Once you’ve made the decision to place your home on the market and have selected a Realtor to represent you, there’s a relatively formal process to be followed. For convenience, I’m going to assume for the purpose of this narrative, that you’ve elected to use our team and start by offering you my congratulations on having made an excellent choice. If we’ve done our job properly, we will have already identified any cosmetic or maintenance issues that need attention in our earlier visits and persuaded you to have dealt with them before putting your home on the market. A great first impression can help deliver both an expedient sale and top dollar for your property.
Our first formal step will be to complete a series of forms that establish the nature of our relationship and authorize us to place your home on the market. These include the Agency Relationship Disclosure, the Listing Agreement, the Property Profile Form (MLS Input Form) and the Seller’s Property Disclosure form (or SPDS). As soon as those preliminaries are completed, we’ll immediately begin implementing what we believe to be the best and most comprehensive marketing plan in the business. We’ll be happy to share the details of that plan with you during our initial visit.
At this point, we suggest that you familiarize yourself with the documents you’ll be working with during the sales process. These include the Purchase Contract itself, the Buyer’s Prequalification form, the BINSR and the Loan Status Update Form.
When you do get an offer it’s likely that you’ll have a very short window in which to make a decision about how to proceed and understanding the forms will allow you to concentrate on the details of the offer rather than secondary issues.
Once you receive an offer, we’ll not only handle the direct negotiations for you but will hold your hands throughout the process until we’re able to achieve your goals. However, the ultimate decision as to what constitutes an acceptable price and terms will always remain with you.
Once there is a formal meeting of the minds, you’ll sign the purchase contract and that’s our signal to launch into a specific time line of activities.
Realtors and their clients are required to formally document the nature of their working relationship. In general, there are two types of “agency” relationships that can come into play in the course of a traditional residential real estate transaction.
There’s the Seller’s Agency relationship in which the Agent works only for the Seller and has obligations, called fiduciary responsibilities, to that Seller. These responsibilities include “undivided loyalty, reasonable skill and care, confidentiality, obedience and disclosure.”
Of course, regardless of the underlying agreement, a Seller’s Broker is required to treat all parties, including the Buyer and the Buyer’s agent, fairly and honestly and may not make misrepresentations on matters that are material to the transaction. Not surprisingly, Buyers and their agents have similarly documented relationships and those agents have the equivalent responsibilities and obligations to their clients and to potential sellers.
There’s also the Limited Dual Agency relationship. Limited Dual representation is a phenomenon that occurs if you wish to allow the Buyer client of RE/MAX Fine Properties to view your home and to purchase it. In this scenario, the Broker, RE/MAX Fine Properties, would be representing both the Buyer and the Seller with some limitations on the duties owed to either party.
In general, a brokerage firm acting in a limited dual representation capacity is not permitted to put one party’s interest ahead of those of the other party and cannot advise or counsel either party on how to gain an advantage at the expense of the other party. We are obligated to treat everyone fairly and honestly.
If you choose to work with us, these agreements and their implications will be explained at our first meeting. However, if you wish to review those agreements in advance, you can simply click on the images above.
The Exclusive Right to Sell Listing Agreement is what formally begins the effort to sell your home. It is the standard employment contract used to establish the relationship between the Seller and the Broker.
This agreement allows us to offer your home for sale through the Arizona Multiple Listing System which is a computerized database of properties for sale, giving you immediate exposure to the marketplace.
The key features are as follows:
- It establishes a beginning & ending date for the listing period
- It indicates the asking price along with a description of the property being offered for sale
- It authorizes lock box access to your property (unless you don’t want one)
- It allows us to place a sign in your yard
- It gives us permission to advertise your home in print media and on various websites
- It establishes the commission rate
You, as the Seller, will have certain responsibilities such as cooperating with showings, informing us of any past due HOA, taxes or mortgage related fees and completing the Sellers Property Disclosure Statement. Working together to get your home sold, along with open lines of communication, is the cornerstone of our business.
Unlike many other parts of the country where contracts are either crafted by attorneys to fit the specific situation or are standardized (but subject to an extensive post-negotiation review), Arizona is blessed with a situation in which standardized contracts, provided by the Arizona Association of Realtors, are used for more than 98% of all residential real estate transactions.
The value in this procedure is that the contract has been fully vetted by its continuous use and, for the most part, protects the rights of both buyers and sellers equally. It also means that the negotiations on the sale of the property are focused on the actual terms of sale and not on the efforts that each party might make to gain an advantage through the insertion of some deftly crafted clause.
However, this procedural advantage notwithstanding, it is still essential that buyers and sellers be both familiar with the contract terms and vigilant in its completion and execution.
Toward that end, prospective sellers are encouraged to click on the image above, read through the contract at their leisure and then call or email us if there are any questions regarding interpretation. While we are not attorneys, we are quite familiar with the generally accepted interpretations of the document by virtue of having negotiated hundreds of sales over the years. Should additional insight be required, we generally refer our clients to a real estate attorney who can assist them.
A good Realtor is one who helps demystify the process for their clients and a little bit of early education can make the process so much more pleasant.
You should know that a buyer must submit evidence of their qualification to purchase your home at the same time the offer is presented. If they are financing the purchase, they will either have a Prequalification Form (PQF) or the more extensive Loan Status Update Report (LSU). These documents affirm that the buyer qualifies for a specific loan amount based on their representations. It should be emphasized that the PQF is contractually required to be submitted with every offer and the LSU is required, at the latest, on day 10 of contract acceptance. The Loan Status Update form is then periodically updated throughout the transaction so that we always know the status of the loan application and process.
Similarly, if a buyer is paying cash, they must submit proof of their cash funds up front. That can either be a copy of their bank statement or a letter from their financial advisor or financial institution that verifies they have the cash funds to purchase your home.
In order to accomplish that goal, they hold the earnest deposit monies in escrow, order & review the preliminary title report, obtain title insurance for the buyer, obtain mortgage payoff information for the seller and prepare the deed.
In addition, the escrow officer in charge of “the file” is responsible for calculating the settlement statements to ensure that all of the closing figures are correct (including prorations, when required), arranging for both parties to sign all necessary documents, receiving funds from the lender, distributing those funds and making sure that everything is in order prior to recording the deed. Once the deed records, your proceeds will be released to you, usually in the form of a wire transfer.
Home sellers are required by law to disclose all known material facts about a property to a potential buyer. In order to ensure that there is standardization in the process, the Arizona Association of Realtors has developed the Sellers Property Disclosure Statement (SPDS) and mandated that it be used on every transaction.
While this document asks most of the pertinent questions that a buyer might generally have about a property, it does not relieve you, the seller, of the broader responsibility to answer any other questions that a prospective buyer may pose.
Among the disclosures a buyer is entitled to receive after entering into a formal contractual agreement is a letter from your insurance company that lists any claims that may have been made either within the previous five years or during the time you owned the property, whichever is less.
By requiring that these disclosures be made early in the overall purchase process, it provides the buyer an opportunity to inspect and do their due diligence with regard to those situations where either numerous claims or ongoing problems with the property might substantially impact both coverage and costs.
The Arizona Association of Realtor’s standard contract of sale provides a buyer the right to conduct inspections, at their expense, within 10 days of the date the contract is executed — unless an alternative period of time is mutually agreed upon.
The most common options selected are the structural home inspection, which addresses the major systems in the house such as plumbing, cooling, heating, electrical and pool equipment and the termite inspection. It should be noted that about half the homes sold in the Valley show some evidence of termite infestation, it’s very common in Arizona and not, in itself, any reason for undue concern.
However, there are a number of ancillary inspections that a buyer might want to consider including a lead based paint inspection (for those homes built prior to 1978), fire sprinkler, radon gas and mold.
Home inspectors in Arizona must be licensed and a good source for references is the American Society of Home Inspectors (ASHI) which requires that its members adhere to a Code of Ethics and Standards of Practice. They also require members to have passed written examinations, performed at least 250 inspections and completed 20 hours of continuing education each year. They can be reached at 1-847-759-2820 or accessed via the internet at www.ashi.com.
Termite inspectors must be licensed by the State of Arizona and are under the auspices of the Pest Management Division of the Department of Agriculture (602-255-3664) or https://agriculture.az.gov/
Once an inspection has been performed, a buyer may submit an itemized list of any structural or mechanical concerns to you, the seller. You will then have an opportunity to respond to that request (usually within 5 days). If there are items that you are unwilling to fix that are of concern to the buyer, the buyer is entitled to cancel the contract and have their earnest deposit refunded.
Any other items of importance (“material concerns”) which might ultimately affect a buyer’s decision to proceed with an agreement must also be investigated during the inspection period. This includes, but is not limited to, things like airport noise and flight patterns, flood zone information, Meagan’s Law, the community CC&R’s, etc. See Disclosures for additional details.
If you don’t already have a home warranty, you may not be familiar with just how great an impact the home warranty has had on the real estate marketplace. Insurers have been offering such coverage for over 25 years and it has virtually become a standard feature of real estate transactions here in the valley. In specific, the home warranty is an insurance policy (offered at a relatively nominal cost) that protects the buyer from any problems that might occur after the closing. The party who pays for the policy is negotiated in the contract.
The warranty generally covers all systems (electrical, heating, cooling, plumbing, etc.) in the home for a period of one year from the closing date. And, should anything go wrong with a covered item or be in need of repair during that period, the buyer can simply call the warranty company and they will send a contractor to repair or replace the item at no cost (note: there is a nominal service charge involved).
The use of this tool has effectively eliminated uncertainty from a buyer’s mind and transformed a traditionally contentious part of the real estate negotiation into just another minor part of the purchase process. It’s a WIN-WIN for all concerned.