A Buyer's Handbook

1. CHOOSE A REALTOR
· A Realtor can give you up to date access to the Multiple Listing Service (MLS) which is an internet based searchable database of every single house listed for sale by a real estate agent.
· A Realtor can schedule private showings of any house you wish to see - at your convenience.
· A Realtor can help you choose a mortgage lender that is right for you.
· A Realtor can show you recent neighborhood sales comparables of homes you like to make sure you don’t overpay.
· A Realtor can write the 9-page purchase contract.
· A Realtor can negotiate the details of the contract including price, closing date and closing costs.
· A Realtor can help you through the home inspection process.
· A Realtor can coordinate all of the people and companies involved in your transaction and deal with any problems that can arise.
· A Realtor can represent you as the Buyer and watch out for your interests
· Best of all - you can hire a Realtor for FREE!

2. CHOOSE A MORTAGE LENDER

The first step before writing an offer and even before looking at houses is to speak with a mortgage lender. Unless you are buying a house with cash, you will need a loan from a mortgage lender or bank. We suggest you use a reputable mortgage lender who has a personal investment in your business instead of a 9-to-5 banking institution. We will be happy to refer you to a mortgage lender that can best help you, whether you’re a first time buyer or a seasoned pro.  The reason you need to speak with a mortgage lender is because before you make an offer on a house, you will need a “Conditional Loan Approval” letter from the lender, forwarded to the seller, stating that you are indeed pre-approved to buy a house. You don’t need to spend any money to get pre-approved and it usually can be done over the phone, plus it is usually good for six months. Later on, you will need to be “approved” by the mortgage lender and getting pre-approved just makes that process faster and easier. Basically, speaking with a mortgage lender and getting pre-approved shows the seller, the seller’s agent and your Realtor that you are serious about buying a house.

Here is the information you should have when you talk to your mortgage lender:

· Income information and any additional income

· W2’s from the past two to three years

· Loan information on all other real estate you own or other open loans

· Credit card information and balances

· Checking and saving account information

Here is some additional information you will need when you meet with your lender:

· Photo identification and social security card

· List of home addresses for the past four years

· Employer information for the past two to three years

· Most current paycheck receipt

· Estimate of value of all personal property

· Divorce information (if applicable)

· Money to pay from your credit report (if applicable)

3. SEARCHING FOR HOMES

You can receive updated lists of current homes for sale based upon your search specifications sent directly to the privacy of your own e-mail. We will need your minimum requirements, if any, for the following criteria:

· House, Townhouse or Condo

· Number of Bedrooms

· Number of Bathrooms

· 2-story, Single level or No Preference

· How Old when Built or No Preference

· Minimum Square Feet

· Garage, Carport or No Preference

· Private Pool, Community Pool, No Pool or No Preference

· Areas to Search (N-S-W-E boundaries) or subdivisions, cities or area codes

· Maximum Price

We will need your e-mail address and your preference on how often you would like to receive updated lists. The list will come in the form of an e-mail with an internet link in the message, not an attachment. You can click on this blue underlined link and it will take you directly to a live internet site that will have the full-page results of your search. You will then be able to view them on your monitor and print them out. Since this is a live link and not an attachment, We suggest you save the e-mails because each listing will be updated if any changes are made.  Each listing will have the address, directions, price and features of the house. You can look at these listings and take a drive by the ones you like. You may decide whether you like a house just by driving around the neighborhood. This is certainly an easy and comfortable way to narrow down your list of choices. You can receive as many e-mails as you would like and you can change your search criteria as often as it takes to find your dream house.  When you are ready to see the interior and back yard of any of these houses, simply refer to the 7-digit MLS number by the photo and call us with your list. We will be happy to schedule private showings for you. You can look at one house at a time or see an entire list in one day - whatever is easiest for you.

4. WRITING AN OFFER

When you find the house that you would like to purchase, we will help you write an offer. First, they will show you the comparable sales in the neighborhood to determine if the list price is overpriced, underpriced or priced just right. When you are comfortable with the “comps”, you have the option to write and formally submit an offer to the Seller. A copy of the 9-page purchase contract is located at the end of this handbook. Before writing an offer, you will be required to sign a “Buyer’s Broker Agreement”, which is an employment agreement, as well as an “Agency Disclosure” detailing the duties of both parties.  We will be able to advise you on every aspect of the purchase contract.  You will need to decide on an offering price, a closing date, any personal property you want included

(ie: washer and dryer), a home warranty plan and other terms and conditions you require. You will give the Seller an amount of time to respond, usually 24 hours, and we will submit your offer.

We will also need to submit your “Conditional Loan Approval” letter from your mortgage lender. You will be asked to provide an “earnest money deposit” which is simply a personal check made out to the Title Company for an agreed upon amount. This earnest money is required as a Title Company deposit to open escrow when your offer is accepted. Normally, the earnest money amount is around 1% of the offering price. For example, if you are writing an offer on a house for $150,000, be prepared to write a check to the Title Company for $1,000 to $1,500. This check will not be cashed but held by your Realtor. When your offer is accepted, the check along with the purchase contract will be given to the Title Company who will then cash the check to open escrow. This earnest money is not above and beyond the purchase price but will be added towards your down payment.

The Seller will then have three options after receiving your offer. 1. They can accept the offer without any change. 2. The can reject the offer, or 3. They can write you a “Counter Offer” proposing changes to your original offer. It will then be up to you to 1. Accept the counter offer, 2. Reject the Counter Offer and cancel the contract, or 3. Write a second counter offer proposing further changes or additions.  At the end of the counter offer stage, you will either end up with an acceptance or a cancellation. If there is a contract acceptance, the Title  Company will open escrow the next business day.

5. 10-DAY INSPECTION PERIOD

The calendar day after your offer has been accepted starts what’s known as the “10-Day Inspection Period”. During the next ten calendar days six things will need to happen.

1. You are advised to hire a home inspector to perform a general inspection of the property.

2. We will schedule and complete a termite inspection.

3. The Seller will provide you with a “Seller’s Property Disclosure Statement” for your review within the ten day period.

4. If the property was built before 1978, the Seller will provide a Lead-Based Paint Disclosure.

5. Your mortgage lender will order the appraisal of the property to be completed before close of escrow.

6. If you have not already done so, you will need to meet with your mortgage lender and obtain a “Conditional Loan Approval” in writing to provide to the Seller.

· THE HOME INSPECTION

The home inspection is the best protection for you as a Buyer. A home inspection can reveal material defects or issues that you might not be able to see. The inspector will also be able to show you how to work different amenities. This is also a good time for you to take a really good look through the house, measure rooms and identify needed repairs.  A home inspection will usually take about two hours and the inspector will spend time with you afterwards.  They will be able to provide a written report for your future reference. We strongly suggest you have a home inspection and will be able to refer you to several reputable companies. The home inspection is not figured into your closing costs so you will need to pay the inspector’s fee at the time of the inspection. Fees range from $150 to $300 depending on the house and it’s amenities. You will then have the opportunity to issue a “Buyer’s Inspection Notice and Request for Repairs”. You have 3 options.

1. You can accept the property without asking for any repairs.

2. If there is a serious problem of a material fact you can ask to cancel the contract.

3. You may ask certain repairs to be completed as per the inspection suggestions.

The Seller then has five days to respond to your request. The Seller can:

1. Accept your requests and agree to perform the repairs.

2. Reject your requests.

3. Agree to perform some but not all of your requests. If #2 or #3 happens,

you have 5 days to accept or reject the changes.

· THE TERMITE INSPECTION

Arizona law requires that a termite inspection must be done on the property.

We will schedule this inspection and meet the inspector at the property. The inspection company will deliver a report to the Title Company who will in turn deliver a copy to the agents. If there are termites present - or evidence of past termite infestation or treatment - you have 3 options.

1. You can accept the property in its present condition.

2. You can ask the Seller to perform a full treatment of the property.

3. If the infestation is a material fact, you can ask to cancel the contract.

· SELLER’S PROPERTY DISCLOSURE STATEMENT

This form is commonly referred to as “SPuDS” and is to be delivered to you for your review. The Seller is required to complete this 6-page form detailing all material facts about the property such as information about the ownership, safety, utilities and environmental issues. The Seller also discloses any material facts that might influence a Buyer’s decision to purchase. You will be asked to sign this form. Your signature shows only that you received the form. You have until the end of the 10-day inspection period to bring up any items of concern. You may address any concerns you have on the Inspection Notice form at the same time as the home inspection. The Seller will complete this form to the best of their ability depending on the length of time they have occupied the property. The items listed on this form are representations of the Seller and are not verified by the agents.

· APPRAISAL

Your mortgage lender will order the appraisal and the party responsible for the fee will be required to make payment within the 10 day period. The responsible party is designated in your original offer.  The appraisal will be completed before closing and the appraised value of the property will be issued to the Lender who will in turn issue it to the agents. If the appraisal should come in lower than the

purchase price, we will discuss your options with you.

· CONDITIONAL LOAN APPROVAL

Before searching for homes, PhxHomeBuying.com Realtors strongly suggest you speak with a Mortgage Lender. This Lender can issue a “Conditional Loan Approval” to submit with your offer (see Choose a Mortgage Lender). This letter shows the Seller that you have spoken with a Lender and are pre-approved for a loan.  The next step is to complete the loan application process and obtain a loan approval letter. This process will require you to meet with your Mortgage Lender to submit additional financial records and payment for a credit report. You do have the option of completing this process at your initial meeting with your Mortgage Lender. Submitting a Conditional Loan Approval with your offer simply strengthens your offer that much more in the eyes of the Seller.

6. NEW BUILD HOMES

We can also help you find and purchase a brand new home. A Realtor can save you time and money by representing and protecting you - all at no additional cost to you! All model homes post a sign which states “If you are working with a Realtor, they must accompany you on your first visit”. If you visit or sign in at a model home, you literally sign away your advantage and you loose money. Whether you take your agent with you or purchase a new home alone, the cost is exactly the same. You do save a penny off the price doing it alone. The salesperson represents the builder - not you. The commission is already built in to the purchase price and it will go to the builder or your agent...but not to you. That’s like paying the salesperson at Circuit City an extra $10.00 (on top of his regular commission) to buy a stereo just so he can move his inventory.  It is no wonder that sign in the model homes get smaller and smaller each year.  You need someone looking out for you and helping you understand the contracts, making suggestions and answering your questions with your protection in mind. Do you know which builder options and upgrades will increase the value of your home? Will this expensive options have any effect on the resale value of your home? Plus, when we sell your home and represent you in the purchase of your brand new home, they will charge you less commission on the sale of your present home.  But we cannot do any of this if you visit a model home site or sign in with a salesperson. When you sign in or if the salesperson remembers you, we can no longer be a part of the transaction and cannot help you. People like to take “weekend drives” and visit model homes “just for fun” - but you need to realize that it can cost you money when you do. Remember that we do this full-time and are ready to meet you at any model home site at your convenience.

7. HOME WARRANTY

After the 10-Day Inspection Period and before Close of Escrow, you will need to choose a Home Warranty provider. In your original contract, you will ask the Seller to provide you with a 1-year home warranty. Depending on the company and what it covers, if you have a problem with an amenity in the house after closing, you can call the home warranty company who will send a contractor to your house to fix the problem. You will pay a $35 to $45 service fee and the home warranty will cover the balance.

8. HOME OWNER’S INSURANCE

You will also need to choose a Homeowners Insurance Provider. A portion of your monthly mortgage payment will go towards this insurance. We can provide you with referrals of different insurance companies. Many insurance companies give discounts when they handle both your home and automobile insurance. You will also need to decide whether you want a $250, $500, or $1,000 deductible.  The Home Warranty and Homeowners Insurance can sometimes work hand in hand. For example, a water pipe breaks in your attic and causes damage to the ceiling. With a $35 or $45 service fee, the Home Warranty will cover the cost of replacing the broken pipe and with a $250 or $500 deductible, the Homeowners Insurance may then cover the resulting damage to the home caused by the broken pipe.

9. CHANGING UTILITIES

You will need to contact the different companies that provide utilities and services for your new home.  You will need to give them the address of the home and tell them you are purchasing the house on the closing date. You will ask them to start or connect service on the close of escrow date. The Seller will also call these companies to stop or disconnect these same utilities and services. We can provide you with a list of these companies and telephone numbers.

10. FINAL WALK-THROUGH

A few days before close of escrow, we will schedule a final walkthrough of the property for one last look before closing. This is an opportunity to make sure the property is in the same basic condition as when you wrote the offer. You will also make sure all repairs that were agreed upon are completed. You will also have a chance to make sure everything works such as plumbing, electrical, etc.

11. SIGINING DOCUMENTS

Your Mortgage Lender will provide documents to the Title Company to draw up. The Title Company Escrow Officer will then call you to schedule a time for you to visit the Title Company (usually the day before closing). The Escrow Officer will send us a settlement statement detailing all of the costs associated with your purchase. We will review this and call you when it is all in order. You will then visit with the Escrow Officer and sign the required forms. You will also be asked to bring a photo ID and you will be given a final amount due with written instructions to take to your bank in order to wire this amount to complete your side of the transaction. You will need to keep a flexible schedule this day and plan on at least an hour to spend at the Title Company.

12. CLOSING AND RECORDING

After both parties have signed, the closing documents are sent back to the Lender for review. The Lender then “funds the loan” and sends the documents back to the Title Company. The documents are then recorded and escrow is closed.

13. POSSESSION