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Stigmatized Property Law

September 26, 2018 By

AZ Stigmatized Property LawSellers in Arizona are protected by the Stigmatized Property Law which states:

“No criminal, civil, or administrative action may be brought against a transferor or lessor of real property or a licensee for failing to disclose that the property being transferred or leased is or has been:
– The site of a natural death, suicide, or homicide, or any other crime classified as a felony
– Owned or occupied by a person exposed to the human immunodeficiency virus, or diagnosed as having the acquired immune deficiency syndrome, or any other disease that is not known to be transmitted through common occupancy of real estate
– Located in the vicinity of a sex offender
Failing to disclose any fact or suspicion noted above shall not be grounds for termination or rescission of any transaction in which real property has been or will be transferred or leased.”

This AZ stigmatized property law has been interpreted by legal counsel to indicate there is no obligation for seller to disclose:
– a natural death, suicide, homicide or felony occurred on the property
– it was occupied or owned by a person with HIV or AIDS or any other disease that cannot be transmitted by living in the same property
– a sex offender lives in the area

Currently, all other material facts and latent defects are required to be disclosed by seller. A material fact is something that a reasonable person would deem important in making a purchase decision. A latent defect is an issue that may not be immediately noticeable or seen at all.

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Home Seller Mistakes

September 14, 2018 By

Phoenix home seller mistakesIf you are planning to sell your home, but secretly want to make selling it difficult, please make sure you:

– have such a restrictive schedule that showings can only be Tue mornings
– close all the blinds and keep all the lights off so it’s nice and dark
– don’t pick up after your pets outside so buyers have to dodge land mines
– have your house looking like you just threw a bachelor party last night
– leave your barking dogs caged up at home for all showings
– quietly sit in back yard anxiously waiting for buyer to leave
– stay inside your home sitting on the couch watching TV during each showing
– put a handwritten sign on a random bedroom door saying “Do Not Enter”
– follow buyers and agents all around your home explaining every detail
– confront buyers and agents directly for honest feedback when they try to leave

You may be thinking “I would never be that foolish” but I raise each of these real world scenarios because I have encountered them (numerous times each) over the many years I have been practicing real estate.

It’s mind-boggling to think people believe nothing is wrong with some or all of the above actions. It’s even scarier that their agents may not have stated the obvious to them, when trying to make it easy to sell their home.

Homes don’t sell for at least 1 of 3 reasons (and sometimes it’s all 3): it’s overpriced, it’s poorly marketed, it’s hard to show. The first two are obvious, the third not so much. By hard to show, I mean a combination of any or all of the above, whereby the home does not present well or a buyer cannot be comfortable while viewing the home.

Please keep this in mind to make selling your Phoenix home a pleasant experience!

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Arizona Well Water

August 27, 2018 By

Arizona Well WaterA home in Arizona not served by municipal city water is likely to have a private well on property or use of a shared well. Under current FHA loan guidelines, a home can share a well with up to 3 other homes (so 4 homes total on shared well for FHA eligibility). What to know about well water in Arizona:

If well performance (flow test) or water quality (content analysis) is important to buyer, they should have well inspected during home inspection period. These water quality tests are a lender requirement on FHA loans.

When the property includes a domestic water well, the Arizona purchase contract requires use of a Domestic Well Water Addendum (DWWA) which must be delivered to buyer, in addition to the Seller Property Disclosure Statement (SPDS), within 3 days of contract acceptance.

Seller must provide information about well registration and ownership, well agreement in the case of shared well ownership, whether the well is on property or off property, whether property is within an Active Management Area (AMA) and name of AMA if any.

The DWWA also requires seller to provide information regarding health hazards relating to well, well flow tests for yield and recovery, whether well has ever failed to produce adequate water for domestic use and any existing problems with water pressure, well pump, pressure tank or other well equipment.

Buyer may disapprove of any items on DWWA within 5 days of receipt, or during the home inspection period, whichever is later. At time of transaction closing, escrow company sends a change of well information/ownership form and transfer fee to the Arizona Department of Water Resources (ADWR).

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Instant Offer

August 15, 2018 By

Instant Offer to sell your homeWhat is an instant offer? There has been growing interest of late (the earliest programs started in 2014) in getting an instant offer to sell your home, without making any repairs or improvements, and close in a 2-3 weeks. Known as iBuyers, companies like 0pendoor and 0fferpad have taken the original concept started by We Buy Ugly Houses and given it a much-needed improved image. Simply put, these are investors who will purchase your home in any condition at below market value in exchange for the convenience of a guaranteed quick sale.

Why would anyone want to sell their home for less than market value? This could make sense for people relocating, divorcing or selling an estate. In other words, for anyone looking to give up money to save time. It’s the paramount of all trade-offs, where humans trade time for money every day, in a quest for convenience. Think of it like eating: cooking a meal from scratch takes the most time but costs the least money; cooking a prepared meal takes less time but costs more money; eating out takes no time to cook but costs the very most.

Are these instant offer programs here to stay? Things just got very real when Zillow recently announced a test program to act as a buyer of homes in Phoenix. So now they will provide you with an estimated home value for your property and offer to buy it from you. Hmmm… hardly seems independent or objective to me. How do you really know what your home is worth? Without getting an impartial 3rd party opinion, it’s like taking collectibles (think baseball cards) to a store, asking the clerk what they’re worth, then accepting their offer to take them off your hands. Does “in that condition, the most I can give you is $20 for the Babe Ruth rookie card” sound suspicious to you?

Does it make sense to sell your home below market value in a hot and rising market (ie. a seller’s market)? Probably not. The majority of homes are selling within 30 days (time on market) then buyers typically need another 30 days to close the deal with their lender. The homes of my clients are selling much faster, often getting multiple offers in the first week. Which brings up another point: exposure to the open market is good for sellers since it allows them to experience price discovery (the process of determining the price of an asset in the marketplace through the interactions of buyers and sellers). So if you don’t expose your home to the market and choose to make a private deal with one party to buy it, how can you be sure you got a fair price? You can’t.

What to do? As with most things in life, price shopping will be rewarded. That is, get several opinions of value. Perhaps you get an instant offer, then get a realtor’s opinion of value, and finally order an appraisal on your home. Review all three numbers carefully and be sure to look at your expected net proceeds under the instant offer versus selling with a real estate agent. With the instant offer companies charging 7-13% in fees to take your home off your hands for below market value, the typical 6% commission model suddenly looks pretty good. And with a realtor, you have someone working for you instead of against you like with the instant offer. The more you make, the more the agent makes. The less you make in the instant offer, the more profit the buyer company makes.

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Title Insurance Policy

July 25, 2018 By

Title InsuranceTitle insurance protects a policyholder from any events that occurred before the issuance of the policy. The purpose of title insurance is to protect the policyholder against any losses that may arise from defects or liens associated with title.

When buying title insurance, the title insurance company researches the history of title through public records relating to the property and trace the chain of title in an effort to determine whether there are any existing liens, encumbrances or other claims associated with the property. Once the insurance company has explored all relevant public records, they issue a title commitment for issuing a policy. A title commitment is a contractual obligation for a title insurance company to issue a policy for a particular property. It includes a statement of the terms and conditions under which the insurance company is willing to insure the property’s title and lists any exclusions that the company deems uninsurable, plus identifies any liens on property that have not been paid off.

There are several types of title insurance policies:
1. ALTA Owner’s Policy protects the buyer and in Arizona is paid for by the seller (as called for in the AZ purchase contract). This non-transferable policy protects the insured against any claim of title that may arise from something that is a matter of record, plus protects against hidden risks like forgery in the chain of title, fraud, lack of capacity by a party to a past transaction involving title or improper delivery of the deed. This type of policy is usually only available if the legal description of the property is a lot/neighborhood description. A property with a “metes & bounds” description may not be eligible to obtain this type of policy.

2. ALTA Lender’s Policy protects the lender on title and their claim against the property. This policy insures against matters of record and hidden hazards, plus against unrecorded liens and things that can be ascertained by a physical inspection of the property (such as encroachments). The Arizona purchase contract stipulates that this policy is paid for by the buyer and stays in force until the loan is paid off.

3. Standard Loan Policy protects the lender and is paid for by the buyer. This policy only insures against matters of record and hidden risks.

No title insurance policy will protect against government acts or regulations such as zoning and no policy will protect against every claim. There are always exceptions listed in the title insurer’s Commitment For Title Insurance, as Schedule B items and should be reviewed by buyer very carefully in a transaction. Lenders consider title insurance an ideal form of evidence of title because title insurance companies research public records extensively before taking on the responsibilities created when they issue title insurance.

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Andrew Robb - RE/MAX Fine Properties, 21020 N Pima Rd, Scottsdale AZ 85255