What are the steps to buying a house in Arizona?

It’s no secret, buying a house is the biggest transaction that most people will make in their lifetime. Buying a house is not as simple as logging onto Zillow, or any other Real Estate website and clicking “buy now”. Instead, there are multiple steps that buyers must consider before they start the house buying process. This is why working with an experienced buyer real estate agent is so important.

Here are the steps all buyers must consider when purchasing a home in Arizona:

Discovery: Meeting with a Realtor

The discovery phase is arguably the most important part. During this phase you meet with an experienced realtor and discuss your homes, dreams, and desires when it comes to your new home. This can be things such as the desired amount of rooms, the location of the home, and the desired square footage of the home you are wanting. It is important to choose an experienced real estate agent at this point in the process. An experienced realtor will be able to ask you specific questions that you might not even know you should be asking. This includes things such as “how long do you plan to stay in this home?” and “what are some of the most important upgrades that you want in a house?” The real estate agent will take thorough notes during this meeting and start to gain an understanding of what you do and do not want for your new home.

After this initial meeting the real estate agent will go back to his team and the MLS (Multiple Listing Service) to start the search for your ideal home based on the inventory that is available. If you choose a high-caliber real estate agent they will also have a network of homes that are available for sale that are not yet listed on Zillow, Redfin, or other house listing websites. The real estate agent will then set you up on an automated search that alerts you the moment a house that meets your criteria is listed on the market.

This is crucial as buyers who are first to make an offer on a property are often the ones that win the deal. When choosing a real estate agent be sure to ask them their process for finding properties. If they are relying on you to bring them a house, this is an indication that the real estate agent will not work hard on your behalf to find the perfect home.

Buying Power: Understand how much home you can afford

This part of the process is crucial. In order to make a legitimate offer on a home, buyers need what is called a “prequalification” from a bank or mortgage broker. A prequalification is often a letter or official form that tells the buyer and the buyer’s real estate agent how much of a purchase price a potential buyer can afford. This will assist the potential home buyer in narrowing down the list of potential properties to the ones that potentially fit their budget.

How is a prequalification determined?

Buyers are prequalified on a list of criteria. Often times the criteria is shortened to an acronym called “DTI” which stands for “debt to income ration”. in short, DTI considers how much monthly debt the potential buyer has in comparison to how much monthly income the potential buyer earns. For example, if a buyer has $4,000 in monthly gross income and a monthly debt obligation of $1,000, their current DTI would be 25%.

The amount that a bank will qualify you for varies from bank to bank, however typically it is around 45% of your monthly income. The bank will then run a projection based on your income how much they will qualify you for on a monthly basis, and then subtract your monthly debt. For example, if the potential buyer has an income of $4,000, the bank will take 45% of this as the max monthly amount they can afford. This would work out to $1800 per month. They will then subtract out the monthly debt obligation of $1,000. In this scenario, it leaves the buyer with $800 that the bank says they can afford on a monthly mortgage. Once this monthly number is determined, they will work backwards to find the purchase price of the home which takes into account the current interest rates and the projected monthly payment amount.

Shopping

Once the buyer has a pre-qualification letter in hand, it’s time to shop for a home! The realtor will reference the list of homes they found during the discovery phase and find homes that match your criteria along with how much of a house the bank says you can afford. During this phase it is not uncommon for potential buyers to preview 10 or 20 homes before they submit an offer on a property. It is important to note that buyers should not feel bad about asking their real estate agent to show them multiple properties. Real Estate agents are skilled and trained in showing properties and understand that this is a major decesion. Realtors will make it clear that their job is to show as many properties that the potential buyer would like to review.

Offers and Negotiations

Once the buyer finds a property that meets their criteria, it is time to submit an offer. Your real estate agent will work on your behalf to create an offer that match your terms and proposed purchase price. In this stage it is highly important that you choose a real estate agent that has lots of experience in negotiations. It is not uncommon that your real estate agent will employ a variety of strategies to help you get the terms and price you are wanting.

Additionally, it is important that you trust your real estate agent. They will offer you their feedback on the strength of your offer and how to best position your offer to get accepted. Sometimes this also means that the real estate agent will help you manage your expectations regarding how much lower of an offer a seller is likely to accept. Be sure to have an open dialogue with your real estate agent to come to an understanding on what the best, strongest offer for the house will be.

Closing and Move In

Typically it takes anywhere from 45 days to 60 days for the house you are under contract for to become yours. During this time there is a variety of moving pieces that must be completed in order to make your transaction a success. This includes things such as title research, property inspection, property appraisal, and financing details. It is not uncommon for buyers to experience hurdles during this process that must be smoothed out by their real estate agent.

Once the property officially closes and records at the county office, the real estate agent will meet you at the house and give you the new keys! This is the most exciting step of the entire transaction. Once the keys are in-hand the new home owners are welcome to move in and make the house their own.