FAQ's for Candadians purchasing real estate in Arizona.
Have you been thinking about buying a vacation home or investment property here in Arizona? If you have then you've come to the right place. We are often asked questions from our Canadian clients about the buying real estate in active adult communities here in Arizona. So in order to better serve our friends from across the border, we thought we would provide some answers that would help in your decision making process.
Let's begin with "not everything you may have heard about our real estate market is true". We have had a significant down turn in our real estate market over the last few years and have seen record levels of foreclosed homes. Have we hit bottom? Depending upon whom you talk with we may have already started to rebound.
The question I know you want the answer to is "Are there still deals out there"? The answer is YES and we've helped many Canadian's like yourself find great deals here in the and the Phoenix area.
Where do we start?
First, we recommend reading the "Guide to Foreign Buyers Purchasing Property in Arizona" to learn more about buying a home here in Arizona. This guide was created a by a team of specialists in their field that guide you through most of the questions you'll have. You can request your copy by clicking this link!
Then find an experienced real estate agent that you can trust and rely upon for valuable information and "we" would welcome the chance to help you! We can guide you through the process of buying real estate here in Arizona especially in active adult (over 55) communities. If you're looking to purchase a vacation or investment property, we have the professional resources to ensure a smooth transaction. We can recommend lenders, inspectors, title companies, property management services and contractors to you.
Does Arizona offer buyer agency?
This is the most important question you can ask. The state of Arizona allows for buyer agency (which I do) and the seller or builder pays the cost. It's important because as a buyer's agent I owe my fiduciary responsibilities to you and only you.
I've heard I can just call the agent that has the home listed?
You're correct you could call them but that's where some buyers get in trouble. If you are working with the listing agent, they represent the SELLER not you in this transaction. Why would you pass up representation especially since there is no cost to you?
Couldn't just any agent help us find a home?
Again, that's possible but we would recommend that you look for two things-
1- An agent that completed their ABR (Accredited Buyer Representative) designation. This ensures the agent understands how to help you , as a buyer, find the home that right for you.
2- An agent that has completed their SRES (Senior Real Estate Specialist) designation and specializes in active adult homes. Some agents try to dabble in this but then get themselves in trouble when they miss a HOA cost that is not typical in traditional family areas.
If buying a new construction home, should I have an agent with me?
Builders in our area are more than happy to work with agents and yes you should have someone there representing you. Buying a home, especailly a new home, is an exciting time and your focus will be on the home rather than the terms, etc. and that's where we come in.
Are there any restrictions for Canadian buyers purchasing a home in Arizona?
There are no restrictions for foreign nationals buying property here in Arizona that we are aware of.
Who will draw up the contract and can I get a copy of it prior to coming to Arizona?
In Arizona, real estate agents prepare, present and negotiate the offer on your behalf. Another good reason to have a competent agent representing you.
Of course we can supply you with a sample contract. In fact we went as far as searching out a sample contract with explanations of what the terms mean. This makes understanding the contract much easier and when it's time to write the offer you will already understand the process.
If I don't want to pay cash can I obtain financing to buy in Arizona?
Yes, there are many lenders that can help Canadians obtain a suitable mortgage when purchasing a home in Arizona. If you want to obtain a mortgage in Arizona you will need the following information before a lender can assist you.
1. Copies of passport and visa.
2. Last two pay stubs.
3. Last two bank statements.
4. Last two years tax returns, if self employed a letter from an accountant stating how many years you've been in business, and business tax returns.
5. Verification of two years of employment history.
6. International credit report-lender will order.
7. Set-up an American bank account to transfer funds.
8. Down payment around 25% to 35% of total purchase price of home.
What costs are involved with a Canadian purchasing a property in Arizona?
Most of the cost involved in purchasing a property will be fees that you pay to the lender (Seller pays my commission), which is primarily done through a title company. Arizona is a title state and we do not use Attorney's to process our real estate purchase and sale contracts.
You will also most likely pay for a home inspection, termite inspection, an appraisal, the escrow (title) fees, title insurance, recording fees, property taxes and homeowner's insurance. A good rule of thumb is to figure your closing costs will be approximately 3% of the purchase price. This cost will be considerably less if you are paying cash. It will be around 1% of the purchase price for cash buyers.
Does Arizona have a transfer tax and who pays your commission?
Arizona does not have a real estate transfer tax and the Seller or builder pay for all real estate commissions. We can represent you and there is NO COST to you for my services.
What about property taxes in Arizona?
You will be pleased to know how low our property taxes are. Each city and county will vary slightly, but taxes are usually around .8 to 1.2% of the assessed value of the property.
Are Canadian buyers subject to capital gains tax when their Arizona property is sold?
The foreign Investment in Real Property Tax Act (FIRPTA) imposes a U.S. tax on income and gains from real estate owned by "non-resident aliens" at the same graduated rates applicable to U.S. persons. It is recommended you consult with an accountant or lawyer for more details.
Can I lease my property out when not in use?
Yes. Typically, our rentals are done either furnished for a short-term seasonal basis (1 to 4 months) or unfurnished (6 to 12 months) for a long-term basis. If your property is located within a Home Owner Association Community, you will need to review your Covenants, Conditions and Restrictions (CC&R's) to determine the length of time you want to lease your property.
We have a very large seasonal rental pool here and have clients from around the world who visit sunny Arizona during the fall and winter seasons to enjoy our climate, golf, entertainment and recreational activities.
What is the best way to decide where to buy?
We suggest that you first consider what activities interest you, such as golfing, dining, shopping, hiking, tennis, arts or other entertainment venues. Then, concentrate your search near where those activities are located. For example, if golf is of the first priority, then golf communities maybe your first choice. Our job is to take your dream list and help guide you to the communties (Active Adult & Traditional) that best fit your needs.
I've heard active adult communities are for old people?
On the contrary, some over 55 communities like Trilogy at Vistancia, Sun City Festival and other growing communities offer a wide variety of ages. If buying from the builder you only need to be 45 and a lot of people (me included) took advantage of this.
Are HOA budgets and reserves readily available for my review?
Our real estate contracts are buyer friendly, meaning that you have an inspection period to not only review the condition of the property, but the HOA information before you move forward with the purchase of the home. This protects you from buying into a community blindly and gives you a better state of mind that moving forward is a safe and secure investment.
Hopefully you've found this information has helped with some of the confusion you may have heard in the past about buying a home in Arizona. We've assist many Canadian clients buy and sell real estate here in Arizona and are confident we can do the same for you.
Please feel free to give us a call anytime at 623-271-4234 or send us an email at Jay@RetiringToAz.com and we would be happy to answer any of your questions and would be honored to assist you with your home purchase here in sunny Arizona.