Understanding the Arizona Residential Purchase Agreement
Arizona has been hot in more ways than one. Not only has the temperature always been high, in recent years real estate has been hot as well. For several decades demand for housing has increased at a steady rate because of the significant influx of people moving there. Over the last two years investors discovered the Phoenix metropolitan area and prices, like so many places in the country went through the roof. Traditionally, around 18% of the transactions may have involved an investor. In recent history that number has been closer to 40%. A corollary is that these investors were from other states. Local investors and many move-up buyers were sidelined because of the bidding wars that were occurring in that hot market.
The good news is the market has cooled and now could be a great time to consider buying in the Phoenix area. There is an excessive inventory and prices have been moderating for the past 6 months. Sellers are more negotiable and yet, from a long-term perspective, Arizona still has growth potential that has supported real estate appreciation that was - and will be significantly higher than other parts of the country in coming years.
If your purchase is a resale home rather than a new one, the Arizona Association of Realtors (AAR) approved contract will be used as the agreement between yourself and the Seller. This document and several others have been drafted and modified over the years to provide built in protections for both parties. The AAR Residential Purchase Agreement includes the following to serve as safeguards both parties:
- 10 Day Inspection Period during which the Buyer may have numerous inspections performed by specialists;
- A 5 Day Response Time during which the Seller is given the opportunity to correct issues which may be discovered during the inspections;
- A 5 Day period during which the Buyer can decide to continue with the transaction based on all the information collected during the inspection period and the Seller's 5 Day response time. The Buyer "at his sole discretion" may decide to cancel the contract based on information gained during the previous 20 days;
- A provision for the Seller to Provide the Buyer with a Seller’s Property Disclosure Statement (SPDS) to disclose “known” defects;
- The requirement of a property appraisals for financing;
- A provision that gives both parties the right to give the other a "3 Day Cure Notice" prior to declaring a breach of contract;
- The ability to cancel the contract if the other party is in breach or has not performed to the terms of the contract during the “cure” period;
- A provision for mediation of conflicts as an option to legal action;
- A provision for a Final Walk-Through to allow the Buyer access to the home to verify the property is in substantially the same condition as when originally was viewed before the original offer was made. The Buyer also can verify at that time everything the Seller may have agreed to do has been done.
A normal transaction in Arizona has other supporting documents that are used routinely to ensure both parties are treated fairly:
- The SPDS mentioned above;
- A Preliminary Title Report describing the technicalities of the particular property;
- An Agency Disclosure so that all parties know who the agent is working for;
- The Buyers Advisory, a catch-all that informs the Buyer as to where additional information may be found.
The process in Arizona is one that makes every effort to ensure the Buyer is receiving what he contracted for and the Seller is receiving in exchange what he expects. Unfortunately, Agreements are only as dependable as the parties making the agreement. The sale and purchase of a home is distressful for both parties regardless of the safeguards. To minimize the distress, it is beneficial to use the AAR Residential Purchase Contract as the controlling document. It’s equally important to have someone who is competent and representing your interests to draft the agreement. It’s a good reason to call a REALTOR to represent your interests in the transaction.
When you choose to use members of our team to purchase your next home, you can have the confidence in knowing the transaction will be handled with the highest level of care and professionalism. YourAzMove agents perform as consultants. Your interests are always at the forefront of their attention.
As you go through the home buying process, it is important to understand the relationships between the various parties involved. The listing agreement signed when a home Seller decides to offer a home for sale, creates a legal relationship known as “agency” between the Seller and a real estate Broker. Legally, it means the Broker and agents working for the Broker’s company owe allegiance to the Seller. They are obliged to protect the interests of the seller during the process.
Historically, Buyers haven’t had the same level of representation as sellers.
Our Agents use two documents to clarify their roles when working with potential Home Buyers:
- The Arizona Association of Realtors approved
“REAL ESTATE AGENCY DISCLOSURE AND ELECTION” form;
- The Arizona Association of Realtors approved
“BUYER-BROKER EXCLUSIVE EMPLOYMENT AGREEMENT”;
The “REAL ESTATE AGENCY DISCLOSURE AND ELECTION” is not an employment agreement. As the name implies, it is intended to provide an in-depth explanation of the responsibilities of brokers to Buyers or Sellers. Additionally, it allows those in either role to decide the issue of dual agency. Limited dual agency allows an agent to represent both parties with certain restrictions.
The “BUYER-BROKER EXCLUSIVE EMPLOYMENT AGREEMENT” is an employment agreement. Just as the Seller has a formal agreement with the Listing Broker, this agreement establishes a formal relationship between the Buyer and his chosen representative. The Arizona Department of Real Estate recommends the use of this form in every transaction.
While the documents mentioned on the previous page define the formalities of the relationship, forms alone cannot deliver the level of service YourAzMove Consultants strive to accomplish. When guidelines are understood by all parties, an atmosphere of mutual trust is created. Expect a no pressure, no sales technique approach. Our role is to facilitate your search and to be a resource for you.