Arizona Real Estate Contract

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Arizona Real Estate Contract Changes

The top four changes to the Arizona Real Estate Contract

The new Arizona Real Estate Contract is now in use and there are many changes you should be aware of before entering into any real estate transaction. Let’s cover the top four here.

  1. Earnest Money: The previous contract stated a buyers Earnest Money had been received by Broker. This was an issue if the agent did not collect the funds at the time the offer was written. Today’s contracts language on Earnest Money has been moved from line 380 in the back of the contract to page one and it does not list who will deposit the money. Now anyone can deposit the money when escrow is opened.

 

  1. Fixtures and Personal Property: The language in this section has been changed to help clarify what in the fixture list should be included in the sale.

 

  1. Seller Warranties: This has frequently been the source of much confusion. The new contract has removed Seller Warranties and the premises are to be sold in its present physical condition as of the date of contract acceptance. As a result, the AS-IS Addendum  has been removed and all contracts will be AS-IS going forward. Additionally, the section for Notice of Non-Working Warranted Items  has also been removed. See our note on Home Inspections below.

 

  1. Broker on Behalf of Client: The previous contract only allowed one agent to be placed on a contract. A second space has been added to the new contract to allow for a second agent to be added. This allows for agent teams to play a larger role in representing a client in a transaction and for the team leader to record the transaction.

 

The new residential real estate contract went through an extensive revision and review process over that last year. Many smaller committees made up from area experts in numerous different sections of the real estate industry from brokers, agents, and escrow officers to lenders and home inspectors. Recommendations were made to the full committee and a comment period was given before the adoption of the new contract. No contract is ever perfect because EVERY real estate transaction is unique! A well-trained agent not only handles transactions, but also spends hours in continuing education to fully understand the nuances of the contract and can better guide you through your unique real estate deal.

When looking to buy or sell real estate in the Scottsdale, Arizona metro area, be sure to contact ScottsdaleScott.

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Arizona Real Estate Contract Change

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Arizona Real Estate Contract Changes – ATTENTION

The Arizona Real Estate Contract is about to change! This does not happen often, because of the long and arduous task of professional committees and work groups that are assembled to has out what is best for buyers and sellers regarding a real estate transaction. The newly proposed version, due out this February, is no exception. It has taken over a year to analyze, propose, has through, and finalize. Don’t forget the impact on all the secondary forms as well. Each additional form must be reviewed for any and all impact the new contract changes may have upon them.

A major change in the upcoming contract is the removal of seller warranted items. In the past, the contract had a section that listed all warranted items a seller must assure a buyer were in working order. This has been changed to wording that now states there are NO warranted items. This does a few things. To mention just a couple… A seller must still make sure the home is in substantially the same condition at closing as it was the day a contract was accepted. It also means a buyer will most likely be counting on their inspector even more than in the past. As a buyer, make sure you have a competent inspector AND that you understand the inspection process and  what they cover and what they don’t. Inspections give a buyer a general sense of a homes condition. They don’t typically inspect every little thing. Talk to your inspector and understand what they inspect and how they inspect it. Also understand that during your inspection period you have the right to hire any home inspection professional for specific inspections as well as general inspections. Meaning, you can hire an HVAC company to inspect just the HVAC. Or you can hire a roof company just to  inspect the roof.

Back to the contract. It is a good idea to sit down with your agent and review the most important tool you will use in buying or selling one of your greatest assets… your home. Take the time to review the paperwork before you list your home or begin your search. Make sure all your questions are asked and answered. If your professional does not know the answer we know where to find it or can even refer you for legal advice. It is best to get a good foundation/understanding of the contract and supporting documents ahead of time.

Example:

Time frames is one of the miss-understood items within a contract. When does a time  period start or end. If you have a ten day inspection period when does it start or end. Days in which an action is taken, such as signing a contract, don’t count in the ten day inspection period. The inspection period starts the following day. When does it end and when do you have to have your Buyer Inspection Notice and Seller Response form returned? On the tenth day (or the last day of your inspection period, which ever is in your agreed upon contract). Turn it in on the eleventh day (in our example) and  your are out of luck. It would be the same as accepting the property as it is. So, it is important to understand these types of things spelled out in the contract. I encourage you to take the time to review the contract with your agent. Arizona Real Estate Contract Changes

Another change in the contract is the leased items section. Many times the notion of solar panels comes up in this discussion. It is important to know and understand your rights and obligations on leased items. Many solar panels are leased items. Did you know a buyer would  have to qualify to take over the lease? What if the seller wants to take the solar panels with them when they move? When do they remove them from the roof? What about roof repair? When does a buyer inspect the roof in coordination to the removal of the panels? Sometimes legal advice is needed to know your rights. Understand that a real estate agent is qualified to help you understand the contract, but many times questions extend far beyond and require legal advice. I again encourage you to review the contract to help you see where you may need additional advice and support.

More To Come

There will be more on the upcoming new contract in coming weeks. Just know that it is changing and you should work with a team (agent, lender, title company) that understands the changes. Many of the professionals we work with were actually part of the group that worked on developing the new contract. In fact, Realty One Groups own Jim Sexton chaired to efforts on the latest contract changes. Thanks to Jim and his team for all their hard work(s).

Contact us and we would be happy to spend time with you to review either the current or proposed Arizona Real Estate contract or any of the supporting documents. Arizona Real Estate Contract Changes

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Copyright 2016, Scott Farmer, All Rights Reserved

Underwater Homes

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Underwater Homes

This is a repost from an article from AZcentral.com 1/13/12 regarding Underwater Homes

A long-awaited federal program will soon allow more Phoenix-area homeowners to refinance their mortgages and lower their payments in spite of owing far more than their homes are now worth.

The expansion of the Home Affordable Refinancing Plan will allow for new home loans in March, according to new details from the U.S. Department of Housing and Urban Development, and homeowners are already lining up to apply.

President Barack Obama announced the plan in October, and borrowers have awaited the details since.

The program targets homeowners who bought during the housing boom and have been unable to refinance up until now because their homes are no longer worth enough to secure a new mortgage through traditional refinancing.

An earlier version of HARP allowed homeowners with mortgages backed by two federal loan agencies to refinance, but only if their new loans were no more than 125 percent of their home’s current value. In metro Phoenix, where values have plunged by more than half since the market’s peak in 2006, that limit left many borrowers out.

The update to the program, which lenders refer to as HARP 2.0, lifts that loan-to-value restriction completely.

The goal is to help homeowners save money and fend off foreclosures by lowering payments.

For a typical $250,000 mortgage, a switch from a 6 percent rate to current rates of about 4 percent would cut the monthly payment by about $300.

Matt Oliver of Peoria-based Lund Mortgage said despite the delay, some bigger banks have already refinanced borrowers deeply underwater and are now holding the loans, waiting to turn them over to the federal mortgage agencies Fannie Mae and Freddie Mac.

Albert Hasson was able to get his bank, Flagstar, to approve a refinance on his Phoenix-area home in late December even though the refinancing program was stalled at the time.

“The expanded HARP program is only semistalled,” Hasson said.

He said other homeowners should call their servicers now to see if they can be approved early.

To qualify

The expanded refinancing program is available only to those with mortgages backed by Fannie Mae and Freddie Mac, but the two entities back more than half of all mortgages.

Eligible homeowners can have missed only one payment in the past year and must still bring in enough monthly income to afford their lower payment.

Some borrowers will be required to show proof they have the income to pay the lower mortgage payments, but the guidelines aren’t clear on who will be required to do this.

HUD Secretary Shaun Donovan told The Arizona Republic in October that part of the goal of expanding the refinancing program is to reward homeowners who have continued to pay their mortgages despite huge drops in their home’s values and potentially prevent more homeowners from walking away. Estimates show nearly half of Arizona’s mortgage holders are underwater.

The previous HARP plan, which allowed homeowners to refinance if their loan-to-value ratio was 125 percent or lower, had the same intent. But it helped few metro Phoenix homeowners because home values in the region have plummeted 60 percent during the crash.

While the program will be expanded, some borrowers aren’t eligible.

Kim Baker has been in her Phoenix home for more than five years and owes at least 40 percent more on her mortgage than what her house is worth. She can’t refinance to reduce her 6.5 percent interest rate because her loan isn’t backed by Fannie or Freddie. She wants the federal government to give lenders an incentive to help homeowners like her, too.

“Otherwise, we’re stuck,” she said. “Can’t sell, can’t re-fi, can’t lower our payment, can’t move to a cheaper house down the street. We didn’t want to walk away or foreclose. So we keep paying every month hoping the economy turns around and maybe in several years we’ll break even.”

New guidelines

Much of the delay introducing the expanded refinancing program has been because of slow negotiations with lenders, and it is still not clear if the nation’s biggest banks will participate, market watchers say.

The government struggled to get big lenders to cooperate with another program, a loan-modification plan that would reduce payments for struggling homeowners.

It’s likely to take lenders a few months to implement the expanded refinancing program, so it may not be clear until summer whether the program will be more successful.

Government officials say it has taken longer than expected to work out details with lenders on the expanded refinancing plan. The federal government has several hurdles to overcome with lenders and the mortgage market to make the new program work.

Currently, most loans are bundled together as securities and resold to investors, who make money off homeowner interest payments.

But the market doesn’t currently deal with loans that are intentionally issued on homes that are worth less than the amount of the loan. It’s not clear yet whether the federal government will create new securities to sell to investors or add a portfolio to hold the loans in.

The federal government also has to negotiate with lenders holding second mortgages on a home so they won’t stall or stop the new refinancing program. Under the program, those lenders can get a small settlement when the loan is refinanced.

The expanded HARP program also now is open to investor-owned properties.

Homeowners can check to see if their loan is backed by Fannie or Freddie at makinghomeaffordable.gov.

Jay Luber, president of Galaxy Lending, said it appears the new HARP will reduce rates, fees and the terms of a loan, ultimately providing a more affordable and less risky mortgage.

Read more: http://www.azcentral.com/business/realestate/articles/2012/01/06/20120106phoenix-area-underwater-homeowners-help-coming-march.html#ixzz1jMTfwPnZ

by Catherine Reagor – Jan. 12, 2012 11:11 PM
The Republic | azcentral.com

Read more: http://www.azcentral.com/business/realestate/articles/2012/01/06/20120106phoenix-area-underwater-homeowners-help-coming-march.html#ixzz1jMUF0PAA

Scottsdale Development

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Scottsdale Development

Development vs. Progress?

Scottsdale Development: Visitors to Scottsdale, Arizona are usually quick to learn of the cities pride in maintaining natural desert open space and most particularly the McDowell Mountain Preserve in East Scottsdale. The iconic McDowell Mountains keep watch over the city like a dutiful sentry and are capped by the well known Tom’s Thumb rock formation. Crisscrossed throughout the area are miles and miles of hiking trails.

At the upper most Northern area of Scottsdale visitors will find the Brown’s Ranch park. This is relatively a new park within the Scottsdale City park system and hiking/biking trails are continually being opened here. Brown’s ranch is a wide open natural desert space with several mountains dotting the area. Brown’s mountain, in fact, takes hikers to the same elevation as the highest trail point on Pinnacle Peak Park.

Now that you have a sense of the area here is the reason for todays blog. The area around Brown’s ranch is under attach once again by developers looking to develop the area surrounding Legend Trails (far North Scottsdale). A proposed change to the Scottsdale Master plan has been made and is far reaching. Known as 19-ZN-2014 the amendment would include a patchwork of development surrounding the Legend Trails community all the way back to the Scottsdale Rd. and Happy Valley Rd. intersection and would include residential homes, commercial real estate, and resort real estate.

Whether you are for it or against it what we try to do is let our readers know of it. You can make up your own minds. You can call the city for more details and give them the 19-ZN-2014 application number. The amendment will go through a round of committee review before coming up to the full review and possibly on the a recommendation to the city council. If you choose to, you can send in a letter to the city and they will include it in the packet that is reviewed by the committee. Make sure to include the application number 19-ZN-2014.

Know what is happening in your area. It DOES effect your real estate values one way or the other, especially if you are figuring out how to sell your house fast. Pay attention to those sign posts that pop up on vacant land. Attend the committee meeting when they happen. Getting involved after is too late. If you can’t attend, maybe your HOA can send a representative and report back to your membership.

Know this. Once our beautiful open desert is developed it is gone for good. Scottsdale is known for our open space. It is a huge draw for residents and visitors alike. Many have worked very hard over the years to maintain the little space left. Let’s keep it open. Scottsdale Development

SCOTTSDALESCOTT.com

©2015  ScottsdaleScott

Understanding FIRPTA

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FIRPTA, The Foreign Investment Real Property Tax Act

What is FIRPTA? The Foreign Investment Real Property Tax Act is a law enacted in 1980 and states that if a seller of real estate located in the United States is a foreign national the Buyer must withhold a tax equal to 10% of the gross purchase price (26 U.S.C. & 1445(a).

The reality is that in Arizona, the title company would take care of this “holdback” and process it with the IRS for the buyer. The Foreign National Seller would or could then apply to get some or all of this money back from the IRS based upon their tax situation.

What many Foreign National Buyer’s don’t know is that they should apply for a Federal EIN (Employer Identification Number) prior to or just after you buy a home in the U.S. Why? Because it prepares you for the day you sell the property. Don’t wait until you want to put the property on the market, because it may take months to get the EIN number. This could delay your closing. You don’t want to close without it. The EIN number allows the title company to file the withholding under your number so you can file to get the withholding back (if you qualify).

Here is how it is stated directly on the IRS Website (link: http://www.irs.gov/Individuals/International-Taxpayers/FIRPTA-Withholding :
FIRPTA Withholding
Withholding of Tax on Dispositions of United States Real Property Interests

The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests. A disposition means “disposition” for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers’ agents, and settlement officers are required to withhold 10 percent of the amount realized on the disposition (special rules for foreign corporations). In most cases, the transferee/buyer is the withholding agent. If you are the transferee/buyer you must find out if the transferor is a foreign person. If the transferor is a foreign person and you fail to withhold, you may be held liable for the tax. For cases in which a U.S. business entity such as a corporation or partnership disposes of a U.S. real property interest, the business entity itself is the withholding agent.
[END]

Bottom line:
1) if you are a foreign national seller, get your EIN number before you put your home on the market.
2) If you are a buyer of home from a foreign National, know your responsibility that you need to withhold 10% of the gross sale by using your title company to do so.


Lastly, We are REALTORS® not tax advisors, so please check with a qualified tax advisor to make sure you take the right steps for your specific situation. Always seek professional help for the area of interest you are dealing with and do not trust anything you read on the internet. Verify, verify, verify.

© 2014 All Rights Reserved, ScottsdaleScott

Black Mountain Blvd. Interchange

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Black Mountain

Changes Coming to Black Mountain Blvd.

There will be a town hall style meeting given by the City of Phoenix held at Pinnacle High School in the cafeteria on May 1st, 2014 at 6:00pm. Come hear what is in store for connecting the Black Mountain Blvd. with Highway 51. A new interchange is coming.

Things are happening all around you. Keep in touch. Know how these changes may effect your real estate values. Remember it is location, location, location.

This change would make accessing highway 101 and highway 51 from the Desert Ridge area easier by not having to work your way through the Desert Ridge Mall traffic. But, what happens to nearby homes on Black Mountain Blvd.? If anything? It remains to be seen.

If you want your comments heard by the city, attend the meeting.

If you want to know exactly what they have planned, attend the meeting.

I called Pinnacle High School administration to see if any of the monies could be used to increase the size of the Pinnacle High School parking lot (which is notoriously poor), but nothing is planned. The school is basically land locked by state land and I was told the state is not willing to sell it to the city to be used for the school.

More information on the interchange and the meeting can be viewed at: www.blackmountainblvd.com

Here is a map of the planned interchange for Black Mountain Blvd.
projectMap
This map was produced by the city of Phoenix. To reach the City of Phoenix for more information, please call: 602-297-5203

Here is the schedule they have been following leading up to the project:
Screen Shot 2014-04-16 at 2.10.19 PM

I have lived in the Desert Ridge and surrounding areas for over 15 years. I know it well and would be happy to help you or your friends in any of your real estate needs. I may be reached at 480-370-3214 or online: www.ScottsdaleScott.com


Scottsdalescott, Scottsdale real estate Realty One Group