Great news! You and the seller have reached an agreement on the price and terms, and now the home is officially "in escrow," "under contract," or "pending." They all mean the same thing.
The "Residential Resale Real Estate Purchase Contract" from the Arizona Association of Realtors, also known as the "contract," offers numerous protections for buyers. The aim is to provide buyers with the opportunity to thoroughly inspect and investigate the property before finalizing the purchase. Here is your full guide to the inspection period in Arizona.
10-Day Inspection Window
Typically, you have a 10-day window to conduct all necessary inspections and investigations of the home. You have the freedom to inspect anything related to the property – its condition, the neighborhood, the schools, zoning regulations, and any development plans for the area, among other things.
The Arizona Association of Realtors provides a comprehensive list of items that you may want to inspect or investigate during this period.
Cancellation Option
During the inspection period, it's straightforward for you, the buyer, to cancel the contract and receive a full refund of your earnest money if you discover anything undesirable about the property or its surroundings. Whether it's the condition of the house, the neighborhood, the roads, the schools, or anything else related to the property, you can cancel the contract and get your earnest money back.
Home Inspectors
I strongly recommend hiring a licensed home inspector (typically costing $350 to $500) to evaluate the physical condition of the home. The inspector will provide you with a detailed report highlighting any issues found during the inspection.
I suggest arranging to meet the inspector at the property after the inspection. This allows the inspector to walk you through their findings in person, making it easier for you to understand any problems identified.
Scheduling the Home Inspection
I also advise contacting home inspection companies within 24 hours of reaching an agreement with the seller. The selected home inspection company may not be able to schedule your inspection immediately.
It's crucial to have the inspection done early in case further inspections are recommended. For instance, if the home inspector suggests a full roof or air conditioning inspection, you'll need time to complete these additional assessments before the 10-day inspection period expires.
Reviewing the Inspection Report
Once you receive the detailed report from the home inspector, it's time to take action. If you're unsatisfied with the findings or your own investigations, you have the option to cancel the contract and receive a full refund of your earnest money, though you'll be responsible for the cost of the home inspection.
Buyer's Inspection Notice
More often than not, rather than canceling the contract, you may request that the seller address certain repairs. You'll need to decide which issues from the inspection report you want the seller to address. Your real estate agent will draft the written "Buyer's Inspection Notice," commonly known as the "Request for Repairs." This request must be submitted within the 10-day inspection period and can only be made once.
If you don't request any repairs within the 10-day inspection period, you automatically agree to purchase the home as is.
Seller's Response
Once your real estate agent submits your request for repairs to the seller, the seller has 5 days to respond. If the seller agrees to make all the requested repairs, the inspection period ends, and you're committed to the contract, subject to any outstanding contingencies.
If the seller agrees to some but not all of the repairs, you'll have 5 days to decide whether to accept their response or walk away.
End of Inspection Period
Once you and the seller reach an agreement on repairs, the inspection process concludes, and you are now committed to the contract, subject to any remaining contingencies.
Seller Property Disclosure Statement (SPDS)
Within 5 days of contract acceptance, the seller must provide you with an Arizona seller property disclosure statement (old version). Reviewing the SPDS during the inspection period can provide you with additional insights. If you're unhappy with anything in the SPDS, you have 5 days to cancel the contract and receive a full refund of your earnest money.
Insurance Claims History
Within 5 days of contract acceptance, the seller will typically provide you with a 5-year insurance claims history for the home. Reviewing this report can help uncover any undisclosed issues, giving you the option to cancel the contract and receive a refund if necessary.
Remember, your real estate agent represents you, and the 5-day countdown begins when they receive the Insurance Claims History. Few states offer this level of protection for homebuyers.
Congratulations! If you navigate the inspection period successfully without canceling the contract, the likelihood of a successful purchase closing is high.
Appraisal
If you're financing the purchase and using the Arizona Association of Realtors Purchase Contract, your offer likely hinges on the home appraising for at least the agreed-upon price. After the inspection period concludes, your lender will order an appraisal (typically costing $600 to $900), which you'll need to pay for upfront in addition to other fees.
Final Walk-Through
Your real estate agent will coordinate a final walk-through of the home a day or two before closing. This allows you to verify that any agreed-upon repairs have been completed and that no new damage has occurred since the contract was accepted.