The de Faria Realty and Investments team specializes in Real Estate in the greater Phoenix area which includes Scottsdale, Mesa, Gilbert, Chandler, Tempe, Peoria, Glendale, Fountain Hills, Carefree and Cave Creek.
We are a full service Real Estate office that works with Foreclosures or REOs (Bank Owned), Short Sales, and Property Management, as well as “regular” real estate sales. With over 30 years of experience, we have knowledge of the entire “Valley of the Sun.” We have access to all areas through our MLS system and are able to handle your transactions by e-mail and fax if necessary.
We are happy to give you more detailed information on any of the areas below, as well as information about the various cities mentioned above.
WHAT IS THE FORECLOSURE PROCESS IN ARIZONA?
Buying foreclosures in Arizona is different than in Canada. We are a Trust Deed state. A property being foreclosed upon is sold at a Trustees Sale (auction) held at the court house steps or other named location. Since most properties in this market owe more on the encumbrances than their current value, the lender ends up taking the property back and it becomes an REO (Real Estate Owned.) The properties are then listed with a Real Estate agent and placed in our MLS system to be sold as a REO in “as is” condition. In the Greater Phoenix area there is only one MLS system so it makes it easy to search any area you are interested in.
WHAT IS THE PROCESS FOR PURCHASING FORECLOSURES/REOs
When you find a property that you want, we prepare a standard Arizona Association of Realtors (AAR) contract for you to sign. That, along with a copy of an earnest deposit check (typically 1% of the offer,) proof of funds ,if a cash sale, or an AAR Pre-Qualification form from a lender, if there is a loan, is sent via e-mail or fax to the listing agent who presents the offer to the bank or asset manager of the property. If more than one offer comes in, the bank will let you know that there are multiple offers and ask for your highest and best offer. If there are no other offers, they will accept or counter your offer.
On a Bank owned (foreclosed) property, once an offer is accepted, the bank’s addendums are sent to be signed by the buyer, then sent back for the Seller’s signature and only then do you have a “ratified “ contract and Escrow is opened and the earnest money deposited with the Title Company. All funds deposited for the escrow must be by wire transfer.
WHAT ARE TITLE & ESCROW COMPANIES AND WHAT DO THEY DO?
In Arizona, when you purchase Real Estate, closings take place through a Title Company that also handles the Escrow. Title does title search on the property. They will provide a Title Policy to the new owner ensuring that they will have free and clear Title to the property they are buying. The same Title Company will also handle the “Escrow” for the transaction. They act as a natural third party, holding the earnest money deposit, and when all the necessary documents and funds are received, they record the sale with the county assessor and disburse funds to the appropriate parties.
The escrow can be as short as three weeks for a cash sale or 30 days for a new loan. The earnest deposit is part of the total cash needed at closing. If for some reason, the buyer changes their mind about the sale, the earnest money is forfeited.
Click here to view more information on what a Title Company does (Aaron link doc titled Exhibit A to these words)
WHAT DEPOSITS WILL I NEED TO MAKE UP FRONT?
The Earnest Deposit that is necessary when you purchase Real Estate in Arizona is for the purpose of indicating that you are “earnest” about wanting the property. If there is an inspection period and as a result of that inspection, you don’t want the purchase, you will receive your deposit back from the Title Company. If you are getting a loan and end up not qualifying, you are also entitled to receive the deposit back. However, if you decide that you just no longer want the property, or do not have the funds to close, you will forfeit the deposit
WHAT ARE CLOSING COSTS?
There is a cost for the Title search that provides the Owners Title Policy to the new owners, guaranteeing that they have free and clear title to the property. For example, on a $300,000 sale the cost to a seller is approximately $1,430.00
Escrow Fees are split 50/50 between the buyer and the seller. There may be prorated property taxes and or interest if there is a new loan. For example on a $300,000 sale, the Escrow Fee would be approximately $800. If there is a loan the Buyer’s Title policy (ALTA) would run approximately $645. This is based on the loan amount. On a cash sale there would be no Buyer’s Title policy.
There will also be some fees for recording and courier fees amounting to about $100.00. Different Title Companies fees vary slightly.
WHAT ARE THE FORMS OF OWNERSHIP IN ARIZONA?
We recommend that you consult with an Attorney or Financial planner about before buying property in the US. Especially when acquiring more than one property for investment purposes. There are several things to consider including; your liability as a property owner, your tax consequences both in the U.S. and Canada, and your estate and tax base in the event of a death of one of the parties.
For example in Arizona it is common for an investor to take title in the form of a LLC (Limited Liability Company). Limited Liability Companies in the US are taxed as a partnership, if the members choose so. However, in Canada they are taxed as a corporation. A LLP (Limited Liability Partnership) on the other hand would be taxed as a partnership in Canada and still provide liability protection to the members.
Click here to See A List of Forms of Ownership and their meanings (aaron pls link these words to the document labeled Exhibit B)
DO I NEED AN ATTORNEY TO BUY REAL ESTATE IN ARIZONA?
Unlike in Canada, attorneys are not used for Real Estate Transactions in Arizona. This is because Realtors have the legal authority to write the contracts. We use standard Arizona Association of Realtors forms. Title Companies then handle the Escrow and Title work and record the new ownership with the county assessor when the transaction closes. The close of escrow date in Arizona is the date the deed records even though all of the monies are collected and papers are signed one or two days ahead of that date.
Please consult with an attorney about the type of ownership that you will use to buy property in Arizona (See above)
WHAT ARE MY TAX IMPLICATIONS?
When a foreign owner is ready to sell, they could be subject to a 10% (of the Sales Price) withholding unless the transaction is exempt from FIRPTA. The most common exemption: Sales Price is not more than $300 K. The buyer or a member of their family must have plans to reside at the property for at least 50% of the number of days the property is used by any person during each of the first two twelve month periods after the sale.
Please consult your CPA or Financial planner about your tax situation.
Click here to See the FIRPTA (Foreign investment in Real Property Tax Act) (aaron pls link these words to the attached document titled Exhibit C)
WHAT TYPES OF FINANCING ARE AVAILABLE?
There are several banks here that specialize in mortgage programs designed specifically for foreign nationals who want to purchase or refinance a home in Arizona. This includes single family residences and condominiums. There are loans up to $1,000,000 USD. A 25% to 50% down payment is required depending on the loan program and there are fixed and adjustable rate loans available. We can give you local bank names and phone numbers for you to obtain specific information.
WHAT DO I DO ABOUT HOMEOWNERS INSURANCE?
Your Canadian insurance will not cover any Real Estate that you have in Arizona and vice versa. Don’t forget the purpose of having insurance on your properties here is not only to cover the physical buildings, but to also give you liability coverage in the event of something happening on the premises like a personal injury.
WHAT TYPES OF INVESTOR SERVICES ARE PROVIDED?
The de Faria Realty and Investments team provides investor services by helping our clients buy foreclosed homes at the auctions or courthouse steps, as well as purchasing properties through our Short Sale or REO divisions. We can provide services to Rehab the properties for flips or to keep as income investments. Our Property Manage division can then assist you with those investments.
DO YOU HAVE PROPERTY MANAGEMANT?
Yes, we have an affordable full service Property Management division. Our property management is automated for you to see your account 24/7 and for your monthly payments to automatically be deposited into a U. S. bank account if you choose. We find and screen tenants for you. Handle all accounting, move in and move out inspections. Our charge is $75.00 per month to manage single family homes no matter the rent amount. The initial set-up and leasing fee is $700 and we request a $250 reserve for possible emergency or necessary repairs. Our rates for multiple properties are lower. Contact us for more information.
WHAT ABOUT PROPERTY RENOVATIONS?
Once you have closed on your new property, you are free to use anyone including yourself to do work or renovations. Be aware, if you are making additions, the municipality that the property is located in may require permits for various things. Also it is a good idea, if you hire a local contractor, that they are licensed and bonded for your protection. Be aware, the subdivision you purchased in may have HOA or CC&Rs governing the color you can paint the exterior of the property and/or minimum landscaping requirements. We also have vendor recommendations for you if you want them.
WHERE DO I FIND INFORMATION ON THE LOCAL AREAS?
One of the sources de Faria Realty uses for Relocation information is http://www.reloguide.net/ they have great information on the area for anyone wanting to know more about all of the cities mentioned above. We will send a relocation guide to any buyers that you refer to us. Another excellent site for maps and information on this area is http://www.arizona-leisure.com/phoenix-area-map.html |
