tactics
  • is accountable

I’m not trying to toot my own horn but this is my blog ;) …so I’m going to do a quick plug for our World ranked RE/MAX foreclosure team, The HomeStyle Team. We currently have several real estate agents with extensive experience in negotiating foreclosures that are ready to assist buyers and investors alike in all Valley   Cities within the Phoenix-Metro area, Maricopa County, Pinal County, Anthem as well as Flagstaff . Our buyers agents are savvy and knowledgeable. We hope you consider us when looking for a Phoenix Realtor to represent you on your next home purchase!

11 Steps to Buying a Phoenix Home Series-Budget and DTI

The Phoenix home buying planning process means time to budget

Phoenix home buying seriesIt is time to finally track your spending and put pen to paper an itemized list of where you spend money each month and how much. The goal here is to see how much Phoenix home you can afford within your budget.  The good thing is right now in Phoenix-Metro area you can own for less per month that what you can rent in many areas so your living expenses might actually go down once you buy!

Accurate figures are important to the Phoenix home buying planning process

Start with making a list of all your expenses such as utilities and living expenses such as electricity and groceries, then all monthly expenses such as credit card bills, car insurance and yes add your entertainment, clothes, etc. as well. If you spend $40/week on movies and you want to continue to spend $40/week on movies than include it, otherwise remove or lower it to something you feel is reasonable and then follow that. You may be surprised to find out how much money you spend on certain things that with a few minor changes here and there you can drastically reduce your overall monthly expenditures. After you total everything and subtract it from your income you will have a figure. From that figure take a certain percentage off the top to add to your savings accounts and/or retirement plan, etc and the final figure leftover (assuming you already accounted for miscellaneous disposable income in your list) is what you can afford as a mortgage payment with/without any lifestyle changes while growing your savings.

Lenders consider Debt-to-income (DTI) ratios during the Phoenix home buying pre-qualification process

The above budget is mainly for your purposes so you can determine during the Phoenix home buying process your comfort level with the money in and money out every month and also help identify spending habits that can be modified to help strengthen your overall financials. Lenders will take your debt such as current mortgage/rent, credit cards, car payments and compare it to your income (aka DTI or debt-to-income ratio). The qualifying ratio will vary by loan program and FICO score but for our example we will use FHA which is 41%.

Lets consider a quick scenario in determining DTI for a Phoenix home buying loan applicant;

Your Monthly payment on mortgage/rent = 1200
Minimum Monthly Credit Card Payments = 300
Monthly Car Loan Payments = 450
Other Loan payment = 300

Thus, your total monthly debt payment = $2250

Now, let’s consider your Gross Annual Salary = $75000
So, gross monthly salary = $6250
Other monthly income = $1000
Thus, your gross monthly income = $7250

So, mortgage debt to income ratio = (monthly debt payment)/(gross monthly income)
= ($2250/$7250)  = .310 or 31% which is well within the standard DTI ratio.

Hopefully now you have a good idea of how much you can comfortable afford every month, what changes to you budget need to be made if any and if your debt-to-income (DTI) ratio is in-line with qualifying. If not you may have to pay off some debt to get your ratio where it needs to be as part of the Phoenix home buying process.