How to Buy a Home in Phoenix – An Overview

Buyers

by | Dec 27, 2020

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Buying a Home in Phoenix

 

A great Realtor wears a ton of hats, among them Project Manager.

We believe if we are doing our job well, you will feel that buying a home was easy and seamless!

It doesn’t matter if you are a first-time homebuyer or a seasoned investor, buying a home is a huge decision that has both financial and personal consequences for years to come.  We appreciate this as we guide you, and want you to be not only successful, but ecstatic long-term.

We feel that being educated is the single best thing that clients can do to make this exciting journey stress-free and without surprises, so we have put together a quick overview of advice and steps to get started.

As always, we love additional questions and are here to answer them personally via email or in the comments!

Get Pre-Approved for a Loan

We know you’ve likely been browsing Redfin or Zillow and played around a bit with their mortgage calculators, so you probably already understand that your monthly payment will be comprised of principal, interest, property taxes, and homeowner’s insurance (aka PITI).

When you get serious about buying a home, we strongly recommend contacting a skilled, local-to-Phoenix mortgage professional who can determine what price range we should be shopping in. “Preapproval” simply means that you have received a letter from a mortgage lender confirming that they have evaluated your credit, income, and assets and will make you a loan.  Unless you are purchasing a home with all cash, this letter is required before making an offer on a home in order to demonstrate to the seller that you are qualified to buy.

We’ve worked with quite a few local lenders and can point you in the direction of several exceptional ones that we would use on our own transactions, as there is nothing worse than falling in love with something you can’t comfortably afford or passing up a home that you didn’t know you could.

Bottom line advice:  Working with a reputable, responsive, and reliable lender from Day One can make or break your purchase.  We have no secret agreements with any mortgage professionals (in fact that is illegal)—our interest in putting you in the best hands possible is simply because we, too, want a smooth process!

Find a Phoenix Realtor

Once financing is in order, you are ready to begin getting a sense of the inventory and start refining your wants and needs.  Every buyer needs a dedicated buyer’s agent who will help  find the right prospect, advise you through every step while making sure your interests are represented and protected, and keep you realistic as you weigh the inevitable pros and cons.  (Typically, homebuyers get about 7 of 10 items from their wish list.).

The services of your Buyer’s Agent are FREE as we are compensated by the seller only after you are fully satisfied and receive your keys.  Bad agents cost the same as the best ones, and you should only work with one who you feel is responsive, hardworking, and easy to be with.

After shopping with our clients for many weekends and after-work outings, brunched and lunched over paperwork, attended inspections, and texted countless texts, it is common (at least for us) to see our partnership grow into a friendship.  Having our clients become friends and witnessing their milestones after closing is one of the most rewarding aspects of our job.

Bottom line advice:  Many people have a random Realtor somewhere in their family tree who can (legally) help them with their purchase, but you will have a much better long-term experience by working with an agent who is deeply knowledgeable about the neighborhood you are investing in, is full-time, and is NOT the name on the sign (that agent represents the seller).

Make an Offer

Once we find the one, be prepared to act quickly.  In our current market, we are seeing the best homes in Phoenix go under contract within a day.  We can prepare a compelling offer and present it to the seller’s agent with your preapproval letter, and sometimes, a personal letter from you to the seller introducing yourself and sharing what it is that makes the home special for you.

The offer will outline terms including price, escrow period, inspection period, any items you wish to be included in the sale.  Many of these items are subject to the prevailing norms in Phoenix (such as a 30-day escrow period and 10-day inspection period) but can often be adjusted based on our assessment of competing buyers for the same property.  This is where the knowledge, experience, and resourcefulness of your agent should shine.

Bottom line advice:  In a low inventory environment, don’t hesitate to act quickly and aggressively if you are in love.  The good news is an “aggressive offer” in Phoenix typically doesn’t mean offering your firstborn child and instead is more likely 5K-10K over the asking price.

We’ve Won! Now What?

Now we move into full swing and “enter escrow”. You will wire your earnest money deposit to the title company (typically 1% of the purchase price or a fixed amount depending on what we agreed to in our offer), we review seller disclosures about the home, and we schedule inspections.

There WILL be things wrong with its physical condition and remember that we have paid an expert to find them!  Sometimes there are dealbreakers, but more often that not we encounter common, fixable items and reasonable sellers who are willing to complete repairs prior to closing.

Buyers are responsible for the costs of inspection and these are non-refundable.  A general inspection is about $300 and we also advise our clients to inspect the underground sewerline ($150).

Once we receive the inspection report in a day or so, there are sometimes follow-up inspections with specialists such as HVAC contractors, plumbers, or roofers.  This is when we obtain estimates for any items that require remedying so that: 1) you are fully informed what the home needs to be safe and functional, and 2) we can negotiate in Phase Two with the seller.

During this time, your lender will be working on your loan, ordering an appraisal, and providing status reports to all parties to ensure that we remain on track with our agreed-upon timeline.

A good agent will effortlessly coordinate everything during these critical ten days.  From inspectors, title, lender, the seller’s agent, and most important, you, we are experts at juggling the myriad balls in the air and thrive on multi-tasking.

Bottom Line Advice:  Know that every home at every price point has things wrong with it and unless it’s missing a foundation, we can usually find a resolution.  There is not a lot that can come up that we haven’t encountered before!

After Inspections and Preparing for Closing

After Day 10 of 30, we should have submitted a formal, written request to the seller which outlines the items we would like corrected.  They can either say yes, no, or offer to meet somewhere in the middle, and we are there to guide you through this second negotiation.

It is expected that we will have discovered flaws in the home, and still move forward so long as its fundamental value hasn’t changed and you are still in love.  If this is the case, we sign off on our inspection contingency.

At this point, the burden on you, the buyer, begins to ease a bit and the seller shifts into high gear to make the agreed-upon repairs.  Once completed by around Day 25, we will do a final walkthrough to ensure that all was performed as promised and that the home is in substantially the same condition as when you made the offer so that there are no surprises upon moving in.

The lender should now be almost ready to send loan documents to the title company for signing, and you should be ready to wire your remaining down payment.

Bottom line advice:  Stay on top of your lender and, although you will be itching to start decorating, refrain from making any large purchases that can negatively impact your credit in the 11th hour.

Closing and Keys

The term “closing” means that the 30-day escrow period, or process, has closed!  This happens once you have signed your loan documents, they have been returned to the lender, the lender has wired the funds to the title company, you have wired the down payment to the title company, and the County has transferred ownership of the property into your name.

Phew!  It sounds like a lot but believe it or not all of this happens over the course of Days 28-30 while we wait for the call from the title company letting us know that “you are recorded.”  Now we can give you keys and offer a well-deserved congratulations!

Unlike on the East Coast, buyers and sellers do not sit across a table from one another to exchange keys, and are actually unlikely to meet at all.  There are rarely attorneys involved, as the title company serves as the neutral third-party to handle funds, disbursements, and enforce the contract agreed to by all parties.

Bottom line advice:  Try not to book movers, etc. until we can reasonably confirm that closing will happen on Day 30 as planned.  While infrequent, the final transfer of ownership entails many moving parts and delays can sometimes happen.  We are looking out for you and don’t want you to cut it so close that any hiccup could leave you homeless!

Let’s get moving.  Work with the right Realtor from the start and reach out to us.

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