Those are just a handful of the reasons that makes the Northwest Valley an inviting winter destination for Canadians. And with prices still low and the Canadian dollar still strong, opportunity remains to stop squandering money on winter vacation rentals and buy a home in the sun of your own.
There are many questions that arise when purchasing real estate in another country, even if it’s only a matter of crossing the border south from Canada into the United States.
Here’s a place where you can get some answers and search for homes at the same time in a convenient A – Z format. If you have questions not answered here, drop me a line via the contact form and I’ll help however I can.
Agency – In short, an agent representing a buyer or seller has an agency relationship with that client and owes their fiduciary responsiblity to them.
Arizona Association of REALTORS – the local branch of the National Association of REALTORS and the group who provides approved contract forms to member agents. Most common of these is the AAR Residential Resale Purchase Contract, a 9-page form that lays out the details of the contract.
Adult Communities Addenda – It’s common practice for listing agents to ask for a “mandatory” Adult Communities addenda when buyers are purchasing homes in one of the Phoenix area’s many retirement communities. The reality is these addenda aren’t mandatory and in some cases contradict the standard AAR resale purchase contract. Make sure you and your agent discuss the addendum before blindly signing what can be a disadvantageous form.
BINSR – The Buyers Inspection Notice and Sellers Response form is the form used no later than the conclusion of the inspection period to request repairs, accept the home as is or cancel the contract. Failure to provide a BINSR to the seller by the end of the inspection period means the buyer is accepting the house as is.
Bungalow – What our friends north of the border refer to as a bungalow here in the Valley is referred to either as a single-story or ranch home.
CLUE – Also known as the Insurance Claims History report, this generally is provided by the seller to the buyer and lists any insurance claims that have been made on the property either over the last five years or since the seller has owned the home, whichever is less. On lender owned properties, the banks will almost always require the buyer to waive the CLUE report.
Cure notice – If one party in the transaction fails to complete a task as required by the AAR Residential Resale Purchase Contract, the other party must issue a Cure Notice giving the first party three days to correct the situation. It’s actually both a bit less complicated and a bit more detailed than it sounds.
Dual agency – a scenario where the brokerage represents both the buyer and seller in a transaction. This most often is discussed as one-agent dual agency, where the agent represents both buyer and seller in a limited capacity with consent of both parties but dual agency exists anytime both sides of the transaction are being represented by one or more agents of the same broker.
Earnest deposit – Essentially a good faith deposit, the earnest deposit is given to the escrow company after an offer is accepted and is applied against the final cash due and closing costs. In the event of a dispute, the escrow company will use the contract to determine who will get the earnest deposit. Canadians, keep your checkbooks at home – your earnest deposit will have to be wired across the border because local escrow companies can’t process Canadian bank checks – even on U.S. dollar accounts.
FIRPTA – The Foreign Investment in Real Property Tax Act requires buyers to withhold 10% of the proceeds when a foreign national sells property here in the States. In reality, the withholding is done by the escrow company. The reason for the tax is Uncle Sam wants to make sure he receives tax revenue on what are presumed capital gains on the property. There are exemptions to FIRPTA so make sure to double-check the situation with a tax professional.
Inspection period – the period after contract acceptance during which the buyer is to complete their due diligence, including home inspections, inspections for wood destroying organisms and a host of other possible items. It’s important to note that there is no statutory inspection period; it’s negotiated. In the standard AAR Residential Resale Contract the inspection period is 10 days but this can be changes as a condition of contract acceptance.
Jobing.Com – home of the Phoenix Coyotes, located on the southern edge of the Westgate City Center just east of Loop 101 south of Glendale Avenue. And, coming this April for the first time in eight years, the playoff Whiteout has returned.
Key Management – a property management company I recommend, can be contacted at 602-298-1161.
Lakefront property – If you’re purchasing lakefront property in Phoenix, a city in the middle of the Sonoran Desert, be advised that all the lakes are manmade. Most lakes in subdivisions serve a secondary purpose, either as a repository for runoff from the infrequent rain or for recharged water. Outside of the main part of the city there are several lakes – Bartlett, Pleasant, Apache, Canyon and Saguaro – which are part of the reservoir system partially responsible for providing water to the city.
Maricopa County – The county encompassing the Valley of the Sun, stretching from Gilbert and Mesa in the far east to Buckeye, Wickenburg and Wittman in the far west. Maricopa County is larger than several New England states, which is why I always recommend out-of-state buyers take a day to get a feel for the different areas that make up the Greater Phoenix real estate market.
Property management – An absolute must for foreign investors in Arizona real estate. Property managers collect rents, handle tenant issues and hold security and other deposits given by the renters to the landlord at the start of the lease period. They also screen tenants and handle the writing of the formal lease.
Sales tax – There is no sales tax due on the purchase of real estate in Arizona.
U.S. Federal Fair Housing Act – This federal statute prohibits agents from steering buyers to or from any particular areas based on anything other than objective criteria provided by the buyer. In other words, it’s against the law for a real estate agent in the United States to discuss what areas are “good”, “bad”, “quiet”, “safe” or to discuss the demographics of any particular area. Violations of the Fair Housing Act are punishable by a $10,000 fine and possible loss of the real estate license.
So don’t ask, please.
Visa issues – Foreign nationals cannot improve property they own in the United States if they ever, ever, ever intend to use the property as a rental. Doing so would constitute materially participating in a business in this country without having the proper documentation and can cause nightmares when you cross the border.
So don’t do it, please.
Walkthrough – The final walkthrough is conducted a couple of days before the actual close of escrow to make sure the property is in substantially the same condition as it was at contract acceptance and, if repairs were negotiated, to make sure these repairs were completed.
Water supply – Inside the Valley, there is no difference in water supply from one community to the next assuming you are not purchasing a property connected to a small, private well. We’re all in this together.
Exchange rate – Before you exchange your currency through your local bank, consider contacting a currency exchange firm that specializes in such transactions; it’s rare that a currency exchange firm, which trades in the open market, would be unable to best the rate being offered by a local bank that generally only marks the rate to the market once a day.
Zed – I’ve got nothing for this, except I have to admit it sounds better than zero.