This article will introduce you to the concepts, terminology, and vocabulary that you need to know to better understand the Phoenix real estate scene.
Real Estate Sales Process
The real estate sales process in Phoenix is relatively simple. After a transaction is agreed to, the seller will prepare all of the necessary paper work (such as the sales contract and mortgage papers) and submit them to the lender for approval. The lender will review the documents and, upon approval, the transaction will be completed. The paperwork associated with a real estate transaction can take a while to process, so be sure to **expect** the wait.
Types Of Real Estate Deals
There are three basic types of real estate deals that you will encounter in the Phoenix community. First, there is the traditional “for sale by owner” (FSBO) deal. For someone looking for quick and easy real estate transactions, an FSBO deal is the perfect choice. There is usually no real estate agent involved in an FSBO deal, so you don’t have to worry about the commission.
Second, there is the “contract for sale” (contract sale) deal. A real estate agent will often represent the buyer in a contract sale deal, so the buyer will reimburse the agent for the commission. A contract sale is usually a more formal process than an FSBO deal and is, therefore, a little more complicated. It requires more paperwork and has more steps.
The third and final type of deal is the “lease with option to buy” (lease option). In a lease option deal, the buyer of a property will enter into a lease with the owner. Over time, the owner may choose to sell the house (or condo) to the buyer, or he may simply renew the lease with the option to buy the property at the end of the lease term. A lease option is often a less expensive choice for buyers who want to acquire property quickly. However, it requires more paperwork and it is less flexible for someone who wants to eventually sell the property.
Understanding The Real Estate Market
Once you are familiar with the basics, it’s time to delve into the nitty gritty of understanding the Phoenix real estate market. Start by familiarizing yourself with some of the terminology that is commonly used in the field. Familiarize yourself with the dynamics of the local real estate market and how the various terms and phrases impact the buying and selling process. For example, it is important to understand what a “fast-track” listing is and how it differs from a “normal” listing.
What Is A Fast-Track Listing?
A fast-track listing is a type of real estate listing that is often used by realty agents in order to make more sales. A fast-track listing will have all of the pertinent details about the property, including its price, provided to the consumer. This is in contrast to a “normal” real estate listing, which will generally not have the price of the home provided until the contract is signed. The fast-track method of providing details about a house to potential buyers was made popular by the realty agents in the 1920s and has since stuck.
The advantage of a fast-track listing is that it gives the consumer more information before they make a decision. If a consumer is presented with all of the pertinent details about a property before deciding whether or not to make an offer, it means that the consumer is more likely to be swayed by the information and approve the offer. The disadvantage of a fast-track listing is that it reduces the amount of time that the consumer has to make a decision and, in some instances, the agent may rush the consumer into making an offer (even if the consumer is not ready). This can result in an overabundance of choices (particularly if the consumer is looking at several different properties) and create anxiety for the consumer as they try to make a decision.
What Is A Normal Listing?
A normal listing, as the name suggests, follows standard procedures in regards to the listing of a home for sale. The price of the house will not be provided until the contract is signed. In some instances, the price of the house may not even be included in the initial “literature” that is sent to the potential buyer. In these cases, the price will be provided in a subsequent “good faith” letter or in a property disclosure statement that is filed with the county property records. The advantage of a normal listing is that the price and other pertinent information is only provided to those individuals who are legally obligated to view it. This reduces the chance of the information being improperly disclosed to third parties.
A disadvantage of a normal listing is that some details may not be revealed to potential buyers. This is particularly prominent in regards to the condition of the property. If the seller does not disclose the true condition of the property, then the consumer will not have all of the information that they need in order to make an educated decision. A norm listing also increases the chance of the seller taking advantage of the buyer by misrepresenting the condition of the property. For example, the house may appear to be in excellent condition on the outside, but actually be in poor condition on the inside. In some instances, the house may even be a total “fixer-upper” and may not even be worth the investment for the buyer.
What Is A Limited Time Offer?
A limited time offer (LETTER) is a type of real estate offer made during a particular timeframe (often limited to one month). An LETTER is commonly used by realty agents in order to attract potential buyers who may have missed out on the first phase of the housing market (where demand was higher).
The advantage of an LETTER is that it provides buyers with an opportunity to make an offer during a limited time period and, in some instances, the agent will take the lead and introduce the buyer to the seller. However, the advantage of an LETTER is that it limits the amount of time that the consumer has to make a decision and reduces the overall number of choices that the consumer has to deal with. In some instances, a limited time offer can even be a deceptive marketing tool used by the seller in order to pull in more potential buyers (and generate more revenue).
The disadvantage of an LETTER is that it may not provide the consumer with sufficient information about the property. As previously stated, an LETTER will only provide the buyer with the details of the property as it was officially listed. In some instances, this may not even include the price of the home. In these cases, the buyer will not have all of the necessary information needed in order to make an educated decision.
Another disadvantage of an LETTER is that it limits the potential buyers who can participate in the transaction. Typically, only homeowners who can qualify for a mortgage loan within the time frame in which the offer is made are able to take part in an LETTER. In some situations, this can even exclude certain types of buyers who would otherwise be able to purchase the property (based on their income or credit score).