EMPIRE WEST TITLE AGENCY Empire West Title Agency provides title insurance, escrow and settlement services to real estate professionals, residential and commercial clients, lenders, builders, developers, attorneys and consumers. Empire West is part of the ET Investment family of companies and is one of the largest and fastest growing title agencies in the country. Empire West offers a full line of title and escrow services, as well as a variety of other related services including Short Sale Processing, Builder Development, Investor Website, Default, Foreclosure and Account Servicing. We provide customized services to all of our clients and tailor our tools and products to meet the specific needs of our customers. Empire West has assembled a group of committed partners that are dedicated to providing our customers with products and services that will set them apart from the competition. You can trust that Empire West and our partners will provide you with the highest level of professionalism, integrity and accountability. Our sales and escrow teams are highly experienced and understand the critical demands of your business. In Arizona alone we have nearly 120 employees, 18 physical branch locations and an average employee experience of 15 years. We are here to support you and your transactions from start to finish. Our aim is to exceed our clients expectations. Management, escrow, sales and title production all work in tandem to support our customers and ensure their success. We care and are committed to serving our clients both professionally and personally and believe in creating valuable and long lasting partnerships with our customers. Contact us today to find out how Empire West can partner with you to increase your success! Your success is our success. BRANCH LOCATIONS 101-West 1850 N. 95th Avenue, #186 Phoenix, AZ 85037 Phone: (602) 749-7143 Ahwatukee 4505 E. Chandler Blvd., Suite 120 Phoenix, AZ 85048 Phone: (602) 749-7120 Arrowhead 17505 N. 79th Ave., Suite 112 Glendale, AZ 85308 Phone: (602) 749-7131 Camelback Commercial 4808 N. 22nd St., Suite 100 Phoenix, AZ 85016 Phone: (602) 749-7000 Dana Center 225 E. Germann Rd., Suite 170 Gilbert, AZ 85297 Phone: (602) 749-7050 Default Services 4808 N. 22nd St., Suite 100 Phoenix, AZ 85016 Phone: (602) 749-7000 Flagstaff 403 N. Agassiz St., Suite 1 Flagstaff, AZ 86001 Phone: (928) 774-3351 Gilbert 3303 E. Baseline Rd., Bldg. 5, Suite 111 Gilbert, AZ 85234 Phone: (602) 749-7170 Goodyear 1616 N. Litchfield Rd., Suite 260 Goodyear, AZ 85395 Phone: (602) 749-7130 Hayden Park 10611 N. Hayden Rd., Suite D104 Scottsdale, AZ 85260 Phone: (602) 749-7080 Main Escrow 4808 N. 22nd St., Suite 100 Phoenix, AZ 85016 Phone: (602) 749-7000 Maricopa 19756 N. John Wayne Pkwy., Suite 106 Maricopa, AZ 85139 Phone: (520) 233-2244 Mesa 6642 E. Baseline Rd., Suite 104 Mesa, AZ 85206 Phone: (602) 749-7180 North Central 5225 N. Central Ave., Suite 103 Phoenix AZ 85012 Phone: (602) 749-7140 Prescott 600 W. Gurley St., Suite 200 Prescott, AZ 86305 Phone: (928) 778-5044 Prescott Valley 8133 E. State Route 69A, Suite A Prescott Valley, AZ 86314 Phone: (928) 778-8102 Raintree 4808 N. 22nd St., Suite 100 Phoenix, AZ 85016 Phone: (602) 749-7152 San Tan 21321 E. Ocotillo Rd., Suite 105 Queen Creek, AZ 85142 Phone: (602) 749-7060 Scottsdale Ventura 8777 E. Via de Ventura, Suite 399 Scottsdale, AZ 85258 Phone: (602) 749-7030 Sedona 3000 W. State Route 89A Sedona, AZ 86336 Phone: (928) 282-0280 Surprise 14239 W. Bell Rd., Suite 204 Surprise, AZ 85374 Phone: (602) 749-7110 Tempe (Broadway) 2151 E. Broadway Rd., Suite 116 Tempe, AZ 85282 Phone: (602) 749-7160 Val Vista 225 E. Germann Rd., Suite 170 Gilbert, AZ 85297 Phone: (602) 749-7100 CORPORATE HEADQUARTERS 4808 N. 22nd Street, Suite 100 Phoenix, AZ 85016 Phone: (602) 749-7000
TABLE OF CONTENTS Considering A For Sale By Owner 1 Why You Should Sell With A Realtor 2 How To Determine Your Listing Price 3 14 Ideas To Stage Your Home 4 Top 10 Mistakes When Selling Your Home 5-6 What Paperwork Should Be Accessible? 7 The Appraisal Process 8 Home Inspections 9 A Home Warranty 10 Closing Costs - Who Pays What 11 The Life Of An Escrow 12 Who Does What? 13 An Overview of Closing Costs 14 Glossary 15-18 Important Numbers 19-20 Moving Checklist 21-22 Notes 23 Locations 24
CONSIDERING A FOR SALE BY OWNER Statistics show that selling your home with the assistance of a professional real estate agent will garner you a higher profit, enough to cover the commission as well as put more money in your pocket. Most buyers today work with a buyer s agent to represent their interests. If you choose to sell your home on your own, you will be negotiating with a professional and relying on your own skill to finalize a contract. Not only could you end up selling your home for less money, you could leave yourself open to potential legal problems unless you have the contract vetted by an experienced real estate attorney. FSBO transactions can be successful, of course, but 90 percent of homeowners prefer to work with a professional rather than risk an unsatisfactory home selling experience. If you choose to go this route, request Empire West Title Agency to help you map out the FSBO Guide you will need to sell your home on your own. What FSBO Sellers Need to Know About Real Estate Rules and Regulations To sell your house by yourself, you must learn the legal rules that govern real estate transfers in your state, such as who must sign the papers, who can conduct the actual transaction, and what to do if and when issues are discovered that slow down the transfer of ownership. Review these questions before deciding to sell on your own. Do you have experience with protecting your rights in a real estate transaction? Do you understand the escrow process and what is required of you and the buyer? Are you experienced enough in real estate law to write a legally binding contract? Are you able to accurately explain contingencies and legal disclosure requirements? Do you have a complete online and print marketing plan for your property and can you be sure it is reaching your target audience for maximum exposure? 1
WHY YOU SHOULD SELL WITH A REALTOR For most sellers, a real estate agent s services, market knowledge, and network of industry experts are worth the cost. Consider the following benefits of using a REALTOR before you decide to attempt to sell your own home. 1. 2. 3. 4. 5. 6. A REALTOR has access to market data about recent sales and other homes on the market that can be used to price your home appropriately. Studies show that homes priced right when they re first listed sell more quickly and for a higher price than those that linger on the market. A REALTOR can show your home when you aren t available, respond to inquiries from potential buyers and their agents, and get valuable feedback from visitors - all things that save you time. A REALTOR can look at your home objectively and suggest ways to improve its appearance - from staging to minor repairs - so it appeals to more buyers. Buyers typically prefer to look at a home without the seller present so they can feel more comfortable exploring the rooms and visualizing themselves in the property. At a FSBO sale, the seller must be present. A REALTOR can screen visitors to your home, which provides a measure of safety that FSBO sellers don t have. In addition, check to see if the buyers are legitimate and can afford to purchase your home. A REALTOR can help you avoid wasting time showing your home to unqualified buyers. REALTORS have professional marketing expertise, contacts with other REALTORS who work with buyers and the support of a brokerage that can market your home more widely than you can as an individual. 7. A REALTOR can help you negotiate a contract that not only garners you an appropriate price for your home, but that meets your needs for a closing date. In addition, a REALTOR can make sure your contract is in compliance with all local regulations. 2
HOW TO DETERMINE YOUR LISTING PRICE Q. How do I determine my home s listing price? A. Value is a relative term. You need some basis of objectivity - and you can find it by having your REALTOR compare hour house against other similar houses in like neighborhoods. Your REALTOR will work together with you to factor in all the important aspects of your home and price your home effectively. Using the Multiple Listing Service (MLS), the REALTOR will prepare a Comparative Market Analysis (CMA) which involves a survey of homes that are on the market and those that have recently sold and are similar to yours. Your REALTOR will then advise you on the additional value (or deficit) of your home s unique features, and factor that into the equation. Depending upon how anxious you are to sell (and how fast you need to close), your REALTOR can suggest different strategies to help you get top dollar for your home. Q. Doesn t it make sense to price my home higher because buyers will negotiate the price down? A. Because virtually 100% of today s home sellers have their home marketed on the internet, today s home buyers can shop online anonymously. When perusing online, home buyers are able to compare your home against other homes to see if they feel your home s price and features are a value. If you price a home too high, many buyers will make the decision to not even view your home in person. Your home could remain on the market for months, while you continue to pay your mortgage, basically eroding any profit you were hoping to make by pricing it higher. The best strategy is to price it correctly so that prospective buyers searching online believe that their offer will be considered. Q. Does it make sense to test the market with a higher price for a short period of time? A. Because newly listed properties typically attract the most interest from buyers during the first three weeks, it is imperative that you price it correctly to attract buyers. When looking online, buyers are going to compare your home with other homes on the market. If they do not perceive your home s price and features to be a value, they will not make an appointment to see your home, thereby causing it to languish on the market. The longer the home stays on the market, the less you can expect to receive for a selling price because buyers feel that a seller will take less for a home that has been on the market for a long time. Additionally, if you do happen to get the price you want for your home, you will run the risk of it not appraising for the full price. Q. If I list my home at or below the market, won t buyers think there is something wrong with it? A. Because buyers have access to a wealth of information online, they often have a keen sense of a home s real worth. Your home will presumably have a number of photos showcasing it to prospective buyers, and they will be able to see the quality of your home online. Additionally, buyer s agents will know it is priced realistically and they will let their clients know. 3
14 IDEAS TO STAGE YOUR HOME To make the best impression, keep your home clean, neat, uncluttered and in good repair. Please review this list prior to each showing: Let the light in. Raise shades, open blinds, pull back the curtains and turn on the lights. Clear all clutter from counter tops. Keep everything clean. A messy or dirty home will cause prospective buyers to notice every flaw. Close the windows to eliminate street noise. Clean trash cans and put them out of sight. Send pets away or secure them away from the house and be sure to clean up after them. Get rid of odors such as tobacco, pets, cooking, etc., but don t overdo air fresheners or potpourri. Fresh baked bread and cinnamon can make a positive impact. If possible you, your pets, and your children should be gone while your home is being shown. Keep the garage door closed and the driveway clear. Park autos and campers away from your home during showings. Hang clean attractive guest towels in the bathrooms. Make beds with attractive spreads. Check that sink and tub are scrubbed and unstained. Stash or throw out newspapers, magazines, junk mail. If you must be present while your home is shown, keep noise down. Turn off the TV and radio. Soft, instrumental music is fine, but avoid vocals. 4
TOP 10 MISTAKES WHEN SELLING YOUR HOME Selling your home especially if you've never done it before can be surprisingly time-consuming and emotionally challenging. To ensure that your home selling experience is set up for success, here are 10 common mistakes to avoid. 1 2 Getting Emotionally Involved Once you decide to sell your home, it can be helpful to start thinking of yourself as a businessperson and a home seller, rather than as the home's owner. By looking at the transaction from a purely financial perspective, you'll distance yourself from the emotional aspects of selling the property that you've undoubtedly created many memories in. Also, try to remember how you felt when you were shopping for that home. Most buyers will also be in an emotional state. If you can remember that you are selling not just a piece of property but also an image, a dream and a lifestyle, you'll be more likely to put in the extra effort of staging and perhaps some minor remodeling to get top dollar for your home. These changes in appearance will not only help the sales price, but they'll also help you create that emotional distance because the home will look less familiar. Not Hiring an Agent Although real estate agents command a hefty commission (usually 5-6% of the sale price of your home), trying to sell your home on your own, especially if you haven't done it before, is probably ill advised. A good agent will help you set a fair and competitive selling price for your home that will increase your odds of a quick sale. An agent can also help take some of the high emotion out of the process by interacting directly with potential buyers, so you don't have to and eliminating tire kickers who only want to look at your property but have no intention of putting in an offer. 3 An agent will also have more experience negotiating home sales than you do, potentially helping you get more money than you could on your own. Further, if any problems crop up during the process and they commonly do - an experienced professional will be there to handle them for you. Finally, agents are familiar with all the paperwork and pitfalls involved in real estate transactions and can help make sure the process goes smoothly. Setting an Unrealistic Price Whether you're working with an agent or going it alone, setting the right asking price is key. Remember the comparable market analysis you did when you bought a home to figure out a fair offering price? Buyers will do this for your home too, so as a seller you should be one step ahead of the game. 4 5 Absent a housing bubble; overpriced homes do not sell. Don't worry too much about setting a price that's on the low side because, in theory, this will generate multiple offers and bid the price up to the home's true market value. In fact, underpricing your home a bit can be a strategy to generate extra interest in your listing. Expecting To Get Your Asking Price Any smart buyer will negotiate, and if you want to complete the sale, you'll have to play the game. Most people want to list their homes at a price that will attract buyers while still leaving some breathing room for negotiations. This will allow the buyer to feel like he or she is getting a good value and allow you to get the amount of money you need from the sale. Of course, whether you end up with more or less than your asking price will likely depend on whether you're in a buyer's market or a seller's market and on how well you have staged your home. Skimping on Listing Photos So many buyers look for homes online these days, and so many of those homes have photos that you'll be doing yourself a real disservice if you don't offer photos as well. At the same time, there are so many poor photos of homes for sale that if you do a good job, it will set your listing apart and help generate extra interest. Good photos should be crisp and clear, should be taken during the day when there is plenty of natural light available, and should showcase your home's best assets. Consider using a wide-angle lens if possible - this will allow you to give potential buyers a better idea of what entire rooms look like. 5
TOP 10 MISTAKES WHEN SELLING YOUR HOME CONT. 6 7 8 9 10 Not Being Properly Insured With the above-average number of people who will be on your property, you want to make sure you are insured in case someone has an accident on the premises and tries to sue you for damages. You also want to make sure that there are not any obvious hazards at the property or that you take steps to mitigate them (keeping the children of potential buyers away from your pool and getting your dogs out of the house during showings, for example). Trying to Hide Significant Problems Any problem with the property will be uncovered during the buyer's inspection, so there's no use hiding it. Either fix the problem ahead of time, price the property below market value to account for the problem, or list the property at a normal price but offer the buyer a credit to fix the problem. Realize that if you don't fix the problem in advance, you may turn away a fair number of buyers who want a turnkey home. Having your home inspected before listing it is a good idea if you want to avoid costly surprises once the home is under contract. Not Preparing Your Home for Sale Sellers who do not clean and stage their homes are throwing money down the drain. If you can't afford to hire a professional, that's OK - there are many things you can do on your own. Failing to do these things will not only reduce your sale price but may also prevent you from getting a sale at all. For example, if you haven't attended to minor issues like a broken doorknob, a potential buyer may wonder whether the house has larger, costlier issues that haven't been addressed. Have a friend or agent with a fresh pair of eyes point out areas of your home that need work. Because of your familiarity with the home; you may have become immune to its trouble spots. Decluttering, cleaning thoroughly, putting a fresh coat of paint on the walls and getting rid of any odors will also help you make a good impression on buyers. Not Accommodating Potential Buyers If someone wants to view your house, you need to accommodate this person, even if it is inconvenient for you. And yes, you have to clean and declutter the house before every single visit. A buyer won't know and won't care if your house was clean last week if it isn't clean when he or she views it. It's a lot of work, but stay focused on the prize. Signing a Purchase Contract With an Unqualified Buyer It's more than reasonable to expect a buyer to bring a pre-approval letter from a mortgage lender (or proof of funds for cash purchases) showing that he or she has the money to buy the home. Signing a contract with a buyer whose purchase of your home is contingent on the sale of his or her own property may also put you in a serious bind if you need to close by a particular date. The Bottom Line Even if you do all of these things when selling your home, it's best to prepare mentally and financially for less-than-ideal scenarios. The house may sit on the market for far longer than you expect, especially in a declining market. If you can't find a buyer in time, you may end up trying to pay two mortgages, having to rent your home out until you can find a buyer, or in dire situations, in foreclosure. However, if you avoid the costly mistakes listed here, it will go a long way toward helping you put your best foot forward and achieving that seamless, lucrative sale every home seller hopes for. 6
WHAT PAPERWORK SHOULD BE ACCESSIBLE? How Should Disclosure Be Done? In many states, including Arizona, sellers are required to complete a Seller disclosure form. These forms cover everything from appliances to roofs, plumbing, flooring, termites, and some even require disclosure with regard to zoning changes or new bonds and assessments, which will affect the Buyer s valuation of the property. Legalities of Home Preparation Some sellers make a severe mistake and try to cover up problems that exist with a home. An example is painting an interior wall to cover up a discolored area caused by a leak in the exterior wall or roof. This is an example of withholding pertinent information and falls under the laws of seller disclosure. Maintenance and Home Improvement Records Have available all of the records with regard to maintenance service work, warranty work, or improvements that you have made throughout the ownership of the home. Of particular interest will be roof replacement or repair, appliance repair, plumbing service and electrical work. If you have kept up with the proper service and maintained good records, most Buyers will see that as a very strong positive for the house. Utility Bills Most potential Buyers will want to know the approximate monthly utility bills. If you have all of the bills for gas, electricity, propane, sewage, garbage and water for the previous year, have them available. If you have not saved your bills, call each of the utility companies and ask for a printout of your bills for the previous 12 months. Warranties Have available all warranties that are still in effect for appliances or other items for the home. This is especially important for roofs, pools, spas, electrical and major appliances. 7
THE APPRAISAL PROCESS What Appraisers Look for During the Home Appraisal Process Knowing what an appraiser will look for during the appraisal process can help you better prepare your home for the appraisal. Here are a few key features of your home that an appraiser will be interested in: Exterior Before even entering your home, the home appraiser will inspect the outside of your property. This involves looking at the structure of your home and inspecting the foundation and roof to determine what materials they are made from and what condition they are in. The appraiser will also look for any damage to your home, such as leaks, cracks or defects that may have gone unnoticed when the house was built. Interior As with the exterior, the appraiser will consider the materials used in the construction of your home; their condition is very important. The main construction of your home, including the walls, flooring, windows, and doors, will be carefully inspected to determine quality and identify any damage or defects. The condition of lighting fixtures, kitchen appliances and plumbing will also influence the appraiser s estimate. Property The appraiser will consider the overall size of your home. A larger property is often more desirable to buyers because it gives them the possibility of building an addition to the home in the future. A home with many bedrooms and bathrooms will also have extra value since a greater number of people can live in the home. Extra Features Amenities that contribute to the comfort and safety of a home will greatly improve the appraised value. Appraisers will take into consideration all the extras that your home offers, such as air conditioning, fireplaces, security systems, or smoke detectors. Outdoor amenities, such as a swimming pool, garage or gazebo, could also lead to a higher appraisal. Improvements Improvements that you have made since you took ownership will influence the appraised value of your home. While inspecting the interior of your home, the appraiser will pay attention to upgrades that you have made to your kitchen and bathrooms especially. A new oven, stove, sink or bathtub is a big plus when determining your home s value. Because the appraiser might not notice all the upgrades that you ve made, it is important to provide him or her with a list of improvements before the appraisal. 8
HOME INSPECTIONS The standard Arizona Association of Realtors Purchase Contact contains a provision that allows the buyer to have the subject property physically inspected within the first ten days of acceptance of the contract by the seller. It is the seller s obligation to provide the buyer with access to the property during this ten day inspection period for whatever inspections the buyer requires. Once a purchase contract has been signed, the buyer can hire a professional inspector of their choosing for the inspection. Common Types of Inspections General HVAC Structural Pest Control (termite) Chimney Hazardous Materials Well & Septic Home inspections are a critical part of the home buying and selling process. Knowledge in the field of property inspection has become invaluable, espcially in light of stricter legislation on both a state and national level. How a home inspection works: A typical home inspection includes a check of a house s structural and mechanical condition but can also encompass tests for radon gas, detection of wood-destroying insects and other services requested by the buyer. Inspections do not cover cosmetic aspects of the home, like clean carpets and fresh paint. Back in 1976, the American Society of Home Inspectors (ASHI) standardized the home inspection process and established Standards of Practice dictating what must be inspected as well as how far the professional home inspector needs to go to report their findings. According to ASHI, the standard home inspector s report will cover the condition of the home s heating system; central air conditioning system; interior plumbing and electrical systems; the roof, attic and visible insulation; walls ceilings, floors, windows and doors; the foundation, basement and structural components. Once the home inspection is complete, the inspector creates a report for the home buyer detailing all that was found. This report will note problems requiring immediate attention and conditions that could lead to more serious issues over time. Sellers can consider having a home inspection before listing the home, to determine in advance which items need to be addressed and avoid hidden costs that may cause buyers to cancel a contract later on in the transaction. To locate a professional home inspector, use ASHI s Find a Home Inspector locator at www.ashi.org. 9
A HOME WARRANTY A home warranty is an insurance policy that covers a variety of mechanical, electrical, and plumbing items, as well as some appliances, inside the home. Optional coverage is available for more expensive systems such as air conditioners, refrigerators, pools and spas. The Seller may purchase a home warranty plan prior to selling to protect against repairs needed during the listing period, and the Buyer may be able to assume the policy at the close of escrow. Or the Seller may offer to purchase a home warranty policy for the Buyer. Offering a home warranty plan may provide these benefits: Increase the marketability of your home by reassuring potential Buyers. Help sell your home faster and at a higher price. Ward off potential disputes after the sale for repair and/or replacement of covered items. Most home warranty plans can be paid for at the close of escrow. A copy of the invoice is presented to Empire West Title Agency, and it becomes part of the Seller s closing costs. preparing your home FOR SALE First impressions have a major impact on potential Buyers. Try to imagine what a potential Buyer will see when they approach your house for the first time and walk through each room. Ask your Realtor for advice; they know the marketplace and what helps a home sell. Here are some tips to present your home in a positive matter: Mow and edge the lawn regularly, and trim the shrubs Make your entry inviting: Paint your front door and buy a new front door mat. Paint or replace the mailbox, if needed. If screens or windows are damaged, replace or repair them. Repair or replace worn shutters and other exterior trim. Make sure the front steps are clear and hazard-free. Make sure the door bell works properly and has a pleasant sound. Ensure that all exterior lights are working. Check stucco walls for cracks and discoloration. Remove any oil and rust stains from the driveway and garage. Clean and organize the garage, and ensure the door is in good working order. Repair or replace loose knobs on doors and cabinets. Shampoo carpeting or replace if very worn. Clean tile floors, particularly the caulking. Brighten the appearance inside by painting walls, cleaning windows and window coverings, and removing sunscreens. Repair leaky faucets and caulking in bathtubs and showers. If doors stick or squeak, fix them. Make sure toilet seats look new and are firmly attached. Repair or replace loud ventilating fans. Replace worn shower curtains. Rearrange furniture to make rooms appear larger. If possible, remove and/or store excess furniture. Remove clutter throughout the house. Organize and clean out closets and pantry. Make sure all kitchen appliances are clean and working properly Avoid extension cords in plain view. Keep washer and dryer clean and empty. Air conditioners/heaters, evaporative coolers, hot water heaters should be clean, working and inspected if necessary. Replace filters. Check the pool and/or spa equipment and pumps. Make sure all are working properly and that the pool and/or spa are kept clean. Inspect fences, gates and latches. Repair or replace as needed. 10
CLOSING COSTS WHO PAYS WHAT This chart indicates who customarily pays what costs 11
12 THE LIFE OF AN ESCROW
WHO DOES WHAT? This chart indicates who customarily pays what costs THE ESCROW OFFICER Receive signed Purchase Contract; prepare escrow instructions Receive and deposit buyer s earnest money into an escrow account Serve as the neutral agent and liaison/ communication link to all parties to the transaction Order Title Commitment to determine status of title to property The Seller: Deposit the executed Deed to the buyer with the escrow holder Deposit evidence of inspections and any repair work as required Deposit required documents such as addresses of mortgage holders, homeowner association contacts and lien holders Request beneficiary s statement or pay-off demand related to existing financing Comply with lender s requirements as specified in the lender s instructions to escrow Secure releases of all escrow contingencies or other conditions required Request the title insurance policy Prepare or secure the transfer deed or other documents necessary to complete the transaction Arrange appointments for buyer/seller to sign documents Request and receive purchase funds from the buyer and loan funds from new lender Distribute funds as authorized by the instructions supplied by the seller, buyer, and lender, including charges for title insurance, recording fees, real estate commissions and loan payoffs. Close escrow pursuant to instructions provided by seller, buyer and lender The Buyer: Deposit funds required, in addition to any borrowed funds, to pay the purchase price with the escrow holder Deposit funds sufficient for the home and title insurance. Approve inspection reports, title insurance commitments, etc., called for by the purchase contract The Lender (if applicable): Deposit the proceeds of the loan to the purchaser Direct the escrow holder on the conditions under which the loan funds may be used Record the deed and any other documents 13
AN OVERVIEW OF CLOSING COSTS Below is an overview of the types of closing costs you may incur on your loan. Some are one-time fees while others recur over the life of the loan. APPRAISAL FEE This is a one-time fee that pays for an appraisal, a statement of property value required on most loans. The appraisal is made by an independent appraiser. CREDIT REPORT FEE This one-time fee covers the cost of a credit report processed by an independent credit reporting agency. DOCUMENT PREPARATION FEE There may be a separate, one-time fee that covers preparation of the final legal papers, including the note and deed of trust. LOAN DISCOUNT Often called Points, a loan discount is a one-time charge used to adjust the yield on the loan to what market conditions demand. One point is equal to 1% of the loan amount. LOAN ORIGINATION FEE This fee covers the Lender s administrative costs in processing the loan. It is a one-time fee and is generally expressed as a percentage of the loan amount. MISCELLANEOUS TITLE CHARGES The title company may charge fees for a title search, title examination, document preparation, notary fees, recording fees, and a settlement or closing fee. These are all one-time charges. MORTGAGE INSURANCE PREMIUM Depending on the amount of your down payment, you may be required to pay a fee or mortgage insurance (which protects the Lender against loss due to foreclosure). You may also be required to put a certain amount for mortgage insurance into a special reserve account (called an impound account) held by the Lender. PREPAID INTEREST Depending on the day of the month your loan closes, this charge may vary from a full month to just a few days interest. If your loan closes at the beginning of the month, you will probably have to pay the maximum amount. If your loan closes near the end of the month, you will only have to pay a few days interest. Your first payment will usually be 30 days after the date pre-paid interest is paid through. TAXES AND HAZARD INSURANCE Based on the month you close, property taxes will be prorated between you and the Seller. You will also need to pay an entire years hazard insurance premium upfront (Homeowner s Insurance). In addition, you may be required to put a certain amount for taxes and insurance into a special reserve account (impound account) held by the Lender. TITLE INSURANCE FEES There are two title policies; a homeowner s title policy (which protects the new homeowner) and a Lender s title policy (which protects the Lender against loss due to a defect in the title). These are both one-time fees. 14
GLOSSARY Agency A legal relationship in which someone (principal) hires someone else (agent) to represent them to a third party. Amendment An alteration, addition, or correction to an agreement that does not change the principal idea or essence of the original agreement. Amortized Loan A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal. Also called a Level Payments Loan. Appraisal Opinion as to value of property; a conclusion resulting from an analysis of facts affecting fair market value. Appreciation An increase in value of real estate. Assessed Value Value placed on property by the Central Appraisal District as a basis for taxation. Assessments Special impositions on property to pay the cost of a local work of improvement, e.g. sidewalks, curbs, sewers, street lighting. Assessor County official who determines the assessed value of property for tax purposes. C.C. & R. s The Covenants, Codes, and Restrictions of a subdivision or master planned community. These regulations grant the association the right to enforce certain aspects of the community. (Example: Exterior colors or plantings). Chain of Title A summary or digest of the conveyances, transfers, and any other facts relied on as evidence of title, together with any other elements of record that may affect the marketability of the title. Closing The final settlement of a real estate transaction between the Buyer and Seller. Cloud on Title Semblance of title, or a claim appearing on some legal form, that is in fact invalid. Condominium A system of individual fee ownership of units combined with joint ownership of common area of the structure and the land. Conventional Mortgage A mortgage securing a loan made by investors without governmental underwriting. 15
GLOSSARY Counter-Offer A rejection of an offer by a seller along with an agreement to sell the property to the potential buyer on terms differing from the original offer. Deed Written instrument which, when properly executed and delivered, conveys title of real property. Deed of Trust A written instrument used in Arizona in place of a mortgage to secure the lender s rights. Disclosure To make known or public. When dealing with real property, all disclosures should be in writing. Discount Points Additional charges made by a lender at the time a loan is made. Points are measured as a percent of the loan, with each point equal to one percent. These additional interest charges are paid at the time a loan is closed to increase the rate of return to the lender so as to approximate the market level. Earnest Money Deposit Down payment made by a purchaser of real estate as evidence of good faith. Easement Created by grant or agreement for a specific purpose, an easement is the right, privilege or interest which one party has in the land of another. (Example: rights of way, pipelines, roads, driveways, and utility companies). Encumbrance Anything that affects or limits the ownership of real property, such as mortgages, liens, easements or restrictions of any kind. Equity The interest or value that an owner has in real estate over and above the liens against real property. Escrow The deposit of instruments and funds with instructions (the Contract) to a third neutral party (Escrow Agent) to carry out the provisions of an agreement or contract; when everything is deposited to enable carrying out the instructions, it is called a complete or perfect escrow. Fair Market Value The price at which a willing Seller would sell, and a willing Buyer would buy, neither being under abnormal pressure. FHA Loan A loan guaranteed by the Federal Housing Administration. Impound Account Account held by the lender for payment of taxes and/or insurance against the real property. 16
GLOSSARY Legal Description A description of land that complies with government surveys to thoroughly identify a specific parcel so that it, and its boundaries, cannot be mistaken for any other. Lien A form of encumbrance that usually makes property security for the payment of a debt or discharge of an obligation. (Example: Judgments, taxes, mortgages, deeds of trusts, etc.). Mortgage An instrument recognized by law by which property is hypothecated to secure the payment of a debt or obligation; procedure for foreclosure in the event of default is established by statute. Mortgagee s Title Policy A policy required by the Lender to ensure that the Lender has a valid lien. It does not protect the Buyer. It can also be required for 2nd mortgages. Origination Fee A fee charged the borrower by the lending institution. Owner s Title Policy A policy that insures the Buyer against loss due to any defect of the title, not accepted to or excluded from the policy. Personal Property Any property which is not real property, e.g. money, appliances, cars, boats, furniture, etc. In real estate, anything not permanently attached to the building is considered personal property. PITI A payment that includes Principal, Interest, Taxes, and Insurance. Power of Attorney A legal instrument whereby a principal gives authority to another to act for them. A specific form must be used in Arizona to create a Power of Attorney. Promissory Note Following a loan commitment from the Lender, the borrower signs a note promising to repay the loan under stipulated terms. The promissory note establishes personal liability for its repayment. Quit Claim Deed Deed that conveys whatever present right, title, or interest the grantor may have. A deed operating as a release. Real Property Lands, buildings and appurtenances (immovable property). 17
GLOSSARY Recordation Filing for record in the office of the County Recorder for the purpose of giving constructive notice of a title, claim, or interest in real property. Special Assessment Legal charge against real estate by a public authority to pay cost of public improvements such as: Streetlights, curbing, sidewalks, street improvements, etc. S.P.D.S. Also referred to as SPUDS, is the Seller s Property Disclosure Statement. Sellers are required to fill out a form to disclose any problems that they are aware of that affect the property regardless if they occupied the property or not. Subdivision A parcel of land that has been divided into smaller parts. Termite inspection An inspection required by the Lender to show that the property is free and clear of active termites. Time is of the Essence A term that demands punctual performance in a binding agreement. Trust Fiduciary relationship in which one party (trustee) holds title to property for the benefit of another party (beneficiary). VA Loan A loan guaranteed by the Veteran s Administration. Warranty Deed A deed used to convey real property that contains warranties of title and quiet possession and the grantor agrees to defend the premises against the lawful claims of third persons. 1031 Exchange A method enabling property owners to trade an investment property for another investment property (or properties) without paying capital gains taxes on the transaction. 18
IMPORTANT NUMBERS UTILITIES APS...602.371.7171 Century Link...800.244.1111 Cox Cable...602.277.1000 Garbage & Trash...623.974.4791 Rural Metro Fire Department...480.627.6200 Salt River Project (SRP)...602.236.8888 Southwest Gas...877.860.6020 APACHE JUNCTION Fire Administration...480.982.4440 Police Department (Non-Emergency)...480.982.8260 Water Utilities...480.982.6030 City Website...ajcity.net AVONDALE Fire Administration...623.333.6000 Police Department (Non-Emergency)...623.333.7000 Water Utilities...623.333.2005 City Website...avondale.org BUCKEYE Fire Administration...623.349.6700 Police Department (Non-Emergency)...623.349.6400 Water Utilities...623.349.8700 City Website...buckeyeaz.gov CHANDLER Fire Administration...480.782.2120 Police Department (Non-Emergency)...480.782.4130 Water Utilities...480.782.3700 City Website...chandleraz.gov GILBERT Fire Administration...480.503.6300 Police Department (Non-Emergency)...480.503.6500 Water Utilities...480.503.6800 City Website...gilbertaz.gov GLENDALE Fire Administration...623.930.4400 Police Department (Non-Emergency)...623.930.3000 Water Utilities...623.930.3190 City Website...glendaleaz.gov GOODYEAR Fire Administration...623.932.2300 Police Department (Non-Emergency)...623.932.1220 Water Utilities...623.932.3010 City Website...goodyearaz.gov LITCHFIELD Fire Administration...623.932.2300 Police Department (Non-Emergency)...602.876.1011 Water Utilities...623.935.9367 City Website...litchfield-park.org MARICOPA Fire Administration...520.568.3333 Police Department (Non-Emergency)...520.316.6800 Water Utilities...520.568.4452 City Website...maricopa-az.gov 19
IMPORTANT NUMBERS MESA Fire Administration...480.644.2101 Police Department (Non-Emergency)...480.644.2030 Water Utilities...480.644.4444 City Website...mesaaz.gov PARADISE VALLEY Fire Administration...480.348.3631 Police Department (Non-Emergency)...480.948.7418 Water Utilities City of Phoenix...602.262.6251 Arizona American Water...800.383.0834 Berneil Water...480.966.5804 City Website...ci.paradise-valley.az.us PEORIA Fire Administration...623.773.7279 Police Department (Non-Emergency)...623.773.8311 Water Utilities...623.773.7286 City Website...peoriaaz.gov PHOENIX Fire Administration...602.495.5555 Police Department (Non-Emergency)...602.262.6151 Water Utilities...602.262.6251 City Website...phoenix.gov QUEEN CREEK Fire Administration...480.644.2400 Police Department (Non-Emergency)...602.876.1011 Water Utilities...480.358.3450 City Website...queencreek.org SAN TAN VALLEY Fire Administration...480.627.6200 Pinal County Sheriff (Non-Emergency)...480.420.8689 Water/Johnson Utilities...480.987.9870 City Website...santanvalley.com SCOTTSDALE Fire Administration...480.312.8000 Police Department (Non-Emergency)...480.312.5000 Water Utilities...480.312.2461 City Website...scottsdaleaz.gov SUN CITY Fire Administration...623.974.5321 Police Department (Non-Emergency)...623.584.5808 Water Utilities...480.895.2965 City Website...suncityaz.org SURPRISE Fire Administration...623.222.5000 Police Department (Non-Emergency)...623.222.4000 Water Utilities...623.222.6000 City Website...surpriseaz.gov TEMPE Fire Administration...480.858.7200 Police Department (Non-Emergency)...480.350.8311 Water Utilities...480.350.8361 City Website...tempe.gov 20
MOVING CHECKLIST Before You Leave Obtain movers guide from your local post office Update credit card, other accounts For any subscriptions, give notice of your new address as soon as possible, ideally six or eight weeks notice Notify friends and relatives Bank Locate branches of your bank close to your new home If necessary, arrange to transfer funds to a new bank. Be sure to cancel any automatic payment or direct deposit Insurance Notify companies of new location for coverage: Life Insurance Health Insurance Auto Insurance Utility Companies Cancel gas, electricity, water, telephone, municipal services, internet & cable TV Get refunds on any deposits made Children Register in school Transfer school records Arrange for daycare Records Ask doctor and dentist for referrals; get prescriptions, eyeglasses, X-rays, if appropriate Get copies of birth certificates, medical records and children s school records Pets Ask about regulations for licenses, vaccinations, tags Consult a veterinarian about moving the pet Obtain all records Don t Forget! Empty and defrost freezer & clean refrigerators Have appliances serviced before moving Clean and/or repair furniture, rugs, and curtains Plan for special care needs for your infants & pets Obtain all personal records from lawyers & accountants Obtain relocation package from real estate agent or Chamber of Commerce Make arrangements for cable TV and internet Find out about tax deductible moving expenses Discuss with your moving counselor: insurance coverage, packing and unpacking labor, arrival day, various shipping papers, method and time of expected payment Find a legal way to dispose of items moving companies are not allowed to move, like propane tanks and ammunition Make arrangements for moving your plants. Moving companies do not typically assume responsibility for them Arrange for storage, if needed Make sure to have the things with you that you will need right away when you arrive-a lamp, bowls, utensils, bathroom tissue, snacks, coffee pot, etc. Assemble packing materials If you re driving a long distance, have car serviced & checked for the trip. Let a close friend or relative know the route and schedule you will travel, including overnight stops. Pack a day or two worth of extra clothing in case of delays. 21
MOVING CHECKLIST Moving Day Make a list of every item and box loaded onto the truck CHANGE OF ADDRESS CHECKLIST Take jewelry, family photos, and important documents with you - or mail them to yourself by registered mail Carry an assortment of toys for children (if needed) Double check closets, drawers, & shelves to be sure they are empty Turn of all appliances and lock all doors and windows Leave all old keys needed by new tenant or owner with Realtor or neighbor Let the movers know how you can be reached At Your New Home Check off all boxes & items as they come off the truck Install new locks Check on telephone, gas, electricity, water & trash pickup Utilities Electricity Gas Water Cable/Internet/Phone Cell Phone Trash Financial Employment Banks Credit Cards Loan Agencies Insurance Investment Broker Government Social Security Department of Revenue DMV (License/Registration) USPS Mail Forwarding Voter Registration Business License Office Memberships Professional Associations Magazines/Subscriptions Gyms Churches Community Groups Country Clubs Alma Maters Civic Organizations Licensing Boards Any Other Memberships Services Home (Lawn, Delivery) Housekeeping Childcare Doctors Lawyers Accountants Vet/Groomer Other Business Cards Friends/Family Newspaper Check pilot light on stove, hot water heater & furnace Ask mail carrier for mail that may have been held until your arrival Register car within five days after arrival in state or a penalty may apply when getting new license plates Arrange for medical services: doctor, dentist, etc. 22
NOTES 23
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When You Expect The Best Trust Empire West COMPANY HEADQUARTERS 602.749.7000 4808 N. 22ND STREET SUITE 100 PHOENIX, ARIZONA 85016 WWW.EWTAZ.COM