This Arizona Home Selling Process page lists and briefly discusses the primary documents and events involved in a residential real estate transaction primarily from the seller’s point of view.
Available elsewhere on this website are a couple of E-books:
- 450 Sell-Fast Ideas … a really good guide regarding Preparation
- How to Sell Your Arizona Home – Step by Step … answers “What’s next?” and “Why?”
Presented below is a list of the primary documents involved in the Arizona homes selling process where a Realtor®, one or more, is managing the transaction for the buyer and/or the seller. List items are links to sample versions of the documents themselves. All of these documents originate with the AAR, Arizona Association of Realtors®, and are available for purchase by the public at a very nominal fee.
Each of these is a legally binding document and they all total about two dozen pages. The following discussion is NOT comprehensive for any part of any of these documents. Just for the Purchase Contract alone, TNT have been in continuing-education classes that total more than an hour per page.
Buying and selling residential real estate is probably most simple in the state of Arizona, but even here it’s complicated. Plus, it’s by far the most valuable asset most folks have. Buying or selling, the professional guidance and assistance of a good Realtor® is fundamentally prudent … but there is a difference. In fact, there is probably a greater difference in real estate agents than for any other professional group … from the newly licensed who has never been involved in a real estate transaction and may not even be a Realtor®, to TNT who have decades of experience in Maricopa County through several hundred transactions.
To sell or buy, give TNT a call! You’ll be glad you did.
- ARMLS Listing Agreement -ER
- Listing Agreement – Short Sale Addendum -Feb2017
- Pre-Qualification Form -Feb2017
- Purchase Contract -Feb2017
- Purchase Contract – Short Sale Addendum -Feb2017
- Seller Property Disclosure Disclosure – SPDS -Feb2017
- Buyers Inspection Notice and Sellers Response – BINSR -Feb2017
Listing Agreement – the seller is agreeing here to a good number of issues regarding access, condition, security and other aspects of the property all of which are important to the success of the sales effort. Highlighting these would provide a good starting checklist for preparation and presentation of the property. Likewise, the Short Sale Addendum to this agreement highlights some of the special issues regarding short sales.
Sellers need to be fully aware of the commission to be paid by the listing broker to the buyer’s broker as specified in Section 6 of the Listing Agreement. Otherwise, listing agents commonly offer less than 50% of the total commission to buyer brokers. To some degree, this will be a detriment to “traffic” to the property, in which case the reduced commission offering is NOT in the seller’s best interest.
The sample here is the “ER”, Exclusive Right, form of the listing agreement. With this the agent identified in the form is the one and only, exclusive, agent for the seller and to whom a commission is to be paid when/if the property is sold. There is also an “EA”, Exclusive Agency”, version of the form that is largely the same except that the seller reserves the right to find a buyer themselves, totally separate and apart from any agent, and thereby not be required to pay any commission. The muddle this EA agreement creates is obvious. The yard-sign, advertisements, etc., by the listing agent are likely to be the driving force behind any inquiry made directly to the seller. Plus, the most serious complications start when the offer is submitted. Who manages the transaction? What if the transaction becomes a disaster for the seller? Because of the inherent muddle, the vast majority of Realtors will not even consider an “EA” listing agreement.
Listing Agreement Short Sale Addendum – Ultimately, the seller’s lender will have indirect control of the sale transaction, and will be the major factor affecting the time required for seller and buyer to establish an agreement on the terms, conditions and price. This form documents the essential nature of a short sale, the unique role that the lender plays, and the extra time the transaction is likely to take, with the primary purpose of making the seller fully aware of the ordeal he/she is likely in for.
Buyer Pre-Qualification form – is submitted with a purchase offer that involves financing, but the quality of the “pre-qualification” can vary tremendously. The form can indicate, for example, that very little has actually been done to determine the financial capacity of the buyer. If so, the buyer needs to be told to go get a Pre-Qualification that means something. Further, a good listing agent should call and interview the lender issuing the Pre-Qualification to get some feel for the quality of this document and the true financial capacity of the buyer.
Purchase Contract – the core of the offer and the eventual agreement. For an overall grasp of the nature of this document, consider that:
- it has evolved over decades.
- changes from one version to the next have varied from the relatively minor to a 50% increase in the number of total pages
- it is an AAR document … Realtors® are commonly on both sides of the transaction, so it is intended to be generally “fair” to both sides
- … but can be filled-in, or modified by addendums, to be very one-sided
- it is involved in a VERY LARGE number of transactions on an ongoing, everyday basis so it “works” … in terms of coverage of the issues and being consistently “understood” by people in the industry.
In evaluating purchase offers, sellers should consider the sincerity and nature of the buyer first and foremost … not price. Considering all factors and issues … how likely is the buyer to close the deal? This is especially true in a short sale situation. If the conclusion is that the buyer is likely to not be able or willing to ultimately close, in most cases it’s probably advisable to reject the offer … irrespective of the price.
Short Sale Addendum to the Purchase Contract – lines 9 to 12 reflect the essence of the situation. There really is no “contract” until the seller and seller’s lender reach agreement on the terms and conditions of settlement, which VERY often involves renegotiation between the seller and buyer over the sale price and/or other contract terms and conditions. This usually takes at least a few months from submission of the short-sale package by the list agent to the lender, and can take many months. In considering an offer, sellers are advised to evaluate the buyer first and foremost on the basis of patience … is the buyer willing and able to wait, possibly many months, until the lender gets around to evaluating the short sale offer. The second buyer evaluation factor concerns flexibility regarding price … what if the lender counters to a significantly higher price … commonly done in a rising market. A “low-ball” contract price with an “investor” buyer is likely not going to close. Look for another buyer.
SPDS – referred to as the “spuds”, has long-term risk for the seller … yet it is usually filled out very rapidly and with not a great deal of thought … NOT a good idea. Even years after the transaction closes, if this document is found to be not true and in a material way, the seller is likely liable for any costs associated with the issue. As indicated on the cover page … DISCLOSE – DISCLOSE – DISCLOSE … you will likely be “off the hook” for anything mentioned here … and forever “on the hook” for any material issue not mentioned here.
BINSR – This document is so important and so complicated that it has its own discussion page. The seller needs to be aware that the transaction is somewhat questionable until the inspection process is completed. The nature of BINSR that the seller gets from the buyer is largely “the ballgame”. If the items listed in the BINSR for repair or replacement are few and not significant, the “game” outcome is largely determined. If the items are many and/or significant and costly, the seller has some decisions to make.