Buying Arizona Real Estate
I am starting a thread about Canadians buying real estate in Phoenix Arizona. I would like to share some information about the market in Arizona and answer any questions that Beyond members may have. I have a lot of Canadians asking me the same questions so I think a thread specific to these questions will clarify everything and be a good resource of information.
There are 3 types of properties here in Arizona:
Traditional Sales - Sellers with equity that make 100% of the decisions on what price to accept, closing date, Earnest Money, etc.. This is the type of transaction that Canadians are use to. A typical closing date is 30 days with a 10-day inspection period and a minimum of 1% Earnest Money.
Short Sales - Seller owes more on their mortgage than the home is currently worth. The home is listed at market value (less than the debt owing) and the contract price needs to be approved by the Seller’s lender. Short sales can take anywhere from 30-120 days for the lender to review the offer and make a decision. It’s a waiting game for the Buyer and Seller and patience is definitely necessary. The lender will generally accept a minimum of 88% of the appraised value of the home. Short sales currently account for 38% of the active listings on the MLS.
Bank Owned Sales (REO’s) - The Seller is actually a bank and this type of transaction is very similar to a traditional sale with regards to response times, inspection periods, etc.. The major difference is the lack of disclosure. Since the lender has never lived in the home they will not provide the Buyer will a Seller Property Disclosure Statement (SPDS) or Insurance Claims History (CLUE) which informs the Buyer if the Seller is aware of any problems with the house. These transactions can close as quickly as the Buyer, Seller, and Title company can get all closing documents signed (generally a minimum of 10 business days). Bank owned homes currently account for 12% of the active listings on the MLS.
Financing:
A Canadian Buyer can obtain financing from a US lender solely based on Canadian income and credit. There is 1 US commercial bank here in Arizona that lends to Canadians and 2 mortgage brokers who have specific programs designed for Canadians. These programs differ, but here is an example of 1 of the programs:
-25% down payment for loans up to 1 Million
-35% down payment for loans up to 2 Million
-2nd Home only
-3,5,7,10,and 30 year fixed rates available
-Interest rates vary
Escrow/Title:
Here in Arizona we use Escrow & Title companies to facilitate the transaction. In Canada, most provinces use Lawyers. The Escrow company will prepare all the closing documents, issue Title Insurance, receive and hold funds, and coordinate the signing of documents. Here in Arizona it’s customary that the Seller pays for the Buyer’s Title Insurance. The Buyer doesn’t need to be present in Arizona for the closing as the Escrow Officer will email all necessary documents to you in Canada to sign and you can courier them back overnight. They will also provide you with their bank account number so you can wire the purchase money directly to them.
I hope this answers some of your questions.
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