The day is here! You need to sell your home. The next steps are to find a real estate agent familiar with your neighborhood, put your home on the market and negotiate a BIG sales price. You might not have seen the latest Arizona purchase contract. Filled with 10 pages of legal jargon and multiple addendums, the lack of understanding of the Arizona purchase contract is an easy way to give away thousands of dollars even though you may sell your home for Big $$$. Here are few items to watch for that can affect your bottom line:
- Buyer Loan Costs. Many buyers need help with the purchase cost and like to write offers asking for the seller to pay their loan costs. And if the overall contract sales price is right, paying the buyer loan costs might be well worth while. Generally, the request is made as 3% of sales price. Initially that amount may not seem high. However, when considering a sales price of $200,000, 3% of sales price works out to be $6000 – not a small sum of money. Instead, consider offering a compromise: have the buyer pay only half of the loan costs or a set amount instead of a percentage of sales price.
- HOA Transfer Fees. Did you speak with your homeowner’s association (HOA) before listing your home? The amount your HOA will charge to transfer your home to a new buyer is great information to know. We have seen HOAs have charging in the range $500 - $2500 to transfer the property. With HOA transfer fees being a negotiable item, a seller may be able to pass this cost on to a buyer.
- Home Warranty Costs. As a rule, buyers of most Arizona homes expect sellers to pick up the cost of a Home Warranty. The Home Warranty will cover the buyer for one year in case some of the working components in the house break. The home warranty also protects the seller from being pursued by a buyer who feels that an A/C unit, hot water heater, or other expensive item died prematurely. A typical, basic Home Warranty plan will cover most items and can be obtained for under $450. But watch out – some buyers will ask for plans that can cost twice this amount.
- Appraisal. Did you and your real estate agent have a conversation about what price the property is likely to be valued by an appraiser? Will your home appraise for the sales price on the contract? Sellers may accept contracts for sales prices that have no chance of being supported by appraisal. Mr. Seller, beware! The appraiser may submit an appraisal for thousands less than the contracted sales price. If the seller forgot that the purchase contract is subject to the appraisal, the seller may have packed up the house and secured a new place to live. When the appraisal comes in below sales price, the seller is generally between the proverbial rock and a hard place. They’re forced to decide: “Do I accept the new sales price and take a financial hit, or do I cancel this contract and try to sell the home again?” Keeping in mind that most sellers are moving for significant life reasons such as job transfer, bigger home or changes in lifestyle, the seller generally must accept the financial hit or give up on the timelines and main reasons for moving.
There are a lot of extra terms you can request that will NET you more money from your sale and provide for a better close of escrow. In most cases all you need is a little upfront planning. Do you have more questions? Contact us at (602) 753-0177 or www.MyAZHouse.com.
