ARIZONA
HOME BUYER’S GUIDE
A STEP BY STEP PROCESS
SUSAN TALARICO
Buying a home is one of the most meaningful financial and lifestyle decisions you will make, and having the right advisor by your side makes all the difference. As an experienced Associate Broker, Susan Talarico brings more than two decades of real estate expertise, offering buyers a level of insight, structure, and advocacy that sets the foundation for confident decision-making.
Susan is known for her ability to simplify complex transactions through thoughtful planning and clear communication. She takes the time to understand not only what her clients are looking for in a home, but how they want to live, ensuring each purchase aligns with both lifestyle goals and long-term value. From identifying opportunities, including off-market properties, to evaluating pricing, condition, and resale potential, Susan provides a comprehensive, strategic approach.
Her calm, organized process allows buyers to move forward with clarity, even in competitive or fastmoving markets. She anticipates challenges before they arise, carefully manages each step of the transaction, and negotiates with precision to protect her clients’ interests.
Whether purchasing a primary residence, luxury home, or specialty property, Susan’s clients value the confidence and peace of mind that come from working with a trusted advisor who is fully invested in their success, every step of the way.
602.321.1693
susan.talarico@thenobleagency.com
susantalarico.com
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CONTACT A REALTOR® ONLINE HOME SEARCH
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The term “REALTOR®” identifies a real estate professional who is a member of the NATIONAL ASSOCIATION OF REALTORS® and abides by its strict Code of Ethics. They will direct, guide and represent you through the home-purchase process including:
REAL ESTATE DESIGNATIONS: BENEFITS OF WORKING WITH A REALTOR ®
Monitoring the market for new listings and inform you of homes that meet your criteria
Providing current and historical sales and listing data to help in gauging fair pricing
Helping you explore financing options
Preparing the Purchase Agreement according to your terms and ensure all documents are legally correct
Negotiating price and other details of the offer in your best interest
Ensuring that all disclosures are made
Suggesting which professional inspections should or must be made on the property
Handling any problems which may arise and recommend attorney services if necessary
Overseeing the appraisal process
Seeing that any repairs or requirements are met prior to the closing
Accompanying you during the final walk-through
Advising you as to any contractual changes which might be required prior to closing
Keeping you fully informed of all activities that lead to the closing
ABR - Accredited Buyer Representative
CBR - Certified Buyer Representative
CRS - Certified Residential Specialist
GRI - Graduate REALTOR Institute
MRP - Military Relocation Professional
PSA - Pricing Strategy Advisor
RENE - Real Estate Negotiation Expert
CIPS - Certified International Property Specialist
CPM - Certified Property Manager
CRP - Certified Relocation Professional
BENEFITS OF GETTING PRE-QUALIFIED FOR A HOME LOAN
PAYMENT
A pre-qualification will show you the monthly payment including principal and interest. It may also show you the amount you’ll have to pay toward mortgage insurance, hazard insurance and property taxes, which in most cases are added to the monthly mortgage payment. Knowing these figures in advance gives you a precise idea of the future costs of home ownership.
PREPARATION
The first step is to provide the Lender with your basic financial information including:
Gross income before taxes and deductions, savings and other liquid assets
Debts, including installment payments on outstanding loans, school loans, credit card debt, personal loans and other home loans
Credit history
CALCULATION
In the pre-qualifying process, Lenders consider the interest rate and term of the mortgage to determine the amount of the loan. The higher the interest rate, the higher your monthly payments assuming all terms and principal are equal.
RESULTS
Pre-qualification results reveal the maximum loan amount for which you would qualify. The Lender will tell you how much you’ll need for a down payment on the type of loan you’re applying for, and estimate the closing costs.
CONSIDERATIONS
Most Lender guidelines require homeowners to pay no more than about 30 percent of their monthly income toward mortgage payments. Guidelines are calibrated to your credit rating, so those with good credit can generally qualify for a higher mortgage at a lower interest rate and conversely, borrowers with poor credit may find it difficult to find a good rate, or to pre-qualify for the size of loan they want.
KNOWING AHEAD OF TIME THE AMOUNT OF LOAN YOU QUALIFY FOR CAN TAKE MUCH OF THE MYSTERY AND GUESSWORK OUT OF THE HOME BUYING PROCESS AND MAY STRENGTHEN YOUR BARGAINING POSITION WITH A SELLER.
WHEN AN OFFER IS RECEIVED
When a buyer makes an offer on your home, the sales process begins. It will likely include the following:
PURCHASE CONTRACT PREPARED WITH OFFER
The Buyer’s Agent will prepare the Purchase Contract on behalf of the buyer. This agreement will include the buyer’s terms of the purchase including how much they are offering for the home and any contingencies, such as home inspections or lender appraisal. Earnest money may also be included. Upon completion of the Purchase Contract, the Buyer’s Agent will contact the Seller’s Agent to present the offer.
OFFER IS ACCEPTED OR COUNTERED
The Seller will evaluate the offer then accept the terms or prepare a counter offer.
NET PROCEEDS
The Seller’s Agent may prepare a Net Proceeds Statement for the Seller. This will detail the estimated costs to sell the home and how much the Seller will actually receive under the terms of the offer.
CLOSING PROCESS BEGINS
If the Seller accepts, the closing process will begin. If you counter, the ball is back in the Buyer’s court and the Buyer must decide if they will accept, reject, or counter the counter offer.
HOME INSPECTION & APPRAISAL
HOME INSPECTION
A standard home inspection is a visual examination of the physical structure and major interior systems. It is not to be interpreted as a guarantee of any kind or an insurance policy on the condition of the property.
The inspector will review the easily-accessible exposed portions of the structure of the home including the roof, attic, walls, ceilings, floors, windows, doors, and foundation, as well as the heating/air conditioning systems, interior plumbing and electrical systems. Potential problems will be noted. Home inspections are not intended to point out every small problem or any invisible or latent defects in a home.
SELECTING A HOME INSPECTOR
Your agent, representing you as a buyer, is a good referral resource for a Home Inspector. You may also research Home Inspectors online. The Home Inspector that is retained should welcome your presence during the home inspection and address all your questions and provide a full verbal and written report.
OTHER INSPECTIONS & TESTS TO CONSIDER
LEAD PAINT
TERMITE
AIR QUALITY
SEWER
FUNGI, MOLD AND ALLERGENS
UREA FORMALDEHYDE INSULATION
POOL
HOME APPRAISALS
The worth, or appraised value of the property, will determine how much a Lender is willing to loan to buy that particular piece of real estate.
A real estate appraisal is simply that—the expert opinion of a certified, state-licensed professional who determines the value of a piece of property. A home appraisal protects the bank from getting stuck with property that’s worth less than they’ve invested. And it protects you, the buyer, from paying too much for a house.
COMMON TYPES OF LOANS
Contacting your bank early in the homebuying process can benefit you not only by helping you determine how much home you can afford, but by providing you with pre-approval confirmation. This confirmation proves to sellers that you are financially qualified to purchase the home, and it can be an influencing factor in negotiations.
When it comes to actually securing financing for your home, your banker can assist you in determining a loan type that best fits your financial situation. A loan type will influence interest rates, payoff rates, the loan period, etc.
ADJUSTABLE RATE LOAN
Adjustable or variable rate refers to the fluctuating interest rate you’ll pay over the life of the loan. The rate is adjusted periodically to coincide with the changes in the index on which the rate is based. The minimum and maximum amounts of adjustment, as well as the frequency of adjustment are specified in the loan terms. An adjustable rate mortgage may allow you to qualify for a higher loan amount but maximums, caps and time frames should be considered before deciding on this type of loan.
BALLOON PAYMENT LOAN
A balloon loan is amortized over a long period of time but the balance is due and payable earlier in the life of the loan. Example: Loan is amortized over 30 years but the payment is due after 5 years. The loan also may be expendable or it may roll into a different type. This could be an option if you expect to refinance before the loan is due or you plan to sell the home before the balloon date.
CONVENTIONAL LOAN
A mortgage loan program where the interest rate does not change for the life of the loan. Also called Fixed Rate Mortgage.
CONFORMING LOAN
A mortgage program for up to and including $766,550 in Arizona.
INTEREST ONLY LOAN
A non-amortized loan in which interest is due at regular intervals until maturity, when the full principal on the loan is due.
JUMBO LOAN
A mortgage loan program for $766,550 or more in Arizona. These limits are set by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Jumbo Loans cannot be funded by these two agencies; they usually possess a higher interest rate.
SECOND MORTGAGE
A mortgage on real estate which has already been pledged as collateral for an earlier mortgage. The second mortgage carries rights which are subordinate to those of the first.
TWO-STEP MORTGAGE
An adjustable rate mortgage which has one interest rate for the first part of the mortgage (usually five or seven years), and a different interest rate for the remainder of the mortgage.
THE LOAN APPLICATION
Below is information typically requested by a Lender when applying for a home loan. It is recommended that you have these documents available prior to applying for your loan:
Picture ID and social security number
Residence address ( past 2 years)
Names and addresses of each employer ( past 2 years)
Gross monthly salary (base only—overtime & bonus list separately)
Tax Returns ( past 2 years)
Names, addresses, account numbers & balances of all checking and savings accounts (last 2 months of bank statements)
Names, addresses, account numbers, balances and monthly payments of all open loans
Names, account numbers, balances and monthly payments of all credit cards
Addresses and loan information of other real estate owned
Estimated value of furniture and personal property, if applicable
Certificate of eligibility and DD214s (V.A. only)
Money for credit report and appraisal
Most recent W2s and current check stub
Full divorce decree, if applicable
TIPS ON CREDIT TO HELP BUYERS:
Avoid making large credit purchases until after you have closed escrow and the transaction has been recorded. This includes the purchase of cars, boats, furniture, etc. The large payment obligation may PRECLUDE you from QUALIFYING for your home loan.
Always be aware of your credit balances.
Do not skip payments. If you cannot make payments consistently, seek professional assistance to help you get on track.
If you have a problem, contact your creditors immediately.
Save money on a regular basis. It is wise to have at least three to six months income put away in case of a financial emergency.
UNDERSTANDING THE ESCROW PROCESS
The following explains the sequence of events involved in an escrow/closing process and what party involved is responsible. Your Escrow Officer is the “neutral third party.” Their job in the closing process is to gather all the documents and information from all involved parties to prepare for the transfer of the property.
STEP 1 Escrow Officer
Receives Purchase Contract with earnest money check, opens escrow and orders Title Commitment
STEP 2 Buyer Has all inspections completed
STEP 3 Lender Begins processing: Orders credit report, appraisal, deposits and verification of employment
STEP 4 Escrow Officer Receives Title Commitment for review and distributes to all parties
STEP 5 Escrow Officer Orders any statements for items requiring payoff per Title Commitment
STEP 6 Lender Receives loan approval and orders loan documents to be sent to Escrow
STEP 7 Escrow Officer Prepares a Preliminary Settlement Statement for review by parties
STEP 8 Seller Signs Deed and other related sale documents
STEP 9 Buyer Signs loan documents and deposits funds required
STEP 10 Escrow Officer Returns signed loan documents to Lender
STEP 11 Escrow Officer Receives loan funds from Lender
STEP 12 Escrow Officer Orders recording of Deed and Deed of Trust
STEP 13 Escrow Officer
Completes the file by paying the Seller, agents, and all bills in escrow, and sends the final documents to all
STEP 14 Title Company Issues title policies to Owner and Lender
WHAT IS TITLE INSURANCE?
Your lender must insure that the quality of the title to the property you are about to buy, and which you will pledge as security for the loan, is satisfactory. The Lender does this by obtaining a Lender’s Policy of title insurance, often referred to as the ALTA Policy.
The Lender’s policy protects the Lender against loss due to unknown Title defects at the time of the sale and in the future. This policy only protects the Lender’s interest. It does not protect you. That’s why you need an Owner’s Policy, which will be issued at the same time as the Lender’s policy for a one-time fee.
HOW CAN THERE BE A TITLE DEFECT?
Title insurance is issued after a careful examination of copies of the public records. Even the most thorough search cannot absolutely assure that no Title hazards are present, despite the knowledge and experience of professional Title examiners. In addition to matters shown by public records, other Title problems may exist that cannot be disclosed in a search.
WHAT TITLE INSURANCE PROTECTS AGAINST
Here are just a few of the most common hidden risks that can cause a title issue:
False impersonation of the true owner of the property
Forged deeds, releases of wills
Undisclosed or missing heirs
Mistakes in recording legal documents
Deeds by persons of unsound mind
Deeds by minors
Deeds by persons supposedly single, but in fact married
Liens for unpaid inheritance, income of gift taxes
Fraud
WHAT PROTECTION DOES TITLE INSURANCE
PROVIDE
AGAINST DEFECTS AND HIDDEN RISKS?
Title Insurance will pay for defending against lawsuits attacking your Title as insured, and will clear up Title problems or pay the losses. Your Title Insurance protects against title loss and hidden risks as long as the Policy remains in effect.
TITLE INSURANCE EXPLAINED
WAYS TO TAKE TITLE IN ARIZONA
COMMUNITY PROPERTY
Requires a valid marriage between two persons
Each spouse holds an undivided one-half interest in the estate
One spouse cannot partition the property by selling his or her interest
Requires signatures of both spouses to convey or encumber
Each spouse can devise (will) one-half of the community property
Upon death the estate of the decedent must be “cleared” through probate, affidavit or adjudication
Both halves of the community property are entitled to a “stepped up” tax basis as of the date of death
JOINT TENANCY WITH THE RIGHT OF SURVIVORSHIP
Parties need not be married: may be more than two joint tenants
Each joint tenant holds an equal and undivided interest in the estate, unity of interest
One spouse cannot partition the property by selling his or her interest
Requires signatures of all joint tenants to convey or encumber the whole
Estate passes to surviving joint tenants outside of probate
No court action required to “clear” title upon the death of joint tenant(s)
Deceased tenant’s share is entitled to a “stepped up” tax basis as of the date of death
COMMUNITY PROPERTY WITH THE RIGHT OF SURVIVORSHIP
Requires a valid marriage between two persons
Each spouse holds an undivided one-half interest in the estate
One joint tenant can partition the property by selling his or her joint interest
Requires signatures of both spouses to convey or encumber
Estate passes to surviving spouse outside of probate
No court action required to “clear” title upon the first death
Both halves of the community property are entitled to a “stepped up” tax basis as of the date of death
TENANCY IN COMMON
Parties need not be married: may be more than two tenants in common
Each tenant in common holds an undivided fractional interest in the estate and can be disproportionate (ie: 20%-80% or 60%-40%)
Each tenant’s share can be conveyed, mortgaged or devised to a third party
Requires signatures of all tenants to convey or encumber the whole
Upon death the tenant’s proportionate share passes to his or her heirs by will or intestacy
Upon death the estate of the decedent must be “cleared” through probate, affidavit or adjudication
Each share has its own tax basis
NOTES ON “SOLE AND SEPARATE” TITLE IN ARIZONA
Arizona is a community property state. Property acquired by a husband and wife is presumed to be community property unless legally specified otherwise. If a married person acquires title as “Sole and Separate”, his or her spouse must execute a disclaimer deed to avoid the presumption of community property. Parties may choose to hold title in the name of an entity, e.g. a corporation, a limited liability company, a partnership (general or limited), or trust.
FACTORS OF YOUR CLOSING COSTS
APPRAISAL
This is a one-time fee that pays for an appraisal. The appraisal is made by an independent fee Appraiser.
CREDIT REPORT
A fee that covers the cost of the credit report.
DOCUMENT
There may be a separate fee that covers the preparation of the final legal preparation papers.
LOAN DISCOUNT
A fee used to adjust the yield on the loan to what market conditions demand. It is often called “points.”
LOAN ORIGINATION
The Lender’s administrative costs in processing the loan. This fee covers the loan.
TITLE CHARGES
The Title Company charges fees for a title search, title examination, recording fees, endorsement fees, a settlement or closing fee and notary fees.
PREPAID INTEREST
Depending on the time of the month your loan closes this per diem charge may vary from a full month’s interest to that of a few days. If your loan closes at the end of the month, you will have to pay interest only for a few days or so.
TAXES & INSURANCE
You may be required to reimburse the Seller for property taxes, depending on the month in which you close. You will need to pay a year’s hazard insurance premium up front. Also, you might be required to put a certain amount for taxes and insurance into a special reserve account held by the lender.
IMPORTANT PROPERTY TAX DATES
Taxes for the 1st half of the current year
January 1 through June 30
Due on: October 1 of current year
Delinquent on: November 1 of current year
Taxes for the 2nd half of the current year
July 1 through December 31
Due on: March 1 of following year
Delinquent on: May 1 of following year
MOVING CHECKLIST
ADDRESS CHANGE
Give forwarding address to Post Office 2 to 3 weeks before moving
Change credit card accounts, bank accounts, MVD, etc.
Subscriptions: Notice requires 6 to 8 weeks
Friends and relatives
BANK
Transfer funds, arrange check-cashing in new city
Arrange credit references
INSURANCE
Notify company of new location for coverages: life, health, fire and auto
Make sure homeowners’ policy coverage for your new house is in place
MEDICAL, DENTAL, PRESCRIPTION HISTORIES
Ask doctor and dentist for referrals, transfer needed for prescriptions, eyeglasses, x-rays
Obtain birth records, medical records, etc.
Arrange for medical services: doctor, dental, veterinarian, etc.
PETS
Ask about regulations for licenses, vaccinations, tags, etc.
SCHOOLS
Get school transcripts (some districts require that they be sent directly from the prior school)
UTILITY COMPANIES
Notify gas, electric, water, telephone, sewage, and garbage companies (see Page 17 )
Get refunds on any deposits made
Return cable boxes
DON’T FORGET TO
Carry jewelry and documents yourself, or use registered mail
Double check closets, drawers, shelves to be sure they are empty
Leave old keys, garage door openers, mail box keys, house plans and irrigation instructions
Register to vote
UTILITIES GUIDE
MARICOPA COUNTY
Tax Assessor (602) 506-3406
Treasurer (602) 506-8511
Sheriff’s Office (602) 876-1834
Animal Control (602) 506-PETS
Education Services (602) 506-3866
DMV (602) 255-0072
Elections Dept (602) 506-1511
UTILITIES
Power:
Arizona Public Service (602) 371-7171
Salt River Project (SRP) (602) 236-8888
Southwest Gas (877) 860-6020
Garbage & Recycling (602) 506-4006
Waste Management (602) 257-1313
Cable/Internet/Phone:
Cox (800) 234-3995
Century Link (800) 366-8201
DirecTV (855) 871-7585
Dish Network (866) 280-4519
City Offices:
Avondale (623) 333-1000
Buckeye (623) 349-6000
Chandler (480) 782-2000
El Mirage (623) 972-8116
Fountain Hills (480) 816-5100
Gilbert (480) 503-6871
Glendale ................... (623) 930-2000
Goodyear .................. (623) 882-7200
Litchfield Park .............. (623) 935-5033
Mesa ....................... (480) 644-2099
Paradise Valley (480) 948-7411
Peoria (623) 773-7000
Phoenix (602) 262-6011
Queen Creek (480) 358-3000
Scottsdale (480) 312-3111
Surprise (623) 222-1000
Tempe (480) 350-4311
Tolleson (623) 936-7111
POLICE DEPARTMENT
Avondale (623) 333-7000
Buckeye (623) 349-6400
Chandler (480) 782-4130
El Mirage (623) 933-1341
Fountain Hills (480) 837-2047
Gilbert (480) 503-6500
Glendale (623) 930-2000
Goodyear (623) 932-1220
Litchfield Park (623) 935-5033
Mesa (480) 644-2324
Paradise Valley .............. (480) 948-7418
Peoria ......................(623) 773-7096
Phoenix .................... (602) 262-7626
Queen Creek (602) 876-1011
Scottsdale (480) 312-5000
Surprise (623) 222-4000
Tempe (480) 350-8301
Tolleson (623) 936-7186
FIRE DEPARTMENT
Avondale (623) 333-6000
Buckeye (623) 349-6700
Chandler (480) 782-2120
El Mirage (623) 583-7968
Fountain Hills (480) 837-9820
Gilbert (480) 503-6300
Glendale (623) 930-3400
Goodyear (623) 932-2300
Litchfield Park (480) 627-6200
Mesa (480) 644-2101
Paradise Valley (602) 262-6297
Peoria (623) 773-7279
Phoenix (602) 262-6002
Queen Creek (480) 644-2400
Scottsdale (480) 312-8000
Surprise (623) 222-5000
Tempe (480) 858-7200
Tolleson (623) 936-8500
GLOSSARY
APPRAISAL
AMENDMENT
AMORTIZED LOAN
APPRECIATION
C .C . & R’S
CLOSING
CHAIN OF TITLE
CONDOMINIUM
CONVENTIONAL
COUNTER OFFER
DEED
DEED OF TRUST
DISCOUNT POINTS
An opinion of value based upon a factual analysis.
An alteration, addition, or correction to an agreement that does not change the principal idea or essence of the original agreement.
A loan that is completely paid off, interest and principal, by a series of regular payments that are equal or nearly equal. Also called a Level Payments Loan.
An increase in value of real estate.
The Covenants, Codes, and Restrictions of a subdivision or master planned community. These regulations grant the association the right to enforce certain aspects of the community (example: exterior colors or plantings).
The final settlement of a real estate transaction between the Buyer and Seller.
A summary or digest of the conveyances, transfers, and any other facts relied on as evidence of Title, together with any other elements of record which may affect the marketability of the Title.
A system of individual fee ownership of units combined with joint ownership of common area of the structure and the land.
A mortgage securing a loan made by investors without governmental Mortgage underwriting.
A rejection of an offer by a Seller along with an agreement to sell the property to the potential Buyer on terms differing from the original offer.
Written instrument which, when properly executed and delivered, conveys Title.
An instrument used in Arizona in place of a mortgage to secure the Lenders rights.
Additional charges made by a Lender at the time a loan is made. Points are measured as a percent of the loan, with each point equal to one percent. These additional interest charges are paid at the time a loan is closed to increase the rate of return to the lender so as to approximate the market level.
EARNEST MONEY
EASEMENT
EQUITY
ESCROW
Down payment made by the buyer as evidence of good faith.
Created by grant or agreement for a specific purpose, an easement is the right, privilege or interest which one party has in the land of another (example: rights of way, utility companies).
The market value of real property, less the amount of existing liens.
The deposit of instruments and funds with instructions (the Contract) to a third neutral party (Escrow Officer) to carry out the provisions of an agreement or contract; when everything is deposited to enable carrying out the instructions, it is called a complete or perfect escrow.
GLOSSARY
A loan which has been insured by the Federal Government.
Account held by the lender for payment of taxes, insurance, or other periodic debts against real property.
A description of land that complies with government surveys to thoroughly identify a specific parcel so that it, and its boundaries, cannot be mistaken for any other.
A form of encumbrance which usually makes property security for the payment of a debt or discharge of an obligation (example: Judgments, taxes, mortgages, Deeds of Trust, etc.).
A legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt.
A fee charged to the borrower by the lending institution.
Any property which is not real property, e.g. money, appliances, cars, boats, furniture, etc. In real estate, anything not permanently attached to the building is considered personal property.
A payment that includes Principal, Interest, Taxes, and Insurance.
A legal document whereby a principal gives authority to another to act on their behalf.
A specific form must be used in Arizona to create a Power of Attorney.
Following a loan commitment from the Lender, the borrower signs a note promising to repay the loan under stipulated terms. The Promissory Note establishes personal liability for its repayment.
A deed operating as a release.
The official filing of documents with the County Recorder, making the transfer of property official.
Legal charge against real estate by a public authority to pay cost of public improvements such as: Street lights, sidewalks, street improvements, etc.
Also referred to as Seller’s Property Disclosure Statement. Sellers are required to disclose any problems that they are aware of that affect the property.
A parcel of land that has been divided into smaller parts.
A loan guaranteed by the Veteran’s Administration.
A deed used to convey fee title to real property.
A method enabling property owners to trade an investment property for another investment property (or properties) without paying capital gains taxes on the transaction.
Tax Notice ToAll Buyers And Foreign Sellers Of U.S. Real Property Interests
InternalRevenueCodeSection1445requiresthatallbuyersofaninterestinrealpropertylocatedinthe UnitedStateswithholdandpayovertotheInternalRevenueService("IRS")anamountequalto10%ofthe salespriceunlessthebuyercanadequatelyestablishthatthesellerwasnotaforeignindividualorentity.
Generally,thebuyermustpay10%ofthepurchasepricedueaforeignsellertotheIRSwithin20daysofthe saleoftherealpropertyinterest. The 10%amountisgenerallycalculatedonthegrosssalesprice,i.e.the amount of: (I) the cash paid or to be paid; (ii) the fair market value of other property transferred; and (iii) the outstandingamountofanyliabilityassumedortowhichthepropertywassubjectimmediatelybeforeandafter thesale.Notethatdependingonthestructureofthetransaction,thetaxwithholdingliabilitycouldexceedthe netcashproceedstobepaidaforeignselleratclosing.Nevertheless,thebuyerisstillrequiredtowithholdthe fulltenpercent(10%)andremitittotheIRSwithin20daysofthesaleabsenta"withholdingcertificate'orother relief.Buyersshouldconsulttheirlegalandtaxadvisorsconcerningtheserequirements.
Transactionsinvolvingthepurchaseofpropertyfor$300,000.00orlessforuseasthebuyer'sprimary residence(occupiedbythebuyermorethanfiftypercent(50%)ofthetimefortwo(2)yearsafterpurchase)are exemptfromthewithholdingrequirements.Thebuyeralsoneednotcomplywiththewithholdingrequirement ifthebuyerobtainsadequateproofthatthesellerisnotaforeignindividualorentity.Acertificationexecutedby thesellerunderpenaltyofperjuryisconsideredsufficientprooftothebuyerthatthesellerisnotaforeign individualorentity(assumingthatthebuyerdoesnothaveactualknowledgethatthecertificationisfalse).
Foreignsellersshouldbeawarethatcertainexemptionsmayapplyorthatthe10%withholdingrequirements canbemitigatedthroughreceiptofawithholdingcertificatefromtheIRSbeforethe20-dayperiodexpires. Sellersshouldconsultwiththeirlegalandtaxadvisorsasearlyaspossibletodeterminewhetheranysteps canbetakentoreduceoreliminatethewithholdingrequirements.
BUYERSANDSELLERS:THISDOCUMENTISINTENDEDONLYTOINFORMYOUGENERALLYTHAT THEINTERNALREVENUECODEREQUIRESTAXWITHHOLDINGBYBUYERSWITHRESPECTTO FOREIGNSELLERS.DUETOTHECOMPLEXITYOFTHELAWANDIRSREGULATIONS,ANDTHE NATUREOFYOURPARTICULARREALESTATETRANSACTION,YOUSHOULDCONSULTYOUR ATTORNEY,ACCOUNTANTORTHEIRSWITHANYQUESTIONSYOUMAYHAVE.YOURESCROW AGENTISNOTATAXORLEGALADVISOR.THISDOCUMENTISNOTINTENDEDANDSHOULDNOT BECONSTRUEDASTAXORLEGALADVICE.
The following forms are included:
• Residential Real Estate Purchase Contract
• Buyer Advisory
Please check with aaronline.com or the appropriate government agency website for the most up to date forms.
NOTES
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