Inspections & Appraisals

The Process

Initial Agreement and Deposit

An effective agreement is a legal arrangement between a potential purchaser and the property’s seller. Some important tips to keep in mind to streamline the process:

• Keep written records of everything. This includes verbal agreements, counter-offers, and addendums. We can assist drafting all written records and provide copies for each party.
• Keep up with the schedule. You and the seller will be given a timeline to seal every stage of the real estate closing contract. Please refer to our Critical Date List.

The Closing Agent

Once both parties have agreed upon a contract and signed all documents, either a title company or an attorney will act as the escrow, or closing agent, and you will put down your deposit. The escrow is a neutral third party that will hold, receive, and distribute all funds associated with your transaction until the closing date of the property. They will research the complete history of the property to ensure that the title is clear of encumbrances by the date of closing and that new encumbrances are added correctly to the title. Before escrow can be closed and you can officially purchase the property, all contingencies agreed upon in the Purchase Agreement must be met.

How to Hold Title

There are several types of ways to hold title, or ownership, of a property. Each title method has different implications on ownership transfer, collateralization, financing, and taxation. We recommend speaking with an attorney or tax advisor about the pros and cons of each method, so you can determine the best option for your property. We would be happy to connect you with trusted attorneys and tax advisors in the area.

Inspections

As part of the contingencies outlined in the Purchase Agreement, you will schedule a licensed property inspector to come to the home within the time frame agreed upon by both parties. Inspectors will determine the condition of the property and alert you of any problems. You may wish to have multiple inspectors look at the property who specialize in certain areas (ie. roof or plumbing inspectors). If you are purchasing a commercial property, you might be required to complete an environmental audit or soil test on site for the lending institute. If the inspections reveal issues to the property not specified in the purchase agreement, you may request a renegotiation of the terms of contract (usually the price). Once you are satisfied with the inspections and terms of the purchase agreement, the contingencies will be removed.

Appraisals and Lending

Keep in contact with your lender so you are notified when new documents are required to approve your loan. If the Purchase Agreement is conditional upon financing, the lending institute will require a home appraisal by a third party licensed appraiser. The appraiser will confirm the investment in your property is accurate. Appraisers are experts in determining the value of property based on a variety of factors including building costs, square footage, operating income, and more. Double check with your lender two weeks prior to closing to confirm the loan will be approved on time.

Association Approval

Some properties might require an association’s certificate of approval prior to purchase. If so, make sure to request all rules, regulations, and necessary documents from the seller. In the Purchase Agreement, you and the seller will agree on a time frame for you to submit paperwork or set up any appointments required for the association’s approval. Once accepted, your closing agent will request the original copy of the approval letter, so it can be recorded with the deed in the county record books during the property closing.

Association Disclosures - Information Required by law to be provided to the buyer

1. A copy of the bylaws and the rules of the association.
2. A copy of the declaration of Covenants, Conditions and Restrictions ("CC&Rs").
3. A dated statement containing:
   • The telephone number and address of a principal contact for the association, which may be an association manager, an association management company, an officer of the association or any other person designated by the board of directors.
   • The amount of the common expense assessment and the unpaid common expense assessment, special assessment or other assessment, fee or charge currently due and payable from the Seller.
   • A statement as to whether a portion of the unit is covered by insurance maintained by the association.
   • The total amount of money held by the association as reserves.
   • If the statement is being furnished by the association, a statement as to whether the records of the association reflect any alterations or improvements to the unit that violate the declaration. The association is not obligated to provide information regarding alterations or improvements that occurred more than six years before the proposed sale. Seller remains obligated to disclose alterations or improvements to the Premises that violate the declaration. The association may take action against the Buyer for violations apparent at the time of purchase that are not reflected in the association's records.
   • If the statement is being furnished by the Seller, a statement as to whether the Seller has any knowledge of any alterations or improvements to the unit that violate the declaration.
   • A statement of case names and case numbers for pending litigation with respect to the Premises or the association, including the amount of any money claimed.
4. A copy of the current operating budget of the association.
5. A copy of the most recent annual financial report of the association. If the report is more than ten pages, the association may provide a summary of the report in lieu of the entire report.
6. A copy of the most recent reserve study of the association, if any.
7. Any other information required by law.
8. A statement for Buyer acknowledgment and signature are required by Arizona law.

Property Insurance

Basic property insurance plans will protect you from damages to your property including fire, theft, and certain weather events like wind or hail. While most states do not require a property owner to have coverage, most mortgage lenders will. Depending on your intentions for the property, you will be required to either purchase homeowners insurance if you plan to live in the home, or landlord insurance if you wish to rent out the property as an investment initiative.