The Arizona Purchase Contract - Flashcards Flashcards

The Arizona Purchase Contract - Flashcards Flashcards Seller carrybackA seller financing transaction in which the seller carries a portion of the buyer's loan USDA financingU.S. Department of Agriculture program that helps low- and moderate-income individuals attain housing in rural areas through grants, loans, and loan guarantees 1) Shouldn't do2) Should do3) Should doSandy and DannySandy is a real estate professional who's working with Danny to sell his condo. Sandy just received an offer on Danny's property, but the offer isn't very strong and she would like to wait to present it to him in hopes that a stronger offer will come in. Can Sandy hold onto the offer?Your buyer client, Percy, wants to start searching for his dream house and knows he needs to obtain financing to accomplish that. What's his first step?Obtain a pre-qualification letter.Remi offered to purchase Vera's house for $350,000. He paid the earnest money, but couldn't get enough for the down payment by the closing date. Where will the earnest money go now?Vera is entitled to keep the earnest money because Remi breached their contract.Which type of financing occurs when a seller helps to financing the transaction by taking responsibility for a portion of the buyer's loan?Seller carryback FHA FinancingThe FHA doesn't actually provide financing; it insures loans. FHA-insured loans require a minimal down payment (3.5%). Buyers must pay a mortgage insurance premium (MIP) for the life of the loan, which may be either 15 or 30 years. FHA loans may be either fixed- or adjustable-rate loans.VA FinancingLike the FHA, the VA doesn't provide loans; it guarantees them. VA loans don't require a down payment or mortgage insurance, but VA buyers do pay a funding fee if the borrow doesn't put down a down payment of 2.15% on first time purchases, and 3.3% on a second purchase.VA loans may be either fixed- or adjustable-rate mortgages.DisclosuresLicensees must always disclose the following

information in a purchase contract or agreement:* The

identity of the prospective buyers and whether they have any relationship with the licensee (such as being a relative)* Any financial interest the licensee has with the buyer (such as an agreement with the licensee's sponsoring broker to manage the property after it is purchased)* Known material defects on the property* Any known material fact to the transaction (such as a buyer knowing that job loss is imminent, for example, or a seller knowing a zoning change is in the works)Disclosure laws exist to help consumers make informed decisions.Licensees can establish procedures for making disclosures

and recommend transactional parties consult with technical experts to ensure they have accurate information about real estate.Disclosure RequirementsDetermine whether the following characteristics about disclosures are true or false.1) Licensees must disclose any known material defects about the property.2) Property condition disclosures are never included with a sales contract.3) Licensees do not have to disclose any financial interest that they or their sponsoring broker have in the transaction.More PracticeBy talking with your clients, you've gathered more information about this transaction. Match each subsection of the purchase contract with the information that should go in that subsection.1) The Halls will pay

$378,000 for Jones's house: $3,000 in earnest money,

$40,000 as a down payment, and the rest from

conventional financing.2) Jones will provide possession of the property at close of escrow on December 16, 20XX.3) Jones will include an above-ground hot tub with the transaction.1) Subsection 1c2) Subsection 1d3) Subsection 1gMake sure to also ask the Halls how they'll provide the earnest money, and determine what addenda (if any) will be included with the purchase contract.What does a pre-qualification letter do? Provides some assurance of they buyer's ability to qualify for a loan

Handling OffersListing agents must promptly submit all offers to purchase or lease to the seller. Does this mean that a licensee may hold onto an offer while waiting for another offer to come in? No. Only the seller can authorize a delay in when an offer is presented. Any information about a presentation delay should be conveyed to the buyer's agent, who should then notify the buyer.What to Do? What to Do?In order to manage risk with Arizona contracts, which should a licensee do and not do?1) Present offers or counter-offers orally.2) Write the purchase agreement exactly as the client instructs, unless the client's instructions are illegal.3) Check all information on the purchase agreement for typographical errors.Addenda Incorporated (1f)Remember those disclosure forms we talked about in the previous section? Items like HOA disclosures, lead-based paint disclosures, and other addenda should be listed or marked in this section if they are being provided for the transaction.Fixtures and Personal Property (1g)The purchase agreement should list all fixtures and personal property that go along with the property. Sometimes sellers strip a property of valuable equipment, such as air conditioners, shelf systems, and counters. If items are attached to the property, they are known as "fixtures" and should remain there. The purchase agreement also should list in detail all removable items (whether they're fixtures or personal property) that your buyer client believes are part of their purchase.The Fixtures and Personal Property subsection of

the purchase contract includes a list of fixtures, such as:*

Ceiling fans and remote controls* Fireplace equipment (affixed)* Garage door openers and remotes* Media antennas/satellite dishes (affixed)* Outdoor landscaping (i.e., shrubbery, trees, and unpotted plants)* Timers (affixed)* Wall-mounted TV brackets and hardware (excluding TVs)Leased ItemsLines 65 through 67 address

leased items and appear as follows:"Leased items shall

NOT be included in this sale. Seller shall deliver notice of all leased items within three (3) days after Contract acceptance. Buyer shall provide notice of any leased items disapproved within the Inspection Period or five (5) days after receipt of the notice, whichever is later." USDA FinancingUnited States Department of Agriculture (USDA) loans are offered to rural property owners. These loans are issued by qualified USDA-approved lenders in local areas. USDA loans, like VA and FHA mortgages, are submitted electronically through an automated underwriting system and are guaranteed (not funded) by the USDA. The underwriting system used for government-backed mortgages is called the Guaranteed Underwriting System

(GUS).

Assumable MortgageWith an assumable mortgage, just as the name implies, the buyer assumes (takes over) the seller's existing mortgage. Not all loans are assumable, and with today's interest rates, buyers tend to apply for new loans with more favorable terms than the loans they might assume from a seller.Conventional mortgageA primary mortgage loan that is not guaranteed or insured by any government agency Pre-Qualification (2a)This subsection refers to the attached pre-qualification form from the buyer, if applicable.Pre-qualifying buyers doesn't guarantee that they'll actually be approved for a mortgage loan. It is important to keep in