@Misti DelMar all questions are good questions when you’re starting something new, especially investing.
I always encourage my clients to ask me anything because they don’t know what they don’t know and I don’t know what they don’t know, so I’m happy to fill in the blanks, which are very common.
Yes the first step is to get in touch with a lender who works with investors who can help you determine your purchasing power.
It would not be a good use of your time to be shopping either in price points or locations or types of properties that wouldn’t suit your needs.
While you can work with a lender from anywhere who is licensed to lend in Arizona, there can be an advantage to working with somebody locally who will go to bat for you and make your financial case to a listing agent when you’re competing against other buyers.
Your lender will fill out an Arizona Association of Realtors prequalification form. Sometimes out-of-state lenders want to send a letter of prequalification, but our contract requires that the AAR form accompany any offers.
I can send you a blank one if you need it.
Once you know what you’d like to spend and the kind of property you’re interested in we start searching for likely targets.
Speed is very important in today’s market. The selling cycle lately has looked like this: properties are listed on Wednesday/Thursday/Friday, showings take place through Sunday, and then the seller reviews offers on Monday and makes a decision.
That’s why it’s so important to have your prequalification form filled out prior to shopping for property.
We try to write a strong enough offer so that we will get chosen. There are a number of strategies and tactics that are used these days, including appraisal gap coverages, escalation clauses and shortening the inspection from 10 days to seven or five…and other things you only bring out when you really need to.
I have worked with investors whose lenders can do a rush appraisal so that we find out within the inspection period what the house will appraise for so that, if we’ve used one of the mechanisms above and it doesn’t appraise well, we have time to leave the deal based on inspection items.
Once your offer is accepted, then comes the inspection. I know of no house that has zero findings because that’s the inspector’s job to test all the systems to find out if there might be any issues.
Once we get the inspection report back that’s another point of negotiations. We generally ask the seller to fix the big items or really anything that you want. Their response can be “we will fix none of the items, we will fix these particular items or we will fix all of the items.”
Most popular these days is a credit in lieu of repairs. This means the seller will give you a credit at closing to have the repairs done after closing.
You can imagine that you have to have a pretty good handle on what those repairs will cost so you don’t get stuck with anything unexpected.
Once we get through the inspection and the seller and buyer agree on repairs, then it’s just really getting the lender everything they need to close the loan.
We do a walk-through a few days prior to closing to make sure that the house is in substantially the same order as when you made your offer.
You don’t want to find out that there was a flood or that they took appliances that were included in the contract…those kinds of things.
We fill out a walk-through form that says that either something needs to be done or everything looks in order. Then the lender does their final preparations.
It really is a team effort to get a transaction closed so it helps to work with an experienced agent who can establish a good rapport with the realtor on the other side.
Closing in Arizona might look different from the way it happens in other states. For example, we don’t use attorneys for our closing process, we run everything through the title company.
Doesn’t mean you can’t have legal advice and have someone look over your contract. It’s just more common that we follow the rules and regs in our contracts and the title company is the neutral third party that sees that the contract is executed as written.
If you are a buyer outside of Arizona, the title company will arrange a remote signing and send a notary to your home or office or local coffee shop to get your pre-closing paperwork signed.
Actually you never have to step foot in Arizona to buy a property here. I still haven’t met many of my investor clients who have closed on homes.
So when do you get the keys?
Once you’ve signed your documents, the seller has signed their documents and the lender has funded your loan by sending the money to the title company, on closing day the title company electronically sends a deed to record the sale to the Maricopa County Recorder’s office.
Within a few hours the recorder sends back to the title company confirmation that the deed has recorded and the property is yours.
At that point you can enter your property (we will have arranged for you to get the keys).
And your real estate investment empire in Arizona is launched!
There are many steps in between all of this that we generally take care of behind the scenes, but this is a good game plan to help you know what to expect!
Let me know if you’d like any other resources or recommendations.
Hope this helps,
Melanie
