DEAR VALUED CLIENT:
For most of us, buying a home is the most important financial decision we will ever make. The process of buying a home is riddled with potential questions and challenges that you may encounter. This book was designed to guide you through the home buying or selling process, and to answer any questions that may arise along the way. This material is provided for general informational purposes and is not intended to provide professional advice. You should consult with a professional as to the application of this information and before making any critical decisions. Our Promise – “We increase the value of real estate transactions for all participants by identifying, underwriting and managing each transaction with the highest standards of technical skill, client service and professional integrity.”
Copyright© 2012 Old Republic. All rights reserved.
CONTENTS 1 ABOUT OLD REPUBLIC Financial Strength | Services We Provide 2 PROPERTIES & MLS PRINTOUTS Property Feedback Form | MLS Printouts 3 YOUR PROFESSIONAL REAL ESTATE TEAM Advantages of Consulting a Real Estate Professional 4 SAMPLE PURCHASE CONTRACT 5 BUYER ADVISORY 6 LOAN INFORMATION
Getting Started | Pre-Approval for Loan | The Loan Process | Inspections | Home Warranties | Buyer Guide to Closing Costs
7 INSURANCE QUOTE 8 ESCROW AND TITLE 9 MOVING
The Escrow Process | How Title Insurance Protects | Ways to Take Title in Arizona | What Your Homeowner’s Title Insurance Policy Includes
Moving Checklist | Gettling Settled | Phoenix Area Map
10 SELLING A HOME
The Process of Selling Your Home | Home Selling Checklist | Seller Guide to Closing Costs
11 DISTRESSED PROPERTY GUIDE 12 GLOSSARY
Sellers Short Sale Guide | Short Sale Checklist
ABOUT US
F
ormed in 1969 in California, Old Republic Title Holding Company (ORTHC) is part of the Old Republic Title Insurance Group (ORTIG) of companies. ORTIG is one of the nation’s largest title insurance groups across the nation and in Puerto Rico through a network of Company-owned offices, subsidiaries, authorized agents and approved attorneys. ORTIG is committed to being the most financially sound title insurance group in the industry. It is proud to state that since financial ratings have been issued for title insurance companies, no group has equaled its consistent overall high ratings. These ratings reflect the group’s consolidated operating performance, strategic relationship with its parent company, Old Republic International Corporation (NYSE:ORI), excellent capitalization, good liquidity, sound investment strategy, reserve adequacy, market position and operating performance. ORTIG has various departments and separate companies to better assist our clients. Services offered by these specialized departments include Builders/Developers Services, Subdivision/DRE Processing, Relocation Division, HUD/FHA/Government-Assisted Housing Services, Commercial Services and Lender Services.
Other specialized services provided by sister companies include: Old Republic Exchange Company (OREXCO, 1031 Exchange), Old Republic Surety Corporation and Old Republic Home Protection Company, Inc.
Copyright© 2012 Old Republic. All rights reserved.
Financial Strength Old Republic Title Company
STRENGTH & STABILITY for over a century At Old Republic Title, we have been opening doors for over a century, consistently crossing new thresholds and moving forward.
Our experience, expertise, integrity and innovation provide the keys to unlock your door to opportunity and success.
Even the most challenging economic times are no match for strength and stability. • Since 1992, we have the highest overall financial strength ratings • We offer our customers rock solid claims-paying ability and financial stability. • Over 100 years of experience • A member of the Old Republic International Corp. family, a diversified, multi-billion dollar parent company • A $500 million dollar, single risk limit** Financially Strong and Ready to Stand Behind Our Commitments Old Republic Title Commercial Services built on the strongest of National Platforms. Our team of experts have the ability to facilitate real property transactions in all 50 States. www.ortc.com
www.oldrepublictitle.com
www.orexco1031.com
Underwriters in the Old Republic Title Insurance Group, Inc. are: Old Republic National Title Insurance Company, Mississippi Valley Title Insurance Company and American Guaranty Title Insurance Company ORSITE National Due Diligence Services OREXCO National 1031 Exchange Facilitator **Where permitted by state law and subject to underwriting approval
Copyright© 2012 Old Republic. All rights reserved.
Services We Provide Our products and services have been developed to address four important aspects of the real estate transfer process: information, ownership, asset management and commitment. In each area, we have created the tools and resources needed to ensure the most possible risk-free and expedient closing possible.
Information Services
Escrow Services
The best real estate closings begin with good information.
The careful management of assets ensures a smooth transaction.
We own and subscribe to leading industry information services for the most current market information, including property profiles, farm reports and mortgage records. We have access to secure internet-based databases with millions of public real estate records and documents. We can prepare and deliver preliminary reports and commitments electronically to multiple locations.
We coordinate and process the entire real estate and mortgage closing procedure. Our services include document gathering, HUD-1 preparation, loan funds disbursement, escrow withholding and document recording with the appropriate government authority; all done in accordance with our clients’ instructions. We serve as a neutral third party working to benefit the entire transaction and the parties involved. Our escrow personnel are proficient at complying with complicated escrow instructions.
We provide real estate professionals with the most current ownership information available through a variety of sources to assist them in selling property and locating the next opportunity. In addition, we provide a variety of real estate insurance products to national lenders ranging from full ALTA policies to limited coverage policies.
Title Services Insured ownership is at the heart of every transaction. We work to remove any recorded encumbrances that are inconsistent with the terms of the transaction. We offer traditional, fully-insured products like ALTA policies, as well as innovative products and insurance policies in the refinance, second mortgage and equity markets. We respond quickly to unique circumstances with flexible and creative approaches to title insurance.
Customer Service Ongoing commitment contributes to long-term success. We offer the best customer service in the industry. Our network of professionals is complemented by online customer support that is available 24 hours a day, 7 days a week with resources and answers to common questions. We have web-based tools for our employees and their clients who need to place orders for bundled services. These tools allow the client team to create orders, track status, update information and monitor status around the clock.
Copyright© 2012 Old Republic. All rights reserved.
Property Feedback Form ADDRESS
WHAT I LIKED
WHAT I DIDN’T LIKE
ADDRESS
WHAT I LIKED
WHAT I DIDN’T LIKE
ADDRESS
WHAT I LIKED
WHAT I DIDN’T LIKE
Copyright© 2012 Old Republic. All rights reserved.
Property Feedback Form ADDRESS
WHAT I LIKED
WHAT I DIDN’T LIKE
ADDRESS
WHAT I LIKED
WHAT I DIDN’T LIKE
ADDRESS
WHAT I LIKED
WHAT I DIDN’T LIKE
Copyright© 2012 Old Republic. All rights reserved.
Notes
Copyright© 2012 Old Republic. All rights reserved.
THE
ADVANTAGES ����
of Consulting a Real Estate Professional ��������
Y
our REALTOR® has unlimited resources to assist you in your home search including access to the MLS (Multiple Listing Service). Your REALTOR® will represent you and negotiate a transaction protecting your legal and financial interests. Your REALTOR® can also represent buyers in negotiating a For Sale By Owner, Short Sale and Foreclosure. Your REALTOR® can also represent buyers with new homebuilders and is able to negotiate on your behalf. This service does not add to the price of the home and you have representation throughout the entire process. Your REALTOR® works for you, not the builder. Always ask your REALTOR® to accompany you when you are looking at homes. Your REALTOR® can assist you in the selection process by providing objective information about each property with access to a variety of information and resources. Your REALTOR® can provide local community information on utilities, zoning, schools, etc.
Your REALTOR®can help you negotiate price, financing, terms, dates of possession and often the inclusion or exclusion of repairs, etc. Your REALTOR® provides due diligence during the evaluation of the property. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank, well tests, and more. Your REALTOR® has a network of qualified responsible professionals that will help you with these investigations. Your REALTOR® can help buyers in understanding different financing options and in identifying qualified lenders. Your REALTOR® can guide you through the closing process and make sure everything flows smoothly and coordinate the transaction to help resolve issues and move towards a successful closing.
Copyright© 2012 Old Republic. All rights reserved.
The Buyer Advisory is a resource for Real Estate Consumers Provided by the Arizona Association of REALTORS® A real estate agent is vital to the purchase of real property and can provide a variety of services in locating a property, negotiating the sale, and advising the buyer. A real estate agent is generally not qualified to discover defects or evaluate the physical condition of property; however, a real estate agent can assist a buyer in finding qualified inspectors and provide the buyer with documents and other resources containing vital information about a prospective property.
(1) common documents a buyer should review; (2) physical conditions in the property the buyer should investigate; and (3) conditions affecting the surrounding area that the buyer should investigate. In addition, a buyer must communicate to the real estate agents in the transaction any special concerns the buyer may have about the property or surrounding area, whether or not those issues are addressed in this Advisory.
This advisory is designed to make the purchase of real property as smooth as possible. Some of the more common issues that a buyer may decide to investigate or verify concerning a property purchase are summarized in this Advisory. Included in this Advisory are:
REMEMBER: This Advisory is supplemental to obtaining professional property inspections. Professional property inspections are absolutely essential: there is no practical substitute for a professional inspection as a measure to discover and investigate defects or shortcomings in a property.
COMMON DOCUMENTS A BUYER SHOULD REVIEW The documents listed below may not be relevant in every transaction, nor is the list exhaustive. Unless otherwise stated, the real estate agent has not independently verified the information contained in these documents.
1
Purchase Contract
Buyers should protect themselves by taking the time to read the real estate purchase contract and understand their legal rights and obligations before they submit an offer to buy a property. Sample AAR forms are at www.aaronline.com/ForRealtors/Forms/.
2
MLS Printout
A listing is an agreement between the seller and the listing broker and may authorize the broker to submit information to the Multiple Listing Service (“MLS”). The MLS printout is similar to an advertisement. Neither the listing agreement nor the printout is a part of the purchase contract between the buyer and seller. The information in the MLS printout was probably secured from the seller, the builder, or a governmental agency,
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and could be inaccurate, incomplete or an approximation. Therefore, the buyer should verify any important information contained in the MLS.
3
The Subdivision Disclosure Report (Public Report)
A Subdivision Disclosure Report (Public Report) is intended to point out material information about a subdivision. Subdividers (any person who offers for sale or lease six or more lots in a subdivision or who causes land to be divided into a subdivision) are required to give buyers an ADRE Public Report. Read the Public Report before signing any contract to purchase property in a subdivision. Although some of the information may become outdated, subsequent buyers can also benefit from reviewing the Public Report. Public Reports dating from January 1, 1997, are available on the ADRE website
COMMON DOCUMENTS A BUYER SHOULD REVIEW (CONTINUED) at http://services.azre.gov/publicdatabase/ SearchDevelopments.aspx. The ADRE does not verify the information in the Public Report therefore the Report could be inaccurate so it should be verified. For additional information, go to www.azre.gov/PublicInfo/PropertyBuyerChecklist.aspx
4
Seller’s Property Disclosure Statement (“SPDS”)
Most sellers provide a SPDS. This document poses a variety of questions for the seller to answer about the property and its condition. The real estate broker is not responsible for verifying the accuracy of the items on the SPDS; therefore, a buyer should carefully review the SPDS and verify those statements of concern. View sample SPDS forms at: www.aaronline.com/ForRealtors/Forms/. Also review: www.azre.gov/PublicInfo/PropertyBuyerChecklist.aspx
5
Covenants, Conditions and Restrictions (“CC&Rs”)
The CC&Rs are recorded against the property and generally empower a homeowner’s association to control certain aspects of property use within the development. By purchasing a property in such a development, the buyer agrees to be bound by the CC&Rs. The association, the property owners as a whole, and individual property owners can enforce the contract. It is essential that the buyer review and agree to these restrictions prior to purchasing a property. See www.realtor.com/BASICS/ condos/ccr.asp. The ADRE advises: “Read the deed restrictions, also called CC&Rs (covenants, conditions and restrictions). You might find some of the CC&Rs are very strict.” www.azre.gov/PublicInfo/PropertyBuyerChecklist.aspx. Buyers should consult legal counsel if uncertain of the application of particular provisions in the CC&Rs.
6
Homeowners Association (“HOA”) Governing Documents
In addition to CC&Rs, HOAs may be governed by Articles of Incorporation, Bylaws, Rules and Regulations, and often architectural control standards. Read and understand these documents. Also, be aware that some HOAs impose fees that must be paid when the property is sold, so ask if the purchase of the property will result in any fees. Condominium and planned community HOAs
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are regulated by Arizona statutes; however, they are not under the jurisdiction of the Department of Real Estate. If you have questions about your rights and remedies regarding homeowners associations or community associations, read the information provided at www.azre.gov/PublicInfo/RealEstateResearchTopics.aspx#LINK11 or Chapter 16 and 18 of the Arizona Revised Statutes Title 33 www.azleg.state.az.us/ArizonaRevisedStatutes.asp?Title=33
7
HOA Disclosures
If purchasing a resale home in a condominium or planned community, the seller (if fewer than 50 units in the community) or the HOA (if there are 50 or more units) must provide the buyer with a disclosure containing a variety of information. See www.azleg.state.az.us/ars/33/01260.htm and www.azleg.state.az.us/ars/33/01806.htm for the laws detailing these requirements.
8
Title Report or Title Commitment
The title report or commitment contains important information and is provided to the buyer by the title/escrow company or agent. This report or commitment lists documents that are exceptions to the title insurance (Schedule B Exceptions). Schedule B Exceptions may include encumbrances, easements, and liens against the property, some of which may affect the use of the property, such as a future addition or swimming pool. Make sure you receive and review all of the listed documents. Questions about the title commitment and Schedule B documents may be answered by the title or escrow officer, legal counsel, or a surveyor. General information regarding title issues may be found at www.alta.org/consumer/questions.cfm. For information on title insurance, visit the Arizona Department of Insurance website at www.id.state.az.us/consumerautohome.html#titleresource.
9
Loan Documents
Unless a buyer is paying cash, the buyer must qualify for a loan in order to complete the purchase. A buyer should complete a loan application with a lender before making an offer on a property if at all possible and, if not, immediately after making an offer. It will be the buyer’s responsibility to deposit any down payment and insure that the buyer’s lender deposits the remainder of the purchase price into escrow prior to the close of escrow date. Therefore, make sure you get all requested documentation to your lender as soon as possible.
COMMON DOCUMENTS A BUYER SHOULD REVIEW (CONTINUED) For information on loans and the lending process, visit the following websites: Ginnie Mae: www.ginniemae.gov/ypth/index.asp?Section=YPTH HUD: www.hud.gov/ Mortgage Bankers Association: www.homeloanlearningcenter.com/default.htm National Association of Mortgage Brokers: www.namb.org/namb/Home_Buyers_Home.asp? SnID=382338594
10
Home Warranty Policy
A home warranty may be part of the sale of the home. Buyers should read the home warranty document for coverage and limitation information. Be aware that pre-existing property conditions are generally not covered under these policies.
11
Affidavit of Disclosure
If the buyer is purchasing five or fewer parcels of land (whether improved or vacant), other than subdivided land, in an unincorporated area of a county, the seller must furnish the buyer with an Affidavit of Disclosure. A sample form is located at www.aaronline.com/documents/affidavit.aspx.
12
Lead-Based Paint Disclosure Form
If the home was built prior to 1978, the seller must provide the buyer with a leadbased paint disclosure form. Information about lead-based paint may be obtained at www.azre.gov/PublicInfo/ RealEstateResearchTopics.aspx#LINK11 or www.epa.gov/lead/. Buyer is further advised to use certified contractors to perform renovation, repair or painting projects that disturb lead-based paint in residential properties built before 1978 and to follow specific work practices to prevent lead contamination. For more information on this new rule, visit www.epa.gov/lead/pubs/lscp-press.htm.
13
Professional Inspection Report
The importance of having a property inspected by a professional inspector cannot be overemphasized. An inspection is a visual physical examination, performed for a fee, designed to identify
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June 2012
material defects in the property. The inspector will generally provide the buyer with a report detailing information about the property’s condition. The buyer should carefully review this report with the inspector and ask the inspector about any item of concern. Pay attention to the scope of the inspection and any portions of the property excluded from the inspection. A list of certified home inspectors may be found at the Arizona Board of Technical Registration website, www.btr.state.az.us. Additional information on inspections may be found at www.ashi.com, and guidance on hiring a home inspector may be found at www.realtor.com/basics/buy/inspnegot/ hire.asp?gate=realtor&poe=propertystore.
14
County Assessors/Tax Records
The county assessor’s records contain a variety of valuable information, including the assessed value of the property for tax purposes and some of the physical aspects of the property, such as the reported square footage. The date built information in the assessor’s records can be either the actual or effective/ weighted age if the residence has been remodeled. All information on the site should be verified for accuracy. Information is available on county websites: Coconino: www.coconino.az.gov/ Maricopa: www.maricopa.gov/assessor or http://treasurer.maricopa.gov/parcels/ Pima: www.asr.pima.gov/ Yavapai: www.co.yavapai.az.us/ Other counties: www.az.gov/webapp/portal
15
Termites and Other Wood Destroying Insects and Organisms
Termites are commonly found in some parts of Arizona. The Office of Pest Management (OPM) regulates pest inspectors and can provide the buyer with information regarding past termite treatments on a property. To obtain a termite history report on a property, visit the OPM website at http://tarf.sb.state.az.us/ or call 1-800-223-0618. The OPM publication, What You Should Know about WoodDestroying Insect Inspection Reports, can be found at www.sb.state.az.us/TermiteInsp.php. Additional information may be obtained at the OPM website at www.sb.state.az.us/index.php.
COMMON DOCUMENTS A BUYER SHOULD REVIEW (CONTINUED)
16
Foreign Investment in Real Property Tax Act (FIRPTA)
Foreign Investment In Real Property Tax Act (FIRPTA) may impact the purchase of property if the legal owner(s) of the property are foreign persons or nonresident aliens pursuant to FIRPTA. If so, consult a tax advisor as mandatory withholding may apply. For additional information related to FIRPTA, go to: http:// www.irs.gov/businesses/small/international/ article/0,,id=105000,00.html
COMMON PHYSICAL CONDITIONS IN THE PROPERTY A BUYER SHOULD INVESTIGATE
3
Every buyer and every property is different, so the physical property conditions requiring investigation will vary
1
Repairs and New Construction
The seller may have made repairs or added a room to the property. The buyer should feel comfortable that the work was properly done or have an expert evaluate the work. Request copies of permits, invoices or other documentation regarding the work performed. The Registrar of Contractors’ (“ROC”) publication, 10 Tips for Hiring a Contractor, is available on the ROC website, www.azroc.gov/Acrobat/News/homeownersinfo.pdf. The Arizona chapters of the National Association of the Remodeling Industry may be contacted at www.greaterphoenixnari.org/ for the Phoenix area and www.nariofsouthernarizona.memberlodge.com/ for Southern Arizona/Tucson. For information regarding permits, contact the city or county building department.
The City of Phoenix records building permit information which can be found on their website http://phoenix.gov/ haht-bin/hsrun/payf/DSDOPPROD/StateId/ Qseb7LtaB5a5Cmv5uSTXDmoM3odP3-4P_W/ HAHTpage/HS_PermitSearch
2
Square Footage
Square footage on the MLS printout or as listed by the county assessor’s records is often only an estimate and generally should not be relied upon for the exact square footage in a property. An appraiser or architect can measure the property’s size to verify the square footage. If the square footage is important, you should have it confirmed by one of these experts during the inspection period in a resale transaction and prior to executing a contract in a new home transaction. A list of appraisers may be found at the Arizona Board of Appraisal, www.appraisal.state.az.us/directory/ Default.aspx. A list of architects may be found at the Board of Technical Registration, www.btr.state.az.us.
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Roof
If the roof is 10 years old or older, a roof inspection by a licensed roofer is highly recommended. See the ROC information on hiring a licensed contractor online at www.azroc.gov/Acrobat/News/homeownersinfo.pdf or the Arizona Roofing Contractors Association at www.azroofing.org.
4
Swimming Pools and Spas
If the property has a pool or a spa, the home inspector may exclude the pool or spa from the general inspection so an inspection by a pool or spa company may be necessary. Barriers: Further, each city and county has its own swimming pool barrier ordinance. Pool barrier contact information for Arizona cities and counties may be found at www.aaronline.com/documents/pool_contacts.aspx. The Arizona Department of Health Services Private Pool Safety notice may be found at http://azdhs.gov/phs/oeh/ pool_rules.htm. The state law on swimming pools is located at www.azleg.state.az.us/ars/36/01681.htm.
5
Septic and Other On-Site Wastewater Treatment Facilities
If the home is not connected to a public sewer, it is probably served by an on-site wastewater treatment facility (septic or alternative system). A qualified inspector must inspect any such facility within six months prior to transfer of ownership. For information on current inspection and transfer of ownership requirements, contact the specific county environmental/health agency where the property is located or the Arizona Department of Environmental Quality at www.azdeq.gov/environ/water/permits/
COMMON PHYSICAL CONDITIONS IN THE PROPERTY (CONTINUED) download/septictank.pdf. To file for a Notice of Transfer online go to https://az.gov/app/own/home.xhtml.
6
Sewer
Even if the listing or SPDS indicates that the property is connected to the city sewer, a plumber, home inspector, or other professional should verify it. Some counties and cities can perform this test as well.
7
Water/Well Issues
You should investigate the availability and quality of the water to the property. For information on wells and assured/adequate water, go to www.azwater.gov/AzDWR/ WaterManagement/Wells/default.htm or www.azwater.gov/WaterManagement_2005/Content/ OAAWS/default.asp. Adjudications: Arizona is undertaking several General Stream Adjudications, which are court proceedings to determine the extent and priority of water rights in an entire river system. For information regarding water uses and watersheds affected by these adjudications, and the forms upon sale of the property, contact the Department of Water Resources at www.azwater.gov/AzDWR/ SurfaceWater/Adjudications/default.htm Additionally, the Verde Valley Water Users assists members in matters pertaining to the Gila River System Adjudication. www.verdevalleywaterusers.org/homepage.htm CAGRDs: The Central Arizona Groundwater Replenishment District (CAGRD) functions to replenish groundwater used by its members, individual subdivisions (“member lands”) and service areas of member water providers (“member service areas”). Homeowners in a CAGRD pay an annual assessment fee which is collected through the county property tax process based on the amount of groundwater served to member homes. To learn more about CAGRD, membership visit www.cagrd.com.
8
Soil Problems
Properties built on such soils may experience significant movement causing a major problem. If it has been disclosed that the property is subject to any such soil conditions or if the buyer has any concerns about the soil condition or observes evidence of cracking, the buyer should secure an independent assessment of the property and its structural integrity by a licensed, bonded, and insured professional engineer. A list of state certified professional engineers and firms can be found at www.btr.state.az.us.
9
Previous Fire/Flood
If it is disclosed there has been a fire or flood on the property, a qualified inspector should be hired to advise you regarding any possible future problems as a result of the fire or flood damage and/or any subsequent repairs. For example, if the property was not properly cleaned after a flood, mold issues may result. Your insurance agent may be able to assist you in obtaining information regarding fire, flood, or other past damage to the property.
10
Pests
Cockroaches, rattlesnakes, black widow spiders, scorpions, termites and other pests are common in parts of Arizona. Fortunately, most pests can be controlled with pesticides. Scorpions: Scorpions, on the other hand, may be difficult to eliminate. If the buyer has any concerns or if the SPDS indicates the seller has seen scorpions or other pests on the property, seek the advice of a pest control company. A source of information on scorpions may be found at www.desertusa.com/oct96/du_scorpion.html.
Bed Bugs: Bed bug infestations are on the rise in Arizona and nationally, for more information visit the following websites: www.azdhs.gov/phs/oids/vector/bedbugs/files/ Bed-Bug_FAQs.pdf www.cdc.gov/parasites/bedbugs/
The soil in some areas of Arizona has “clay-like” tendencies, sometimes referred to as “expansive soil.” To investigate areas in Arizona where expansive soils exist, go to www.az.nrcs.usda.gov (search “shrink/swell”) or www.azgs.az.gov (“Geologic Hazards”) and the direct link to the Study Area Maps is www.azgs.az.gov/efmaps.shtml. Other areas are subject to fissures, subsidence and other soil conditions. For information on earth fissures, visit www.azwater.gov/AzDWR/Hydrology/ Geophysics/LandSubsidenceInArizona.htm. The ADRE provides earth fissure maps at www.re.state.az.us/
PAGE 5
PublicInfo/Fissures.aspx or contact the ADRE for printed fissure maps.
June 2012
www.epa.gov/bedbugs/ Roof Rats: For information on roof rats, which have been reported in some areas, www.maricopa.gov/EnvSvc/ VectorControl/RR/RRInfo.aspx. Termites and bark beetles: For information on termites or bark beetles, which have been reported in some forested areas, see www.sb.state.az.us/.
COMMON PHYSICAL CONDITIONS IN THE PROPERTY (CONTINUED)
11
Endangered and Threatened Species
Certain areas in the state may have issues related to federally listed endangered or threatened species that may affect land uses. Further information may be obtained by going to the following U.S. Fish and Wildlife website, www.fws.gov/southwest/es/arizona/, or contact the appropriate planning/development service department.
12
Deaths and Felonies on the Properties
An Arizona law states that sellers and real estate licensees have no liability for failure to disclose to a buyer that the property was ever the site of a natural death, suicide, murder or felony, www.azleg.state.az.us/ ars/32/02156.htm. This information is often difficult to uncover; however, the local law enforcement agency may be able to identify calls made to the property address.
13
Indoor Environmental Concerns
Mold: Mold has always been with us, and it is a rare property that does not have some mold. However, over the past few years a certain kind of mold has been identified as a possible contributor to illnesses. Allergic individuals may experience symptoms related to mold. The Arizona Department of Health Services, Office of Environmental Health, states: “If you can see mold, or if there is an earthy or musty odor, you can assume you have a mold problem.” www.hs.state.az.us/phs/ oeh/invsurv/air_qual/mold_contents.htm The Environmental Protection Agency (EPA) and Centers for Disease Control and Prevention websites also contain valuable information: www.epa.gov/mold/ and www.cdc.gov/mold/default.htm. Chinese Drywall: There have been a few reports of Chinese Drywall used in Arizona homes, see www.cpsc.gov/info/ drywall/where.html for more information. Radon gas and carbon monoxide: Radon gas and carbon monoxide poisoning are two of the more common and potentially serious indoor air quality (“IAQ”) concerns. Both of these concerns can be addressed by the home inspector, usually for an additional fee. For information on radon levels in the state, go to the Arizona Radiation Regulatory Agency’s website www.azrra.gov/radon/index.html. Drug labs: Unremediated meth labs and other dangerous drug labs must be disclosed to buyers/tenants by Arizona law. A list of unremediated properties and a list of the registered drug laboratory site remediation firms can be found at www.azbtr.gov/listings/drug_lab_site_clean_up.asp.
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Other: For information on other indoor environmental concerns, the EPA has a host of resource materials and pamphlets available at www.epa.gov/iaq/iaqinfo.html and www.epa.gov/iaq/pubs/index.html.
14
Property Boundaries
If the property boundaries are of concern, a survey may be warranted. For example, a survey may be advisable if there is an obvious use of property by others (i.e., a well-worn path across a property and/or parked cars on the property) or fences or structures of adjacent property owners that appear to be built on the property. For more information, visit the Arizona Professional Land Surveyors website at www.azpls.org. A list of surveyors may be obtained from the Board of Technical Registration at www.btr.state.az.us.
15
Flood Plain Status
If the property is in a flood zone, an additional annual insurance premium of several hundred dollars may be required (check with your insurance agent about cost and coverage). If the property is in an area deemed high risk, the buyer may be required by the lender to obtain flood hazard insurance through the National Flood Insurance Program. Find details on flood plain status at: Maricopa County: www.fcd.maricopa.gov/ Coconino County: www.coconino.az.gov/information.aspx?id=23077 Emergency Preparedness Information: www.readycoconino.az.gov/ Pima County: www.rfcd.pima.gov Phoenix: www.phoenix.gov/streets/floodplain/ index.html Tucson: www.tucsonaz.gov/dsd/Site_Review/ Engineer___Flood/Status_Requests/status_requests.html Santa Cruz County: www.co.santa-cruz.az.us/ public_works/flood/index.html Other parts of the state: www.azgs.az.gov/hazards_floods.shtml FEMA Flood Map Service Center: www.fema.gov/hazard/flood/index.shtm
COMMON PHYSICAL CONDITIONS IN THE PROPERTY (CONTINUED)
16
Insurance (Claims History)
Many factors affect the availability and cost of homeowner’s insurance. Some insurance companies use a database known as the Comprehensive Loss Underwriting Exchange (“C.L.U.E.”) in their underwriting practices to track the insurance claim history of a property and of the person applying for insurance coverage. Property owners may request a five year claims history from their insurance agent or purchase a C.L.U.E. report online at https://personalreports.lexisnexis.com/index.jsp or by calling 866-527-2600. For additional insurance information, visit the Arizona Department of Insurance website at www.id.state.az.us/consumer.html and read “The New Reality of Property Insurance—What You Should Know” at www.aaronline.com/documents/insurance.pdf.
17
Other Property Conditions
Plumbing: Check functionality. Cooling/Heating: Make sure the cooling and heating systems are adequate. Arizona State Chapter affiliate of the Air Conditioning Contractors of America: www.acca-az.org/. Electrical systems: Check for function and safety
CONDITIONS AFFECTING THE AREA SURROUNDING THE PROPERTY THE BUYER SHOULD INVESTIGATE Every property is unique; therefore, important conditions vary.
1
Environmental Concerns
It is often very difficult to identify environmental hazards. For environmental information, search the ADEQ website at www.adeq.state.az.us. The ADEQ website contains information regarding the locations of open and closed landfills (Solid Waste Facilities) at www.azdeq.gov/ environ/waste/solid/map.html and wildfire information at www.azdeq.gov/function/programs/wildfire.html, as well as air quality information, water quality information and more. Environmentally Sensitive Land Ordinance: Approximately twothirds of the City of Scottsdale is affected by the Environmentally Sensitive Land Ordinance (ESLO), which requires some areas on private property be retained in their natural state and designated as National Area Open Space (NAOS). For more information about how the ESLO and NAOS may impact affected property, go to www.scottsdaleaz.gov/codes/ESLO.
2
Electromagnetic Fields
For information on electromagnetic fields, and whether they pose a health risk to you or your family, visit the following websites: www.niehs.nih.gov/health/topics/ agents/emf/
PAGE 7
June 2012
3
Superfund Sites
There are numerous sites in Arizona where the soil and groundwater have been contaminated by improper disposal of contaminants. To check if a property is in an area designated by the ADEQ as requiring cleanup, see www.azdeq.gov/environ/waste/sps/phx.html for available maps to view. The EPA also has information on Federal sites at www.epa.gov/superfund/ and in Spanish at www.epa.gov/superfund/spanish/index.htm.
4
Freeway Construction and Traffic Conditions
Although the existence of a freeway near the property may provide highly desirable access, sometimes it contributes to undesirable noise. To search for roadway construction and planning, go to the Arizona Department of Transportation (“ADOT”) website at www.azdot.gov/Highways/. Check ADOT maps to find the nearest future freeway routes and roads in the area slated for widening. For traffic conditions, visit www.az511.com/.
CONDITIONS AFFECTING THE AREA SURROUNDING THE PROPERTY (CONTINUED)
5
Crime Statistics
Crime statistics, an imperfect measurement at best, provide some indication of the level of criminal activity in an area. To check the crime statistics for the cities of Phoenix, Tempe, Glendale, Mesa, Scottsdale, Chandler, Gilbert and Peoria, go to www.faxnet1.org or the city of Phoenix website http://phoenix.gov/POLICE/crista1.html. A visit or phone call to other law enforcement agencies may be required. Tucson: http://tpdinternet.tucsonaz.gov/Stats/. For crime statistics in all Arizona cities go to www.azleague.org/index.cfm?fuseaction=about.cities click on the city/town and search for “crime statistics.”
6
Sex Offenders
Since June 1996, Arizona has had a registry and community notification program for convicted sex offenders. This information may be accessed at https:// az.gov/webapp/offender/main.do. Prior to June 1996, registration was not required, and only the higher-risk sex offenders are on the website. The presence of a sex offender in the vicinity of the property is not a fact that the seller or real estate agent is required to disclose. City of Glendale: For more information go to www.glendaleaz.com/police/sexoffenderinfocenter.cfm. National Sex Offender Public Website: www.nsopw.gov/Core/Portal.aspx
7
Forested Areas
Life in a forested area has unique benefits and concerns. For information on protecting your property from wildfire, go to www.azsf.az.gov/ or www.firewise.org/. See also, Arizona Firewise Communities, http:// cals.arizona.edu/firewise/. Contact county/city fire authority for information on issues particular to your community.
8
Military and Public Airports
The legislature has mandated the identification of areas in the immediate vicinity of military and public airports that are susceptible to a certain level of noise from aircraft. The boundaries of these areas have been plotted on maps that are useful in determining if a property falls within one of these areas. The maps for military airports may be accessed at www.re.state.az.us/ AirportMaps/MilitaryAirports.aspx; view maps for many of the public airports at www.re.state.az.us/AirportMaps/ PublicAirports.aspx. These maps are intended to show the areas subject to the preponderance of airport-related noise from a given airport. Periodic over-flights that may contribute to noise cannot usually be determined from these maps.
9
Zoning/Planning/Neighborhood Services
Phoenix: www.phoenix.gov/PLANNING/index.html Scottsdale: www.scottsdaleaz.gov/Topics/Planning Tucson: www.ci.tucson.az.us/planning.html Other cities and towns: www.azleague.org
10
Schools
Although there is no substitute for an on-site visit to the school to talk with principals and teachers, there is a significant amount of information about Arizona’s schools on the Internet. Visit www.ade.state.az.us for more information. The ADRE advises: “Call the school district serving the subdivision to determine whether nearby schools are accepting new students. Some school districts, especially in the northwest part of the greater Phoenix area, have placed a cap on enrollment. You may find that your children cannot attend the school nearest you and may even be transported to another community.” www.azre.gov/ PublicInfo/PropertyBuyerChecklist.aspx
11
City Profile Report
Information on demographics, finances and other factors drawn from an array of sources, such as U.S. Census Bureau, Bureau of Labor, Internal Revenue Service, Federal Bureau of Investigation, and the National Oceanic and Atmospheric Administration. www.homefair.com/ find_a_place/cityprofile/
PAGE 8
June 2012
OTHER METHODS OF GETTING INFORMATION ABOUT A PROPERTY Talk to the Neighbors Neighbors can provide a wealth of information. Buyers should always talk to the surrounding residents about the neighborhood and the history of the property the buyer is considering for purchase. Drive around the Neighborhood Buyers should always drive around the neighborhood, preferably on different days at several different times of the day and evening, to investigate the surrounding area.
MARKET CONDITIONS ADVISORY The real estate market is cyclical and real estate values go up and down. The financial market also changes, affecting the terms on which a lender will agree to loan money on real property. It is impossible to accurately predict what the real estate or financial market conditions will be at any given time. The ultimate decision on the price a Buyer is willing to pay and the price a Seller is willing to accept for a specific property rests solely with the individual Buyer or Seller. The parties to a real estate transaction must decide on what price and terms they are willing to buy or sell in light of market conditions, their own financial resources and their own unique circumstances. The parties must, upon careful deliberation, decide how much risk they are willing to assume in a transaction. Any waiver of contingencies, rights or warranties in the Contract may have adverse consequences. Buyer and Seller acknowledge that they understand these risks. Buyer and Seller assume all responsibility should the return on investment, tax consequences, credit effects, or financing terms not meet their expectations. The parties understand and agree that the Broker(s) do not provide advice on property as an investment. Broker(s) are not qualified to provide financial, legal, or tax advice regarding a real estate transaction. Therefore, Broker(s) make no representation regarding the above items. Buyer and Seller are advised to obtain professional tax and legal advice regarding the advisability of entering into this transaction.
FAIR HOUSING & DISABILITY LAWS The Fair Housing Act prohibits discrimination in the sale, rental, and financing of dwellings based on race, color, national origin, religion, sex, familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under the age of 18), and handicap (disability). Visit HUD’s Fair Housing/Equal Opportunity website at http://portal.hud.gov/portal/page/portal/HUD/ program_offices/fair_housing_equal_opp. For information on the Americans with Disabilities Act, visit www.usdoj.gov/crt/ada/adahom1.htm.
ADDITIONAL INFORMATION NATIONAL ASSOCIATION OF REALTORS® (NAR): www.realtor.org NAR’s Ten Steps to Homeownership: http://finance.move.com/homefinance/guides/buyers/ default.asp?lnksrc=FINHPGDS002&poe=move&tran=vud Home Closing 101: www.homeclosing101.org/
INFORMATION ABOUT ARIZONA GOVERNMENT Links to state agencies, city and county websites: www.az.gov Geographic Information System (GIS) — Maps and information based on a specific address: www.az.gov/webapp/govinfo/main.do
ARIZONA DEPARTMENT OF REAL ESTATE Consumer Information: www.azre.gov/InfoFor/Consumers.aspx
ARIZONA ASSOCIATION OF REALTORS® Consumer Assistance: www.aaronline.com/ConsumerAssistance/Default.aspx Find a REALTOR®: www.aaronline.com/ConsumerAssistance/FindARealtor/
PAGE 9
June 2012
BUYER ACKNOWLEDGMENT Buyer acknowledges receipt of all nine pages of this Advisory. Buyer further acknowledges that there may be other disclosure issues of concern not listed in this Advisory. Buyer is responsible for making all necessary inquiries and consulting the appropriate persons or entities prior to the purchase of any property. The information in this Advisory is provided with the understanding that it is not intended as legal or other professional services or advice. These materials have been prepared for general informational purposes only. The information and links contained herein may not be updated or revised for accuracy. If you have any additional questions or need advice, please contact your own lawyer or other professional representative.
^ BUYER SIGNATURE
DATE
^ BUYER SIGNATURE
DATE
PAGE 10
June 2012
Buyer Advisory A Resource for Real Estate Consumers Provided by the
TABLE OF CONTENTS PAGE 1 1 1 1 2 2 2 2 2 2 3 3 3 3 3 3 4 4
4 4 4 4 4 5 5 5 5 5 6 6 6 6 6 7 7
PAGE COMMON DOCUMENTS A BUYER SHOULD REVIEW Purchase Contract MLS Printout The Subdivision Disclosure Report (Public Report) Seller’s Property Disclosure Statement (SPDS) Covenants, Conditions and Restrictions (CC&Rs) Homeowner’s Association (HOA) Governing Documents HOA Disclosures Title Report or Title Commitment Loan Documents Home Warranty Policy Affidavit of Disclosure Lead-Based Paint Disclosure Form Professional Inspection Report County Assessors/Tax Records Termites and Other Wood Destroying Insects and Organisms Foreign Investment in Real Property Tax Act (FIRPTA) COMMON PHYSICAL CONDITIONS IN THE PROPERTY A BUYER SHOULD INVESTIGATE
Repairs and New Construction Square Footage Roof Swimming Pools and Spas (Barriers) Septic and Other On-site Wastewater Treatment Facilities Sewer Water/Well Issues (Adjudications, CAGRDs) Soil Problems Previous Fire/Flood Pests (Scorpions, Bed bugs, Roof Rats, Termites & Bark Beetles) Endangered and Threatened Species Deaths and Felonies on the Property Indoor Environmental Concerns (Mold, Chinese Drywall, Radon gas and Carbon monoxide, Drug labs, Other) Property Boundaries Flood Plain Status Insurance (Claims History) Other Property Conditions (Plumbing, Cooling/ heating, Electrical systems) April 2012
7
7 7 7 7 8 8 8 8 8 8 8 9
CONDITIONS AFFECTING THE AREA SURROUNDING THE PROPERTY THE BUYER SHOULD INVESTIGATE
Environmental Concerns (Environmentally Sensitive Land Ordinance) Electromagnetic Fields Superfund Sites Freeway Construction and Traffic Conditions Crime Statistics Sex Offenders Forested Areas Military and Public Airports Zoning/Planning/Neighborhood Services Schools City Profile Report OTHER METHODS TO GETTING INFORMATION ABOUT A PROPERTY
9 9
Talk to the Neighbors Drive around the Neighborhood
9
MARKET CONDITIONS ADVISORY
9
FAIR HOUSING AND DISABILITY LAWS
9
ADDITIONAL INFORMATION
9
INFORMATION ABOUT ARIZONA GOVERNMENT
9
ARIZONA DEPARTMENT OF REAL ESTATE
9
ARIZONA ASSOCIATION OF REALTORS®
10
BUYER ACKNOWLEDGMENT
INDEX PAGE 1 COMMON DOCUMENTS A BUYER SHOULD REVIEW 3 Affidavit of Disclosure 3 County Assessors/Tax Records 2 Covenants, Conditions and Restrictions (CC&Rs) 4 Foreign Investment in Real Property Tax Act (FIRPTA) 2 HOA Disclosures 3 Home Warranty Policy 2 Homeowner’s Association (HOA) Governing Documents 3 Lead-Based Paint Disclosure Form 2 Loan Documents 1 MLS Printout 3 Professional Inspection Report 1 Purchase Contract 2 Seller’s Property Disclosure Statement (SPDS) 3 Termites and Other Wood Destroying Insects and Organisms 1 The Subdivision Disclosure Report (Public Report) 2 Title Report or Title Commitment 4
6 6 6 6 7 7 5 5 6 4 4 4 5 5 4 4 5
COMMON PHYSICAL CONDITIONS IN THE PROPERTY A BUYER SHOULD INVESTIGATE
Deaths and Felonies on the Property Endangered and Threatened Species Flood Plain Status Indoor Environmental Concerns (Mold, Chinese Drywall, Radon gas and Carbon monoxide, Drug labs, Other) Insurance (Claims History) Other Property Conditions (Plumbing, cooling/ heating, electrical systems) Pests (Scorpions, Bed bugs, Roof rats, Termites & Bark Beetles) Previous Fire/Flood Property Boundaries Repairs and New Construction Roof Septic and Other On-site Wastewater Treatment Facilities Sewer Soil Problems Square Footage Swimming Pools and Spas (Barriers) Water/Well Issues (Adjudications, CAGRDs)
June 2012
PAGE 7
8 8 7 7 8 7 8 8 8 7 8 9
CONDITIONS AFFECTING THE AREA SURROUNDING THE PROPERTY THE BUYER SHOULD INVESTIGATE
City Profile Report Crime Statistics Electromagnetic Fields Environmental Concerns (Environmentally Sensitive Land Ordinance) Forested Areas Freeway Construction and Traffic Conditions Military and Public Airports Schools Sex Offenders Superfund Sites Zoning/Planning/Neighborhood Services OTHER METHODS TO OBTAIN INFORMATION ABOUT A PROPERTY
9 9
Drive around the Neighborhood Talk to the Neighbors
9
ADDITIONAL INFORMATION
9
ARIZONA ASSOCIATION OF REALTORS®
9
ARIZONA DEPARTMENT OF REAL ESTATE
9
FAIR HOUSING AND DISABILITY LAWS
9
INFORMATION ABOUT ARIZONA GOVERNMENT
9
MARKET CONDITIONS ADVISORY
10
BUYER ACKNOWLEDGMENT
BUYER ����
��������
The Process of Buying a Home
Getting Pre-Qualified:
It is recommended that homebuyers pre-qualify with a lender before seeking a home to purchase. By doing so, you will have the most accurate information about the price range best suited for your budget.
Reasons to Get Pre-Qualified:
With pre qualification, you can determine which loan programs best fit your needs and which programs you qualify for. You will need to know how much you are qualified for, since it could be disappointing to find your “dream home” and then find out you can’t afford it. If you are a first-time buyer, you may be able to qualify for a special first-time buyer program, which would allow you to purchase an affordable home.
What you May Need to Get Started:
Personal and financial information is required for the loan application. It is a good idea to have the following information readily available for your lender to complete the loan application. • Addresses of residences for the last two years • Social Security Numbers • A valid ID such as a driver’s license or passport • Names and addresses of employers for the last two years • Preceding two months pay stubs with yearto-date earnings • Prior two years Federal tax returns and W-2’s • Other sources of verifiable income • Preceding two months of statements for all checking, savings, and money market accounts • Recent statements of any investment accounts including stocks, mutual funds, CDs, 401K, etc. • Addresses and estimated values of all real estate owned • Your best estimate of the value of all your personal property. This may include houses, automobiles, boats, furniture, jewelry, television, audio equipment, etc. • Names, addresses, account numbers, and payment amounts on all loans or lines of credit including but not limited to real estate loans, home equity lines, and credit cards. • Divorce decree, if applicable.
Copyright© 2012 Old Republic. All rights reserved.
HOME BUYING PROCESS Initial meeting with Your Loan Officer to Pre-Qualify
Earnest Money Is Deposited
Meet with Your REALTOR® to Discuss Needs and Wants
Inspections, Disclosures and Repairs are Completed
Review Homes on-line and Referred by REALTOR®
View Properties with Your REALTOR®
Decide on Property and Make an Offer through Your REALTOR®
Contract is Presented by Your REALTOR®
Contract is Negotiated through Real Estate Agents and Finalized
Title Company Completes Title Search and Committment for Title Insurance
Buyer Provides Loan Officer with Necessary Documentation
Loan Officer Prepares Loan Package
Appointment at Old Republic to Sign Documents and Provide Closing Funds
Loan is Funded by Mortgage Company
Documents are Recorded at County and Escrow is Closed Agent Opens Contract with Old Republic Title Agency Agent Opens Contract with Old Republic Title Agency Copyright© 2012 Old Republic. All rights reserved.
BUYER The Loan Process
1
APPLICATION FOR LOAN
Loan officer obtains information from buyer.
2
LENDER REQUESTS INFORMATION
Orders credit report, appraisal and other required information.
LOAN IS SUBMITTED
After all documentation is received, the Loan Officer submits the package to the underwriter for approval.
LOAN APPROVAL:
The underwriter may ask for conditions to be met before loan can close.
LENDER DRAWS LOAN DOCUMENTS
Documents are sent to Old Republic Title, signing appointments made and required funds requested from borrower.
LOAN IS FUNDED
After signings, loan package is reviewed by lender and funds are transferred.
RECORDING
Once funds are received by Escrow Officer and the deed is recorded with the County.
3 4 5 6 7 8
ESCROW CLOSED
Buyer receives keys and moves in.
Copyright© 2012 Old Republic. All rights reserved.
BUYER Types of Loans: Adjustable Rate Mortgage – Adjustable rate mortgages have an interest rate that is adjusted at certain intervals based on a specific index during the life of the loan. Balloon Payment Loan – A fixed rate loan that is amortized over 30 years but becomes due and payable at the end of a certain term. It may be extendable or may rollover into another type of loan. Buy-Down Loan – Buy-down loans are fixed rate loans where the interest rate and the payment are reduced for a specific period of time by paying the interest up-front to subsidize the lower payment. Community Home Buyer’s Program – A fixed rate loan for the first time home buyers with a low down payment (usually 3%-5%), no cash reserve requirement, and easier qualifying ratios. This loan is subject to the borrower meeting income limits and attending a four-hour training course on home ownership. Conventional Loan – Conventional loans are sometimes more lenient with the appraisal and condition of the property. Conventional loans are not government insured and usually have high down payment requirements.
FHA Loans – FHA loans are insured by the Federal Housing Administration under H.U.D. They offer low down payment and are easier to qualify for than conventional loans. Appraisal and property condition rules will be applied and loan amounts are limited. Fixed Rate Loan – A fixed rate loan has one interest rate constant throughout the life of the loan. Graduated Payment Mortgage – A fixed rate loan that has payments starting lower than a standard fixed rate loan, which then increases by a predetermined amount each year for a set number of years. Non-Qualifying Loan (Assumable) – Nonqualifying loans are pre-existing loans which can be assumed by a buyer from the seller of a property without going through the qualifying process. The buyer pays the seller for their equity and then starts making payments. VA Loan – Loans are guaranteed by the Veterans Administration. A veteran must have served 180 days active service. Reverse Mortgage – A reverse mortgage is a loan available to seniors aged 62 or older, per HUD, and is used to release the home equity in the property as one lump sum or multiple payments. The homeowner’s obligation to repay the loan is deferred until the owner dies, the home is sold, or the owner leaves, (they can be out of the home for up to 364 consecutive days).
Copyright© 2012 Old Republic. All rights reserved.
BUYER Listen to Your Loan Officer - Eleven Things Not To Do Before Closing... At last, you have found your dream home and the seller has accepted your purchase contract. For you, the buyer, the few weeks before closing can be very nerve-racking since it is so important that everything goes smoothly. Do not worry. Follow these simple guidelines of what not to do, and your closing will go as planned.
1. Do Not Switch Jobs or Careers – When buying a home,
it is very important that you stay with your current job until after you purchase a home. Lenders do not like to see an inconsistent job history. If you must switch jobs, try to stay in the same line of work. Lenders are more likely to provide loans to individuals who have switched jobs but have remained in the same field.
6. Do Not Dismiss Your Obligations – Again, there are many
resources available which will educate you on what is and is not your responsibility. For instance, if your lender requires unusual documentation, you must provide it within an agreed upon time.
7. Do Not Conceal Pertinent Information from Your Lender
look at a few factors when considering you for a loan: a. Debit to income ratio c. Job history b. Credit score d. Cash reserves
or REALTOR® - You have finally done it, made an offer on the house that you love. What’s that? You did not tell your lender that you have decided to be on the loan by yourself when your loan approval was based upon your in-laws cosigning for you? Oh No!!!
Since making a major purchase such as buying a car or new entertainment system can affect the above criteria, hold tight until you are in your dream home. Remember, financial experts believe that your first major investment should be your home.
It is important to reveal any information that could change the status of the loan or your ability to buy the house. This is true even if something does not initially show up on a credit report such as a recent line of credit.
3. Do Not Let Your Emotions Get the Best of You –
8. Do Not Give a F.S.B.O. (For Sale by Owner) Money for Your
2. Do Not Make a Substantial Purchase – Lending institutions
You have just sold your old home and have a limited amount of time to move your family from your current residence. There is a house that your REALTOR® took you through which is priced right. Plus, you and your family absolutely love it. You make an offer which the seller accepts and during the home inspection, you find many small items in need of repair. In this scenario timing is critical, but don’t let your emotions take over. Make reasonable offers to amend the situations. Do not lose your dream home because the seller refused to fix something which takes little time and/or money. No older home is without its imperfections. It is quite normal for the new owners to take on minor repairs. Then again, if it is something major which could devalue the house, do not buy it just because your have made it this far in the home buying process.
4. Do Not Go to Pieces Because the Home Appraises Below the Purchase Price – Know that there are certain steps you and your agent can do to amend this situation. Talk to your REALTOR® about the options.
5. Do Not Do Everything Yourself – Your REALTOR® is there
for you to help make crucial decisions to assure that you will close the home. Other resources, including Old Republic Title Agency, are here to assist you in the process as well. Use these resources to help you along the way.
Earnest Deposit – Never give your earnest money directly to a seller who is not listing with an agent. Sometimes sellers are unaware of the fact that this money is a good faith deposit to be applied to the purchase price of the home at closing. Instead, the earnest deposit should go into a trust account. If a trust is not set up for the deposit, you may have difficulty applying the funds to the purchase price or retrieving the funds if rightfully owed back to you.
9. Do Not Negotiate Deals on the Side – If you are working with an agent, all negotiations, agreements, and changes to the contract should be completed by the REALTOR®. Failing to allow the REALTOR® to do their job could delay or quite possibly prevent you from closing.
10.
Do Not Forget to Switch the Utilities – As soon as a contract is in place, call all of the utility companies to apply for service. Also, get informed on the lead time to switch over service. Update the companies periodically on your closing date. The task sounds easy, but many people forget to do this and are without service for a period of time.
11.
Do Not Forget to Obtain Hazard Insurance – This is another easily overlooked task, yet obviously important. Your lender will require an insurance binder for the new home prior to closing. Take care of it in the beginning so you are not scrambling at the last moment. Copyright© 2012 Old Republic. All rights reserved.
BUYER Guidelines to Calculating Your Monthly Payment
Often times, lenders use certain ratios to figure the loan amount that their customers can qualify for. Although many other factors are taken into account, generally lenders use a percentage of the gross monthly income as the maximum allowed mortgage payment (principle, interest, taxes and insurance PITI). Total monthly debt includes PITI as well as any other long-term debt such as auto loans, home equity lines, revolving credit card debt, etc. It does not include variable expenses such as clothing, food, or utilities.
Inspections
Buying a home can be the single most important purchase most of us will ever make. Contingencies in the real estate contract allow the buyer to physically inspect the property. For a few hundred dollars, the buyer can use the services of a home inspector to get a much better idea of the home’s physical condition. Most states require that the purchase and sales agreement have a clause allowing a buyer the right to have the home inspected to their satisfaction. Exercising this right is definitely in your best interest. There are different types of inspections that the buyer may want to purchase depending upon the property. Physical Inspection A complete inspection includes a visual examination of the building from top to bottom. The inspector may evaluate and report the condition of the items listed below. Only those items that are visible and accessible by normal means are included in the report. • The structure of the house, such as the foundation, floors, walls, ceilings, stairs and attic • The exterior, such as wall coverings, chimneys, caulking and weather stripping, roof, roof penetrations, grading, drainage, driveways and patios
• The interior, such as steps, counters, railings, cabinets, sinks and showers, visible insulation and ventilation • The interior plumbing, such as fixtures, faucets, water flow, drains, water heater • The electrical system, including wiring, fixtures and overload protection • The heating and air conditioning, both main equipment and distribution system. Structural Pest Control Termites and other wood destroying insects are commonly found in Arizona. Investigating evidence of termites or other wood infestation is the job of the termite inspector. Section I of the inspector’s report will include items which need immediate attention because of active infestation. Section II of the report includes items that could cause infestation and if not corrected, may cause damage. The Structural Pest Control Commission regulates these inspectors and can provide the buyer with information regarding past termite treatments on a property. Other Possible Inspections • Hazardous Material • Seismic • Energy Audit • Geotechnical • Contractors Home Inspection • Chimney Inspection • Well and Septic • Water Conservation • Heating and Air Conditioning • Pool Inspection • Structural Engineering • Zoning and Building Permit
Home Warranties
The home warranty covers designated mechanical aspects of a home including major appliances such as heating and air conditioning. The benefits to the buyer are: • Warranties components of the purchased home • Reduces repair expenses for covered components, protecting your investment • Home warranty companies offer a network of qualified professionals • Gives added peace of mind regarding your investment Copyright© 2012 Old Republic. All rights reserved.
BUYER OLD REPUBLIC HOME PROTECTION’S HOME WARRANTY PLAN Our Product: Old Republic Home Protection’s Home Warranty Plan offers Plan Holders comprehensive protection against the high cost of repair or replacement of their home’s major systems and appliances. Our Standard Home Warranty Plan offers coverage on plumbing, heating and electrical systems as well as appliances including oven/range, water heater, dishwasher, garbage disposal, trash compactor and specialty items such as built-in bathtub whirlpool, and central vacuum systems. Optional coverage is also available, and varies by state. Optional coverage includes swimming pool and/or spa equipment, well pump, roof coverage, etc. Please see www.orhp.com for details of coverage.
Our History: Founded in California in 1974 as Dependable Home Warranty, Old Republic Home Protection was established as a subsidiary of Old Republic International in 1982. In 1992, management restructuring set the groundwork for dramatically positive results in customer service, market share growth and increased profitability. Currently the third largest home warranty company nationwide, Old Republic Home Protection began expanding beyond California in 1995 and now conducts business in numerous states nationwide with new states being added annually.
Our Service: At Old Republic Home Protection, we don’t want to be just a “one-year warranty company” to our clients - we want to be their home warranty company for a lifetime. We know the only way to earn that type of loyalty is by providing great customer service experiences. We strive each day to provide just that by offering fast, friendly and efficient service that keeps our clients coming back year after year! We are available to accept service calls 24 hours a day, 365 days a year. To request service go to www.orhp.com and click Request Service under Quick Links or call 800-445-6999.
Copyright© 2012 Old Republic. All rights reserved.
PRE-QUALIFICATION FORM
Document updated: February 2011
PRE-QUALIFICATION INFORMATION 1. 2.
Purpose: This Pre-Qualification Form is to be used in conjunction with an AAR Residential Resale Real Estate Purchase Contract (“Contract”) and is to be completed by the Lender as indicated on lines 34 and 35.
3. 4. 5. 6. 7. 8. 9. 10.
Lender has consulted with (“Buyer”) and submits the following: Buyer is: n Married n Unmarried n Legally Separated Buyer n is n is not relying on the sale or lease of a property to qualify for this loan. Buyer n is n is not relying on Seller Concessions for Buyer’s loan costs including pre-paids, impounds, appraisal fees and Buyer’s title and escrow fees. (Note: The amount that the Seller agrees to contribute, if any, shall be established in the Contract). Type of Loan: n Conventional n FHA n VA n USDA n Other: Occupancy Type:
11.
Property Type:
n n n
12. YES
13. 14. 15.
NO
Primary Single Family Residence Mobile Home
n n n
n n
Secondary Condominium
Non-Owner Occupied
n
Planned Unit Development
Manufactured Home
Other:
N/A
n n n n n n n n n
Lender has provided Buyer with the HUD form “For Your Protection: Get a Home Inspection” (FHA loans only). Lender has completed a verbal discussion with Buyer including a discussion of income, assets and debts. Lender has obtained a Tri-Merged Residential Credit Report.
16. 17. 18. 19. 20.
Based on the information provided, Buyer can pre-qualify for a loan amount of: $ , assuming a monthly principal and interest loan payment of $ , provided that the total monthly housing payment (which includes principal, interest, mortgage insurance, property taxes, homeowner’s insurance, HOA fees, and flood insurance, if applicable) does not exceed: $ Interest rate not to exceed %
21. 22.
Initial Requested Documentation: Lender has received the following information from the Buyer: (Additional documentation may be required). YES
23. 24. 25. 26.
n n n n
NO
n n n n
N/A
n n n n
YES
n n n n
Paystubs W-2s Personal Tax Returns Corporate Tax Returns
NO
n n n n
N/A
n n n n
Down Payment/Reserves Documentation Gift Documentation Credit/Liability Documentation Other:
27.
Additional comments:
28. 29.
Buyer has instructed, and Lender agrees to provide loan status updates on the AAR Loan Status Update form to Seller and Broker(s) within five (5) days of Contract acceptance pursuant to Section 2e of the Contract and upon request thereafter.
LENDER INFORMATION 30. 31. 32.
The lender identified below has prepared the information listed above with the Buyer(s) and has completed the above action points noted. This information does not constitute loan approval. All information provided must be approved by an underwriter, and any material change in the Buyer’s credit or financial profile will render this pre-qualification null and void.
33.
The above pre-qualification expires on
34.
Lender:
COMPANY
35. 36. 37. 38. 39. 40.
DATE
ARIZONA LICENSE #
LOAN OFFICER
NMLS #
ADDRESS
CITY
EMAIL
PHONE
^ LOAN OFFICER’S SIGNATURE
.
STATE
ZIP
FAX
MO/DA/YR
Buyer acknowledges receipt of a copy hereof and grants permission to Broker to submit this Pre-Qualification Form with Contract.
^ BUYER’S SIGNATURE
MO/DA/YR
^ BUYER’S SIGNATURE
Pre-Qualification Form • Updated: February 2011 • Copyright © 2011 Arizona Association of REALTORS®. All rights reserved.
MO/DA/YR
LOAN STATUS UPDATE (LSU)
Document updated: February 2011
1. 2. 3.
Pursuant to Section 2e of the Contract Buyer shall deliver to Seller the AAR Loan Status Update (“LSU”) describing the current status of the Buyer’s proposed loan within five (5) days after Contract acceptance and hereby instructs lender to provide an updated LSU to Broker(s) and Seller upon request. “Lender” is indicated on lines 4 and 5.
4.
Lender:
COMPANY
5. 6. 7.
ARIZONA LICENSE #
LOAN OFFICER
NMLS #
ADDRESS
CITY
EMAIL
PHONE
8.
Closing Loan Documents Delivery Date:
9.
Buyer(s):
10.
Seller(s):
11.
Premises Address:
12.
City:
STATE
ZIP
FAX
Close of Escrow Date:
AZ ZIP Code:
PRE-QUALIFICATION INFORMATION 13. 14. 15. 16. 17. 18.
Buyer is: Buyer Buyer
n n n
Type of Loan:
19.
Occupancy Type:
20.
Property Type:
n n n n
21. YES
22. 23. 24.
NO
Married n Unmarried n Legally Separated is n is not relying on the sale or lease of a property to qualify for this loan. is n is not relying on Seller Concessions for Buyer’s loan costs including pre-paids, impounds, appraisal fees and Buyer’s title and escrow fees. (Note: The amount that the Seller agrees to contribute, if any, shall be established in the Contract). Conventional n FHA n VA n USDA n Other: Primary Single Family Residence Mobile Home
n n n
Secondary Condominium
n n
Non-Owner Occupied Planned Unit Development
n
Manufactured Home
Other:
N/A
n n n n n n n n n
Lender has provided Buyer with the HUD form “For Your Protection: Get a Home Inspection” (FHA loans only). Lender has completed a verbal discussion with Buyer including a discussion of income, assets and debts. Lender has obtained a Tri-Merged Residential Credit Report.
25. 26. 27. 28. 29.
Based on the information provided, Buyer can pre-qualify for a loan amount of: $ , assuming a monthly principal and interest loan payment of $ , provided that the total monthly housing payment (which includes principal, interest, mortgage insurance, property taxes, homeowner’s insurance, HOA fees, and flood insurance, if applicable) does not exceed: $ Interest rate not to exceed %
30. 31.
Initial Requested Documentation: Lender has received the following information from the Buyer: (Additional documentation may be required). YES
32. 33. 34. 35.
n n n n
NO
n n n n
N/A
n n n n
YES
n n n n
Paystubs W-2s Personal Tax Returns Corporate Tax Returns
NO
n n n n
N/A
n n n n
Down Payment/Reserves Documentation Gift Documentation Credit/Liability Documentation Other:
36.
Additional comments:
37. 38.
Buyer has instructed, and Lender agrees to provide loan status updates on this AAR Loan Status Update form to Seller and Broker(s) within five (5) days of Contract acceptance pursuant to Section 2e of the Contract and upon request thereafter.
39.
Buyer intends to proceed with the above referenced Lender on the terms described herein. Buyer acknowledges receipt of a copy hereof.
40.
^ BUYER’S SIGNATURE
MO/DA/YR
^ BUYER’S SIGNATURE
MO/DA/YR
>> Loan Status Update • Updated: February 2011 • Copyright © 2011 Arizona Association of REALTORS®. All rights reserved.
PAGE 1 of 2
Page 2 of 2
Loan Status Update (LSU) >> DOCUMENTATION YES NO
41. 42. 43. 44. 45. 46. 47. 48.
n n n n n n n n
n n n n n n n n
51.
Lender has received the Contract and all Addenda
/
/
Lender has sent initial Good Faith Estimate and Truth in Lending (TIL) Disclosures
/
/
Lender has received a signed Application/1003 and disclosures
/
/
Lender has identified down payment source
/
/
Lender has received and reviewed the Title Commitment
/
/
Payment for the appraisal has been received
/
/
Lender has ordered the appraisal
/
/
Buyer has locked the interest rate and points with Lender
/
/
LENDER INITIALS
Lock expiration date
49. 50.
DATE COMPLETED
n n n n
Lender has received the Initial Requested Documentation listed on lines 32-35
/
/
Appraisal received and the Premises appraised for at least the purchase price
/
/
UNDERWRITING AND APPROVAL 52. 53. 54. 55.
n n n n
n n n n
Lender has submitted the loan package to the Underwriter
/
/
Lender has obtained loan approval with Prior to Document (“PTD”) Conditions
/
/
Appraisal conditions have been met
/
/
Buyer has loan approval without PTD Conditions
/
/
Lender has ordered the Closing Loan Documents (“DOCs”) and Instructions
/
/
Lender has sent the DOCs to the Escrow Company
/
/
CLOSING 56. 57. 58. 59. 60. 61. 62.
n n n n n n n
n n n n n n n
65. 66. 67.
/
/
/
/
Lender has received signed DOCs from all parties
/
/
All lender Quality Control Reviews have been completed
/
/
All Prior to Funding (“PTF”) Conditions have been met and buyer has obtained
/
/
loan approval without conditions
63. 64.
Lender has received the pre-audit from Escrow Company Lender has approved the pre-audit from Escrow Company
n n n n
Funds have been ordered
/
/
All funds have been received by Escrow Company
/
/
Close of escrow occurs when the deed has been recorded at the appropriate county recorder’s office.
^ LOAN OFFICER’S SIGNATURE
MO/DA/YR
Loan Status Update • Updated: February 2011 • Copyright © 2011 Arizona Association of REALTORS®. All rights reserved.
PAGE 2 of 2
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ESCROW & TITLE Congratulations! Your contract has been accepted.
The Escrow Process Fully Executed Sales Contract with Earnest Money is delivered to Old Republic Title Agency
Lender prepares documents and sends to title company
All Inspections are Ordered
Closing documents are prepared by escrow officer
Title Commitment is delivered to Buyer
Documents are signed by Seller and Buyer. Buyer provides any required closing funds
Inspection Reports are sent to all parties and repairs are made
Loan Documents are sent to Lender for review
Title Company is notified of any changes in Real Estate Contract
Loan is funded by Lender
Lender orders the appraisal
Documents recorded with County by title company
Buyer provides lender with requested documents and information
Escrow is closed and funds disbursed
Lender notifies buyer of loan approval
Buyers is now the new owner, receives keys and moves in!
Copyright© 2012 Old Republic. All rights reserved.
ESCROW & TITLE Escrow and Title Services
Now that your contract has been accepted and escrow has been opened. What happens now? Old Republic Title Agency as a neutral third party will: • • • • • • • • • • • • •
Open escrow and deposit “good faith” funds in a separate escrow account. Provide a means of consistent communication between all parties involved in the transaction. Review and follow the terms of the contract. Determine ownership and status of property by performing a title search. Issue the title commitment and begin the process to provide a clear title to property. Request payoff information from the seller’s loans, homeowners associations, etc. Prorate any fees per the contract such as property taxes. Prepare the settlement statement for buyer and seller to review. Set all appointments for the seller and the buyer to sign documents and deposit funds. Ensure all contract requirements are fulfilled; request the funds from the lender. After the funds are deposited, record documents at the County Recorder in order to transfer the property to the buyer. Confirm recordation, close escrow and disperse funds as directed. Finalize all documents and send to all parties.
THE ESCROW PROCESS: Escrow – The Beginning: Escrow opens when the buyer and seller sign a sales contract, commonly called a real estate purchase agreement. The contract serves as instructions for the escrow officer. Simply defined, an escrow is a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event. Escrow is a process that provides for fair and equitable transfer of property from one person to another.
Why Do I Need An Escrow? Whether you are the buyer, seller or lender, you want the assurance that no funds or property will change hands until ALL of the instructions in the transaction have been followed. The escrow company has the obligation to safeguard the funds and/or documents while they are in their possession, and to disburse funds and/or convey title only when all provisions of the escrow have been complied with. Escrow assures that the lender releases the home purchase funds prior to the time that the deed is recorded to reflect new ownership. Escrow – How Does It Work? The escrow officer will process the escrow, in accordance with the purchase contract. When all conditions required in the contract are met, the escrow will be “closed.” Each escrow, although following a similar pattern, will be different in some respects, as it deals with your property and the transaction at hand. The duties of an escrow officer include: following the instructions given by the principals and all the parties to the transaction in a timely manner; handling the funds and/or documents in accordance with the instruction; paying all bills as authorized; responding to authorized requests from the principals; and closing the escrow only when all terms and conditions are met. An accounting of the transaction will then be issued, typically referred to as a Closing or Settlement Statement. For a smooth escrow process, good communication is essential between all parties. Buyers and sellers will sign all paperwork at the title company. The title company will fund the loan(s) with the lender after receiving all required closing funds and record all pertinent documents. This constitutes a successful close of escrow.
Copyright© 2012 Old Republic. All rights reserved.
ESCROW & TITLE WHY YOU NEED TITLE INSURANCE:
The purpose of title insurance is to protect the buyer and lender against loss or damage due to defects in the title of the real property being purchased. It also assures the lender of the priority and validity of its lien. Generally, the title insurance protects against defects that exist on the date of the policy. Certain policies, however, provide additional protection against defects that occur after the policy date. Some of the most common types of title defects include: • Fraud & Forgery • Defective deeds • Unpaid taxes • Unsatisfied liens or judgments • Violations of deed restrictions • Undisclosed spouses or heirs • Clerical errors in the land records • Mistakes in recording documents • Defective foreclosures or tax sales
HOW TITLE INSURANCE PROTECTS:
Are homeowners helpless against these and other pitfalls? You can safeguard your real estate investment against such risks with an owner’s title insurance policy from Old Republic National Title Insurance. A title search, however, is simply a search of public records and not all defects may be discovered. Title insurance is your policy of protection against loss if any undiscovered title defect results in a claim against your property. If a claim is made, then in accordance with the terms of your policy, title insurance will assure you of a legal defense – and pay all court costs and related fees. If the claim proves valid, you will also be reimbursed for your actual loss up to the face amount of the policy.
WHO TITLE INSURANCE PROTECTS:
There are two basic types of protection – one for the mortgage lender and one for the homeowner or real estate investor. If a mortgage is placed on your new home, the mortgage lender will probably require that you purchase title insurance to protect the institution’s position as a holder of a mortgage loan. This mortgagee’s title insurance policy doesn’t protect you, the homeowner. You need an owner’s title insurance policy to protect your investment. You pay only once. There are not renewal premiums, and there is no expiration date on the policy. The protection lasts as long as you or your heirs retain an interest in the property.
A SMALL COST FOR YEARS OF PROTECTION: The real estate you own represents stability, performance and hope for the future. Don’t take a chance and let your property be taken from you because of a flaw in the title. It makes good sense to protect yourself with title insurance for the relatively small amount it costs.
WHAT COVERAGE YOUR HOMEOWNERS TITLE INSURANCE POLICY INCLUDES: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23.
Someone else owns an interest in your property. A document is not property signed, sealed, acknowledged or delivered. Forgery, fraud, duress, incompetency, or impersonation. Defective recording of any document. Unmarketability of title. Lack of legal right of vehicular and pedestrian access to and from land. Mechanic’s lien protection for work or materials done prior to the policy date except where the insured has agreed to same. Unrecorded liens by the homeowner’s association. Others have rights arising out of leases, contract, or options. Someone else has an easement on your land. Forced removal of existing structures because they encroach onto an easement or violate a restriction shown in schedule B, or an existing zoning law. Automatic inflation coverage increasing policy amount up to 150%. Forced removal of existing structures due to building permit violations by prior owners. Subdivision Map Act Coverage. Someone else has a lien on your title, including a mortgage, judgment or tax lien. Restrictive covenant violations by prior owners. Map inconsistency protection. Mineral extraction damage. Post policy encroachment by neighbors. Post policy forgery. Living trust coverage. Forced removal of existing structures including boundary walls and fences due to encroachment onto adjoining land. Supplemental real estate taxes by taxing authority for taxes not previously assessed prior to date of policy because construction or a change in ownership occurring before the policy date.
Copyright© 2012 Old Republic. All rights reserved.
ESCROW & TITLE WAYS TO TAKE TITLE IN ARIZONA: Community Property: • Requires a valid marriage between two people. • Each spouse holds an undivided one-half interest in the estate. • One spouse cannot partition the property by selling his or her interest. • Requires signatures of both spouses to convey or encumber. • Each spouse can devise (will) one-half of the community property • Upon death, the estate of the decedent must be “cleared” through probate, affidavit or adjudication. • Both halves of the community property are entitled to a “stepped up” tax basis as of the date of death. Community Property with the Right of Survivorship: • Requires a valid marriage between two people. • Each spouse holds an undivided one-half interest in the estate. • One spouse cannot partition the property by selling his or her interest. • Requires signatures of both spouses to convey or encumber. • Estate passes to the surviving spouse outside of probate. • No court action required to “clear” title upon the first death. • Both halves of the community property are entitled to a “stepped up” tax basis as of the date of death.
Join Tenancy with the Right of Survivorship: • Parties need not be married; may be more than two joint tenants. • Each joint tenant holds an equal and undivided interest in the estate, unity of interest. • One joint tenant can partition the property by selling his or her interest. • Requires signatures of all joint tenants to convey or encumber the whole. • Estate passes to surviving joint tenants outside of probate. • No court action required to “clear” title upon the death of joint tenant(s). • Deceased tenant’s share is entitled to a “stepped up” tax basis as of the date of death. Tenancy in Common: • Parties need not be married; may be more than two tenants in common. • Each tenant in common holds an undivided fractional interest in the estate. Can be disproportionate, e.g. 60% and 40% • Each tenant’s share can be conveyed, mortgaged or devised to a third party. • Requires signatures of all tenants to convey or encumber the whole. • Upon death, the tenant’s proportionate share passes to his or her heirs by will or intestacy. • Upon death the estate of the decedent must be “cleared” through probate, affidavit or adjudication. • Each share has its own tax basis. Arizona is a community property state. Property acquired by husband and wife is presumed to be community property unless legally specified otherwise. Title may be held as “Sole and Separate.” If a married person acquires title as sole and separate, his or her spouse must execute a disclaimer deed to avoid the presumption of community property. Parties may choose to hold title in the name of an entity, e.g., a corporation; a limited company; a partnership (general or limited), or a trust. Taking title may have significant tax and legal ramifications; please consult your attorney and/or CPA.
Copyright© 2012 Old Republic. All rights reserved.
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THE MOVE ����
Guide to Help Plan Your Move
GUIDE TO HELP PLAN YOUR MOVE:
Summertime is the busiest time of the year for movers. In addition, the beginning and end of each month are traditionally busier than mid-month regardless of the season. If you are planning to move during one of these times, plan well in advance so your mover’s schedule will fit yours.
Countdown to Moving Day Eight Weeks Before You Move: • Obtain a floor plan of your new residence and decide what household items you want to keep. • Begin an inventory of all household goods. • Solicit estimates from several moving companies. • Contact your insurance agent and ask them about your homeowner’s policy to determine whether your possessions are covered when moving. • Establish a file for all moving papers and receipts for IRS tax deduction (talk to your CPA or financial consultant about what costs are covered). • Arrange to transfer children’s school records. • Contact several moving companies and the Better Business Bureau, for services and estimates. • Research your new city through the Chamber of Commerce via the web or contact the Chamber directly to have information mailed to you.
Six Weeks Before You Move: • Begin search for good health-care professionals in your new location. • Fill out post-office change of address cards at your post office or at www.usps.com • Send your new address to anyone that might need it – insurance agents, credit card companies, magazine subscriptions, friends, relatives, etc. • Clean out closets and dispose of all items that you will not be taking with you. • Hold a moving/garage sale or donate items to charities. • Arrange to move all items to the new city including your family, pets etc. • Contact all insurance companies (health, auto, home, etc.) to discuss coverage at the new location.
Four Weeks Before You Move: • For self moves, reserve a truck or trailer. Obtain necessary moving supplies: boxes, tape, etc. • Start Packing! • If your mover is doing the packing, arrange for it to be done one or two days before loading begins. • Send furniture, drapes and carpets for repair or cleaning as needed. • Begin to use up overstocks of staple foods. • Gather valuable personal papers that you may need at your destination, including medical and dental records, school records, birth certificates, etc. • Make travel plans and arrange any accommodation or other reservations.
Copyright© 2012 Old Republic. All rights reserved.
THE MOVE Three Weeks Before You Move: • Arrange to have utilities (gas, electric, phone, cable, water, etc) disconnected in your present home and connected at your new home. • Prepare car registration and insurance records for transfer. • Notify State Motor Vehicle Department of your new address. www.servicearizona.com • Arrange for child and pet care on moving day.
Two Weeks Before You Move: • Arrange to move pets. • Check with mover about moving house plants as some will not. • Dispose of all items too dangerous to move, including flammable liquids. • If necessary, have your automobile serviced and ready for the trip.
One Week Before You Move: • Transfer all bank accounts. • Cancel newspaper delivery. • Have enough medication to last at least two weeks. Have prescriptions forwarded to a pharmacy at your new destination.
Two Days Before You Move: • Check with the local utilities to verify disconnection and connection dates. • Contact your real estate agent to find out when and where your keys to the new home will be available. • Write out clear moving instructions. Include maps, itineraries, and emergency numbers. Give copies to the moving company, family and/or friends. • Have mover pack your goods unless you are doing it yourself. • Disconnect all major appliances. • Defrost and dry refrigerators and freezers to be moved. • Set aside valuable items to carry with you including jewelry, vital documents, money and valuable small items. • Pack local phone books. You’ll be happy that you did.
Moving Day: • Have the beds stripped and ready to be packed. • Be on hand to answer questions, give directions to movers and stay until they are finished. • Accompany driver for inventory of your household goods. • Complete information on the bill of lading and carefully read the document before you sign it. • Make sure you have your copies of the bill of lading and inventory. • Keep the bill of lading until your possessions are delivered, the charges are paid, and any claims are settled. • Before the van leaves, take one final look through the house to make certain nothing has been left behind and everything is shut off. • Give the driver directions to your new home. • Notify the driver and the van line where you can be reached during the move.
Delivery Day: • Be on hand to answer any questions and give directions. • You must pay the driver before your goods can be unloaded. This is a Federal requirement for interstate moves. • Supervise unloading and unpacking. • Check carefully for any damaged or missing items. • Note on the inventory any damaged boxes or obvious damage to unboxed items before you sign anything.
Happy Moving!
Copyright© 2012 Old Republic. All rights reserved.
i GETTING SETTLED Helpful Information GETTING SETTLED: CHILDREN: Schools: visit www.ade.az.gov/schools/schools/ districts.asp for a complete listing of all primary and secondary schools, colleges and universities. School Immunizations: The Arizona School Immunization Law requires that children be up-todate on their immunizations (shots) to attend school or child care. Diseases like measles and whooping cough spread quickly, so children need to be protected before they enter school. Most children need booster shots before starting kindergarten and most high school students will need a tetanus diphtheria (Td) booster shot. For more information, on the immunization program, locations, procedures or up-to-date requirements and schedules, contact Community Information and Referral at 602-263-8856 www.cir.org or the County Health Department at 602506-6767 www.maricopa.gov/public_health Child Care Resource & Referral: Finding child care can be an overwhelming experience for working families. Child Care Resource and Referral is a statewide program that assists parents in their search for child care and educates them on how to identify quality child care programs. For more information on Child Care Resource and Referral, call 1-800-3089000 or www.azchildcare.org ARIZONA PETS & WILDLIFE: The Heat: Please remember the climate affects pets and they need to adjust to the heat just like humans. Many pets have died from exposure to the intense heat. Always make sure your pet has a good supply of water and shade when left outside, even if you are only going to be gone for five minutes. Never leave
your pet locked in a parked care. Even when the temperature is pleasant to us, the temperature inside the car can reach levels capable of killing your pet in a matter of minutes. Leash Law: Phoenix’s leash law requires pets to be confined within your property limits, unless they are being walked by a person capable of controlling the pet on a leash. Licensing Pets: Dogs need to have licenses and they are required annually. They can be purchased from the Maricopa County Animal Control Center at 2323 S. 35th Ave. Phoenix and 2630 W. 8th St. Mesa. For further information please call 602-506-7387 or 602-8949146.www.maricopa.gov/pets Vicious Animal: There are “Vicious Animal” ordinances in Maricopa County. Some cities are more strict than others, but hefty fines can result for not following the rules. For more information call 602-506-7387 Valley Fever: Pets, like humans, are susceptible to Valley Fever, for which there is no vaccine. Most pets exposed to valley fever never develop symptoms, but if extreme fever or fatigue occurs, seek medical help. Other Animals: Watch your pets especially if you live away from the metropolitan area. Animals such as coyotes, snakes, scorpions, and a variety of other natural wildlife may come in harms way of your pet. Never leave the animal outside without supervision, especially if you have a small pet. Copyright© 2012 Old Republic. All rights reserved.
GETTING SETTLED Strays: The Arizona Human Society picks up and takes all strays found or brought in by non-owners. All strays are then transferred to the ACC (Animal Care Control). If you have lost or found a pet, contact the ACC at 1-888-PETS911 (1-888-738-7911) or www.188Petss911.org RECYCLING: The Arizona Department of Environmental Quality maintains a Recycling Hot Line. To find out what can be recycled and where, and to receive information contact 480-782-3430 or www. azdeq.gov/ ELECTRICITY: Arizona Public Service supplies electricity for most of metro Phoenix. Service for Avondale, Buckeye, Carefree/Cave Creek, Chandler, Gilbert, Goodyear, Litchfield Park, Peoria, Sun City West, Tempe, Glendale, Paradise Valley, Phoenix, Scottsdale and Sun City can call 602-371-7171 or www.aps.com For all other cities, Salt River Project main supplier of electricity. Service can be obtained by calling 602-236-8888 or www.srpnet.com. Mesa also has electricity supplied by the city, 480-644-2221 or www.mesaaz.gov/energy TELEPHONE: CenturyLink ..................................................... 866-642-0444 http://www.centurylink.com/home/phone/ Cox Communications .................................. 623-594-8759 http://ww2.cox.com/residential/arizona/phone.cox CABLE AND SATELLITE TELEVISION: Cox Communications ................................... 623-594-0505 ww2.cox.com/residential/arizona/home.cox Direct TV ........................................................... 888-795-9488 http://www.directv.com/DTVAPP/index.jsp?topnavtype=-1 DISH Network ................................................. 800-823-4929 http://www.dish.com/ WATER: To turn water on or off, call one of the following phone numbers for your community. Avondale ............................................................ 623-478-3230 Buckeye .............................................................. 623-349-6800 Carefree .............................................................. 480-488-9100 Cave Creek ........................................................ 602-358-4211 Chandler ............................................................. 480-782-2280
Fountain Hills ................................................... Gilbert ................................................................. Glendale ............................................................. Goodyear ........................................................... Litchfield Park .................................................. Mesa..................................................................... Paradise Valley ................................................. Peoria ................................................................... Phoenix ............................................................... Scottsdale.......................................................... Sun City & Sun City West ............................ Tempe .................................................................. Tolleson ..............................................................
480-837-3411 480-503-6400 623-930-3190 623-932-3015 623-932-3015 480-644-2221 480-948-5410 623-773-7160 602-262-6251 480-312-2461 623-974-2521 480-350-8361 623-936-7 111
NATURAL GAS: Southwest Gas ................................................ 602-861-1999 www.swgas.com For all communities except Carefree/Cave Creek Black Mountain Gas Co. ..................... 480-488-3402 Mesa Black Mountain Gas Co. ...................... 480-644-2221 TRANSPORTATION: Airports: Phoenix Sky Harbor International Airport www.phxskyharbor.com Light Rail: Valley Metro .............................. 602-251-2039 www.valleymetro.org Bus: Phoenix Transit System ................................ 602-253-5000 www.valleymetro.org Greyhound Bus Lines .................................... 800-231-2222 www.greyhound.com Railway: Amtrak .............................................. 800-872-7245 www.amtrak.com DRIVERS LICENSE & VEHICLE REGISTRATION: Arizona Department of Motor Vehicles...............877-692-9227 www.azdot.gov/mvd Once a person establishes residency in Arizona, they are required by law to obtain an Arizona drivers license immediately. In order to obtain a license, visit the nearest licensing office. Notify the Motor Vehicle Department employee that you have an out-of-state drivers license in order to avoid unnecessary delays and testing. You may be required to take a vision test, written test, or driving test.
Copyright© 2012 Old Republic. All rights reserved.
GETTING SETTLED In Arizona, all individuals are required to register and title all vehicles. Instead of paying personal property tax on autos, you will pay Arizona motor vehicle tax and a nominal registration fee. Additionally, Arizona requires that all vehicles be tested for emissions before registering. Newcomers must bring the following information when registering their vehicle. • • • • • •
Proof of Arizona vehicle insurance Out-of-state driver’s license Vehicle title or any lien papers Proof of age Social security card or other form of signature ID Current vehicle registration
The Arizona law requires that all passengers wear a safety belt while riding in a vehicle. A minor under the age of five must be placed in a child passenger restraint system. VOTING: To vote in local and national elections, you must be registered at least twenty-nine days prior to the election. You must be at least 18 years old, a citizen of the United States and a resident of Arizona. Registration can be done at various locations: The Maricopa County Department of Elections, 111 S. 3rd Avenue, Room 102, Phoenix 85003, 602/506-1511; League of Women Voters, 7315 N. 16th Street, Phoenix 85020, 602/997-5218; political party offices; at all city clerk offices; and driver’s license bureaus. Special mail-in forms for registration are also available at these same locations. www.azsos.gov/election/county.htm EMERGENCY NUMBERS: Emergency ......................................................... 911 Maricopa County Crisis Line...................... 800-631-1314 Drug Abuse Hotline ....................................... 800-992-9238 Maricopa County Sheriff............................. 602-256-1011 Poison Control Hotline ................................ 800-222-1222 Suicide Prevention Center .......................... 480-784-1500 Youth Crisis Hotline ...................................... 800-448-4663
FIRE DEPARTMENT – Non-Emergency Chandler ............................................................. 480-786-2712 Fountain Hills ................................................... 480-945-6311 Gilbert ................................................................. 480-503-6500 Glendale ............................................................. 623-930-3400 Mesa..................................................................... 480-644-2101 Peoria ................................................................... 623-412-7440 Phoenix ............................................................... 602-253-1191 Scottsdale.......................................................... 480-627-6900 Salt River Pima-Maricopa Tribal ............... 480-850-8240 Sun City .............................................................. 623-974-2321 Sun City West .................................................. 623-584-3500 Sun Lakes............................................................ 480-895-9343 Surprise ............................................................... 623-583-8225 Tempe .................................................................. 480-350-8850 POLICE – Non-Emergency Apache Junction ............................................. 480-982-8260 Avondale ............................................................ 623-932-3660 Buckeye .............................................................. 623-386-4421 Carefree .............................................................. 602-256-1011 Chandler ............................................................. 480-782-4130 El Mirage ............................................................ 623-933-1341 Ft. McDowell Indian Community ............. 480-837-1091 Fountain Hills ................................................... 480-837-8800 Gilbert ................................................................. 480-503-6500 Glendale ............................................................. 623-930-3000 Goodyear ........................................................... 623-932-1220 Guadalupe ......................................................... 602-256-1011 Litchfield Park .................................................. 623-932-3660 Mesa..................................................................... 480-644-2211 Paradise Valley ................................................. 480-948-7410 Peoria ................................................................... 623-7 73-8311 Phoenix ............................................................... 602-262-6151 Queen Creek .................................................... 602-256-1011 Salt River/Maricopa...................................... 480-850-8200 Scottsdale.......................................................... 480-312-5000 Sun City, Sun City West, Sun Lakes ......... 602-256-1011 Surprise ............................................................... 623-583-1085 Tempe .................................................................. 480-966-6211 Tolleson .............................................................. 623-936-7186 Youngstown ...................................................... 623-974-3665
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GETTING SETTLED City Government: Apache Junction .......................................... 480-982-8002 Avondale .......................................................... 623-932-2400 Carefree ............................................................ 480-488-3686 Cave Creek ...................................................... 602-488-1400 Chandler ........................................................... 480-782-2000 El Mirage .......................................................... 62 3 - 9 7 2 - 8 1 1 6 Glendale ........................................................... 623-435-4000 Goodyear ......................................................... 62 3 - 9 32 - 39 1 0 Litchfield Park ................................................ 62 3 - 9 3 5 - 5 0 3 3 Mesa................................................................... 4 8 0 - 6 4 4 - 2 0 1 1 Paradise Valley ............................................... 4 8 0 - 9 4 8 - 74 1 1 Peoria ................................................................. 623-412-7000 Phoenix ............................................................. 6 0 2 - 2 62 - 6 0 1 1 Queen Creek .................................................. 480-987-9887 Scottsdale........................................................ 480-994-2414 Sun City ............................................................ 623-97 7-5000 Sun Lakes.......................................................... 480-895-3900 Surprise ............................................................. 62 3 - 5 8 3 - 1 0 0 0 Tempe ................................................................ 480-967-2000 Tolleson ............................................................ 62 3 - 9 3 6 - 7 1 1 1
www.ajcity.net www.ci.avondale.az.us www.carefree.org www.cavecreek.org www.chandleraz.gov www.cityofelmirage.org www.glendaleaz.com www.ci.goodyear.az.us www.litchfield-park.org www.mesaaz.gov/Home www.ci.paradise-valley.az.us www.peoriaaz.gov www.phoenix.gov www.queencreek.org www.scottsdaleaz.gov www.suncityaz.org www.city-data.com/city/Sun-Lakes-Arizona www.surpriseaz.gov www.tempe.gov www.tollesonaz.org
BUYER & SELLER RESOURCES: Sample of Arizona Real Estate Contract – www.aaronline.com/legal/forms/sample-pdfs/sample-residential-purchase-contract.pdf Buyers Advisory – www.aaronline.com/documents/buy_advis.pdf Sample Short Sale Addendum - www.aaronline.com/legal/forms/sample-pdfs/sample-short-sale-addendum.pdf Sample HOA Addendum - www.aaronline.com/documents/HOA.pdf
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MAP Old Republic Title Agency Locations 1 - ARIZONA ADMINISTRATION OFFICE 2375 E. Camelback Rd., Suite 180 Phoenix, AZ 85016 Phone: (602) 631-3700 Toll Free: (800) 318-6059 2 - AHWATUKEE 4809 E. Thistle Landing Dr. Suite 100 Phoenix, AZ 85044 Phone: (480) 705-0010 3 - ARROWHEAD 17505 N. 79th Ave., Suite 103 Glendale, AZ 85308 Phone: (623) 334-5009 4 - BASELINE 2451 E. Baseline Rd., Suite 110 Gilbert, AZ 85234 Phone: (480) 820-2255
5 - CAMELBACK 2375 E. Camelback Rd., Suite 180 Phoenix, AZ 85016 Phone: (602) 631-3700
9 - PARADISE VALLEY 11211 N. Tatum Blvd., Suite A-120 Phoenix, AZ 85028 Phone: (602) 996-4301
6 - CHANDLER 4925 S. Alma School Rd., Suite 2 Chandler, AZ 85248 Phone: (480) 895-9924
10 - SUN LAKES 9666 E. Riggs Rd., Suite 111 Sun Lakes, AZ 85248 Phone: (480) 895-9247
7 - COMMERCIAL 2375 E. Camelback Rd., Suite 180 Phoenix, AZ 85016 Phone: (602) 631-3700
11 - TEMPE 4500 S. Lakeshore Dr., Suite 400 Tempe, AZ 85282 Phone: (480) 413-0000
8 - KIERLAND 14850 N. Scottsdale Rd., Suite 195 Scottsdale, AZ 85254 Phone: (480) 596-2060
12 - TUCSON/ORO VALLEY 2506 E. Vistoso Commerce Loop Suite 150 Oro Valley, AZ 85755 Phone: (520) 818-0064
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SELLER ��������
The Process of Selling Your Home Appraisal Ordered Prepare Your Home for Listing
Select a REALTOR® to Market Your Home
Completed Contract Accepted
Loan Documents Compiled by Lender
ORTA Prepares Documents
Signing by both parties Open Escrow with Old Republic Title Agency Lender Funds Loan Title Report Ordered by ORTA
Inspections Ordered and Completed, Repairs Done
ORTA Records Documents
Transaction Final
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SELLER The Process of Selling Your Home
HOME SELLING CHECKLIST Gauge your need to sell.
• Define your goals for the next 5-10 years. • Weigh the pros and cons of selling. • Figure out if you can afford to sell, move and buy a new home. • Calculate your home equity. Research the local housing market. • Consider remodeling the home to fit your needs. Weigh the pros and cons of renting out your home.
Calculate your selling expenses.
• List the repairs and projects you'll have to do to get your home in selling condition and estimate the costs of supplies and contractors. • See what projects you can afford and adjust how much you expect to get for your home. • To get top dollar, consider remodeling projects and green upgrades that increase your home value. • Expect to pay about 7 percent to 10 percent of the home's sale price in closing costs, including: • Real estate agent commissions • Transfer taxes -- based on the property’s sale price • Prorated property taxes -- based on closing date
Factor in these other costs
• Professional home inspection -- will reveal problems with your home before a buyer finds them • Capital gains tax • Mortgage payoff penalties • Staging and marketing expenses -- supplies to prep the house, such as new paint, furniture,
light fixtures, window treatments, rugs and other accents • Moving expenses -- ranges from a few hundred dollars for a local move to thousands of dollars for a cross-country relocation • Cost of living in new city or neighborhood • Costs related to getting a mortgage for new home
Prepare and stage the home.
• Have a yard sale. Sell, donate or trash everything you don't need. • Make necessary repairs. • Make improvements to increase your home's external attractiveness when viewed from the street, such as: • Fresh coat of paint • Replacing old siding • Clearing the clutter • Cleaning the entryway, sidewalks and windows • Professional landscaping • Hire a professional home stager or research staging tips. • De-clutter, depersonalize and decorate every room and outdoor areas so buyers can imagine themselves living in the home. • Paint interior rooms neutral colors. • Replace outdated lighting fixtures and window treatments.
Hire and Work with Your Real Estate Professional
• Keep the home in show-ready condition at all times. • Your REALTOR® will have you fill out a Sellers’ Property Disclosure Statement (SPDS) which will help buyers when choosing a property and address any issues that should come up. • Home Warranty – optional coverage is available to the seller during the listing period and enhances the chance of the home selling quickly for a higher price. A home warranty
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SELLER offers the seller added peace of mind regarding repair coverage if problems arise after closing. Consider Old Republic Home Protection at www. orhp.com or 800-445-6999 • Your REALTOR® will hold an exclusive open house for local agents to introduce them to the home and get feedback. • Include food and refreshments. • Your REALTOR® will hold an open house for potential buyers and advertise in local publications and put up signage in the area.
• Clean and prepare the home for the appraisal and home inspections. • Sign documents at the title company. • Give keys to real estate agent and move out on date closing records. • Keep copies of your documents for reporting the sale on federal and state tax forms.
Review purchase offers. Make counteroffers and negotiate. Get through escrow.
• Create a formal plan for handling repairs, including when they should be made and who pays for them. • Plan move.
Sellers Guide to Closing Costs Typical Seller’s Closing Costs • Owner’s title insurance premium • Real estate commission fees • One-half of the escrow fee, except VA loans, (where seller pays 100$) • Any loan charges as specified from the buyer’s lender • Payoff of all loans in the seller’s name • Any fees from existing loan including statement fees, prepayment penalties, interest accrued on loan being paid off, or reconveyance fees
• Home warranty premium as stated in the contract • Seller may have to pay 1/2 of the Homeowner’s Association transfer fee • All liens, judgments, and the like against the seller • Recording charges to clear all documents of record against seller • Property taxes, pro-rated to the date title was transferred • All delinquent property taxes • All outstanding Homeowner’s Association dues
• As specified in the contract, all bonds and assessments • As stated in the contract, any other fees or repairs • Courier fees, if required Prior to your closing, the Escrow Officer will provide you with a Settlement Statement. It is recommend that you review this document prior to closing.
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SELLER
Distressed Property Guide By: Thomson Law, PLC - www.ThomsonLawPLC.com
When Does It Make Sense to Short Sell My Home? There is no easy answer to this question. Emotions play a big part of this decision, but when the negative equity in the home reaches a level that justifies the potential damage to credit or when the homeowner is simply unable or unwilling to continue making payments, the decision becomes easier. It is important to have all the facts before making your decision. An experienced REALTOR® and/or real estate attorney can help you determine the value of your property and which options best suit your needs so you can make a more informed decision.
Who Pays the Fees In a Short Sale? The lender may pay some or all of the fees associated with the short sale of a property. However, it is not unusual for either a 1st/2nd lienholder or MI company to require funds or a promissory note from the homeowner prior to close. It is important for the homeowner to know their obligations prior to listing a home for short sale.
How Does A Short Sale Work and How Do I Get Started? Typically this is a difficult process, complicated by overwhelmed lenders that are hard to reach and slow to make decisions. The lender has to approve any offers, but the decision also lies with the homeowner. An experienced REALTOR® can help you get started and simplify this process by taking on much of the work with the lender.
Do I Need To Be Delinquent on My Mortgage to Short Sale My Home? No, in most cases if the homeowner is unable to continue making payments de to a hardship
such as a job loss, income reductions, or illness in the family, a lender will accept short sale offers for consideration of approval without the loan being in default. Some people are in a position to continue to make their mortgage payments and make the financial decision to continue making their payments until the home’s sale transaction is closed. According to the new FHA guideline on short sales, those homeowners who keep their payments current during a short sale may qualify to buy a new home through FHA immediately after closing.
Must I Have a Hardship to Qualify for a Short Sale? No, lenders often approve short sales for homeowners that do not have a hardship simply because the alternative is to take the home back in a foreclosure, which would only increase the lender’s losses. What Constitutes a Hardship? • Death of Income Earner • Medical Expenses • Military Service • Loss Of Job • Reduction of Income
Will I Still Owe the Bank After a Short Sale? It is commonly misstated that Arizona is a non-recourse state. Although Arizona has strong anti-deficiency statutes, there are circumstances in which a lender could pursue a deficiency judgment against the homeowner. There are statutes to protect homeowners from deficiency liability in a foreclosure that may not apply in a short sale. The upside to a short sale is it will typically reduce the potential tax obligation when a 1099 is filed after the lender takes a loss. This is why it is very important to consult an attorney before signing any documents or even listing the home for short sale.
Can I Stay in My Home if I Am Not Making My Mortgage Payments? Typically, if a homeowner stops making their payments, after 90 days they will receive a notice of
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SELLER default and then a notice of sale. The notice of sale must give the homeowner 90 days notice. So from the time a homeowner stops making payments, the minimum time before the home could be sold at trustee sale and the homeowner forced out is 6 months. Many lenders are extending these times in order to slow the number of foreclosures. Additionally, lenders will usually extend trustee sale dates to accommodate a short sale.
What is Required From the Property Owner?
The homeowner must provide a listing agreement with a qualified REALTOR®, provide the lender with requested documents, and allow access to show the property.
Short Sale vs. Foreclosure?
1. A foreclosure is typically more damaging to the credit than a short sale or deed-in-lieu. 2. A foreclosure can create more of a tax liability for the homeowner than a short sale, since a short sale is likely to result in a higher payout to the lender. 3. Once a foreclosure is complete, the borrower has no bargaining power if the lender decides to pursue a deficiency lawsuit. If a short sale is completed on a property that may present deficiency risk, it may be possible for an attorney to negotiate language that minimizes this risk. 4. A foreclosure can provide additional anti-deficiency protection to the homeowner that may not apply in a short sale.
Short Sale Seller Checklist In the event that you do decide to short sale your home your bank will require certain documents from you. Each lender will vary in their required documents, but here are a few that you may need: • Authorization to release loan information for short selling processing. • Authorization to Old Republic Title Agency to release loan information to real estate agents(s)/financial counselors for short sale processing • Hardship Letter – This letter must be directed to your lender(s) and state the reasons you request a short sale. For example, unemployment, change income, divorce, poor money management, etc. • Copies of the last 2 years tax returns • Copies of last 2 months bank statements • Copies of pay stubs for last 2 pay periods • Copies of most recent W-2 forms • Any and/or all communication you have received from your existing lender(s) • Other documents as may be required by lender • Copies of statements from lenders (1st & 2nd) • Financial statement or worksheet
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GLOSSARY Abstract of Judgment: A summary of the essential provisions of a court judgment. When recorded, an abstract of judgment creates a lien on all of the real property of the judgment debtor in the county in which it is recorded. Acknowledgement: A formal declaration made before a duly authorized officer (usually a notary public) by a person who has executed an instrument that such execution is her or her act and deed. Adjustable Rate Mortgage (ARM): A mortgage in which the interests rate is adjusted periodically according to a preselected index. The terms, adjustment schedule and index to be used can vary based on the particular lender. Agency: A relationship created when one person (the principal) delegates to another (the agent) the right to act on his or her behalf in business transactions.
Assumable: A mortgage loan that can be transferred to another person without a change in the terms of the loan. Balloon Payment: The unpaid principal amount of a loan due on a specific date in the future. This usually is the amount that must be paid in a lump sum at the end of the term. Beneficiary: The person who is entitled to receive funds or property under the terms and provisions of a will, trust, insurance policy or security instrument. In connection with a mortgage loan, the beneficiary is the lender.
All-inclusive Trust Deed (Wrap-Around Mortgage): A financing technique that involves the creation of a new trust deed that includes the balance due on the existing note plus any new funds advanced.
Beneficiary’s Statement: The statement of a lender that gives the remaining principal balance due on a note and other information concerning the loan. It is usually obtained in escrow when the owner wishes to sell or refinance.
American Land Title Association (ALTA): A national association of title insurance companies, abstractors and agents. The association adopts standard title policy forms.
Bill of Sale: An instrument by which title to personal property is transferred or conveyed.
Amortization: The process of paying off a debt in installments over a given period of time without a final balloon payment. Annual Percentage Rate (APR): An expression of the percentage relationship of the total finance charges to the total amount to be financed as required under the federal Truth-In-Lending Act. Appraisal: An opinion of the value of property which results from an analysis of facts affecting market value. Assessed Valuation: The value that a taxing authority places upon real or personal property for the purpose of taxation.
Bona Fide Purchaser (BFP): One who buys property in good faith, for fair value, and without notice of any adverse claims or rights of third parties. Broker: A person licensed to act as an agent for another in negotiating the sale or purchase of real property in return for a fee or commission. Buydown: A financing technique used to reduce the monthly payment for the home buying borrower during the initial years of ownership. Under some buydown plans, a residential developer, builder or the seller will make subsidy payments (in the form of points) to the lender that “buy down,” or lower the effective interest rate paid by the home buyer, thus reducing monthly payments for a set period of time.
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GLOSSARY CC&R’s (Covenants, Conditions, and Restrictions): Limitations placed on the use and enjoyment of real property. These are found most often in condominiums and planned unit developments.
Contingency: Action conditioned upon a certain event. Acceptance of the terms of a contract based on something else happening or certain conditions being met.
Chain of Title: A chronological list of recorded instruments tracing title to land, from the original owner to the present owner.
Conveyance: The transfer of title or an interest in real property by means of a written instrument such as a deed of trust.
Cap: The maximum that an adjustable rate mortgage may increase regardless of index changes.
Deed of Trust: A security agreement creating a lien by which title to real property is transferred to a thirdparty trustee as security for an obligation owed by the trustor (borrower) to the beneficiary (lender).
Clear Title: Title to property that is free from liens, defects or other encumbrances. Closing: The process of completing a real estate transaction during which the seller delivers title to the buyer in exchange for payment of the purchase price. Also called a “settlement .” Closing Costs: Expenses, beyond the selling price, such as loan fees, title fees, etc. These are paid when documents are executed and/or recorded and the sale is complete. Closing Statement: A summary, in the form of a balance sheet, showing the amounts of debits and credits to which each party to a real estate transaction is entitled upon closing. Cloud on Title: Any document, claim, unreleased lien or encumbrance, which, if valid, would affect or impair title to a property. Commission: Compensation due a real estate broker for acting on behalf of the principal. Community Property: A form of vesting title to property owned by a husband and wife during their marriage that they intend to own together. It distinguishes from separate property, which is property acquired before marriage, by separate gift of bequest, after legal separation, or which is agreed in writing to be owned by one spouse. Comparables (Comps): An abbreviation for comparable properties used for comparative purposes in the appraisal process. Consideration: A required element in all contracts by which something of value, including a promise, is exchanged for the act or promise of another.
Demand: On the lender’s statement, the amount due to pay off a loan. Documentary Transfer Tax: The tax, based on sales price, less loans which are being assumed, which is charged by the city and/or county on the transfer of real property. Due-On-Sale Clause: A clause in a mortgage loan that gives the lender the right to demand payment in full when the property changes ownership. Not applicable to FHA or VA loans. Earnest Money: The cash deposit paid by a prospective buyer as evidence of good faith to bind a sale of real estate. Easement: A limited right or interest in land of another that entitles the holder of the right to some use, privilege or benefit over the land. Encumbrance: A claim, right or lien upon real property held by someone other than the owner. Endorsement: A rider attached to an insurance policy to expand or limit coverage. Equity: The value of a person’s interest in real property after all liens and charges have been deducted. Escrow: The process in which a disinterested third party holds money and documents for delivery to the respective parties in a transaction on performance of established conditions. Exception: A provision in a title insurance binder or policy that excludes liability for specified title defect, outstanding lien, or encumbrance.
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GLOSSARY Fair Market Value: An appraisal term for the price that a property would bring in a competitive market given a willing seller and willing buyer, each of whom has a reasonable knowledge of all pertinent facts, with neither being under any compulsion to buy or sell. Fee Simple: An estate under which the owner owns a complete interest in the property and is entitled to the unrestricted use and enjoyment of the property, including the right to dispose of the property. Federal Home Loan Mortgage Corporation (FHLMC, Freddie Mac): An agency that purchases conventional mortgages in the secondary mortgage market from depository institutions and Department of House and Urban Development (HUD) approved mortgage bankers. Federal Housing Administration (FHA): A division of the Department of Housing and Urban Development (HUD). Its main activity is the insuring of residential mortgage loans by private lenders. Federal National Mortgage Association: (FNMA, Fannie Mae): A tax paying corporation created by Congress to support the secondary mortgage market. It purchases and sells residential mortgages insured by FHA or guaranteed by VA as well as conventional home mortgages. Finance Charge: A total of all costs imposed directly or indirectly by the creditor and payable either directly or indirectly by the customer, as defined by the federal Truth-In-Lending laws. First Mortgage: A mortgage on property that is superior in right to any other mortgage. Fixed Rate Loan: A loan on which the same rate of interest is charged for the life of the loan. Fixture: Personal property when permanently attached to real property, becomes part of the real property.
Impound Account: An account held by a lender for the payment of taxes, insurance or other periodic debts against real property. Joint Tenancy: A means of ownership in which two or more persons own legal shares in real property. Upon the death of one tenant, his/her share passes to the remaining tenant(s) until the title is vest in the last survivor. Legal Description: A description by which property can be definitely located by reference to surveys or recorded maps. Lien: A recorded document that claims an interest in real property as security to a debt owed. Such liability may be created by contract such as a deed of trust, or by court judgment. Lis Pendens: Legal notice that a lawsuit is pending. Also called notice of action. Loan to Value Ratio: The ratio of the mortgage loan’s principal to the property’s appraised value or its sales price, whichever is lower. Market Value: An appraisal term denoting the highest price that a buyer (willing but not compelled to buy) would pay and the lowest a seller (willing but not compelled to sell) would accept. Mechanic’s Lien: A lien on real estate which secures the payment of debts due to persons who perform labor or services or furnish materials incident to the construction of buildings and improvement on real estate. Metes and Bounds: A form of land description in which the boundaries are described by courses, directions, distances and monuments. Mortgage: A legal document used to secure the performance of obligations.
Grantee: One to whom a grant is made. The purchaser of real property.
Notarization: The certification by a notary public that a person signing a document has been properly identified. Notarization does not certify the content of a document, only validity of signature.
Grantor: One who has made a grant. The seller of real property.
Perfecting Title: Process involving the elimination of any adverse claims against title.
Hidden Defect: An encumbrance on a title that is not apparent in the public records; for example, unknown heirs, secret marriages and forged instruments.
PITI: Refers to principal, interest, taxes and insurance, the four major components of a usual monthly mortgage payment. Copyright© 2012 Old Republic. All rights reserved.
GLOSSARY PITI Ratio: The principal, interest, tax and insurance payment-to-income ratio. Used in mortgage lending decisions.
companies to differentiate between parties with similar names when searching matters such as liens and court decrees.
Points: A fee charged by the lender to fund a loan, in addition to and separate from other fees charged. One point equals one percent of the amount of the loan.
“Subject To” Clause: A clause in a contract of sale setting forth any contingencies or special conditions of purchase an sale, such as an offer made and accept subject to financing, securing certain zoning or similar requirements.
Principal: The sum of money outstanding upon which the interest is payable. Also refers to one who is served by an agent. Private Mortgage Insurance (PMI): Insurance written by a private mortgage insurance company protecting the mortgage lender against loss occasioned by a mortgage default and foreclosure. Proration: The method used in dividing charges into that portion which applies only to a party’s ownership up to a particular date.
Subordination Agreement: An agreement under which a prior or superior lien is made inferior or subject to an otherwise junior lien. Tax Lien: A statutory lien imposed against real property for nonpayment of taxes. Tenancy In Common: Co-ownership in a property by two or more persons, each of who has an undivided interest in the whole property.
Qualification: The process of reviewing a prospective borrower’s credit and payment capacity prior to approving a loan.
Title Plant: The information warehouse of a title company in which it has accumulated, and is constantly updating title records of properties in its area that it can use to search title to real property.
Quit Claim Deed: A deed relinquishing all interest, title or claim in a property by a grantor. Accomplished without representing that such title is valid, nor containing any warranty covenants of title.
Trustee: A person who holds title in trust for the benefit of another. In a deed of trust, the trustee is the person named to hold title in trust for the benefit of the lender until the loan is paid off.
Real Estate Settlement Procedures Act (RESPA): A federal statute requiring disclosure of certain costs in the sale of residential, improved property that is to be financed by a federally insured lender.
Trustor: The borrower under a deed of trust. One who deeds their property to a trustee as security for repayment of a loan.
Reconveyance: The conveyance to the landowner of the title, held by a trustee under a deed of trust, when the performance of the debt is satisfied. Recordation: Involves filing for record in the office of the county recorder for the purpose of giving constructive notice of title, claim or interest in real property. Statement Of Information (SI): A confidential information statement completed by the buyer, seller and borrower in every transaction where a policy or policies of title insurance are requested. Allows the title company to competently search documents affecting the property to be insured, documents which may not refer to said property. Allows title
Uniform Settlement Statement (HUD): The standard HUD1 form required to be given to the borrower, lender and seller at or prior to settlement. Unmarketable Title: Title that contains defects and would allow a purchaser to be released from his obligation to purchase. Vesting: Denotes the manner in which title is held. Examples of common vestings are: Community Property, Joint Tenancy, and Tenancy in Common. Veterans Administration (VA): VA has power and authority to guarantee or insure payment of loans made to veterans by private lending institutions. This function is similar to that of FHA. VA also makes loans to veterans in non-urban areas where private loan funds are not available.
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Notes
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