DEAR BOB: What recourse does a home seller have against a”deadbeat real estate agent”? Knowing we are in a buyer’s market, Isigned a listing with a high-profile realty agent professing to have greatmarketing skills and a fabulous sales record. What I wound up with was an agentwho put up the for-sale sign, listed my home on the MLS (multiple listingservice), and then disappeared. No communication, no updates about marketing,and more important, no showings. Can I cancel the listing contract with nopenalty and list with another more competent agent? –Suzanne Z.
DEAR SUZANNE: Your report is shocking. It sounds like youlisted your home with a “numbers agent” who takes lots of listings,knowing only some of them will sell.
Purchase Bob Bruss reports online.
Before giving up on your listing agent, phone him to discussthe situation. Ask why he didn’t have a broker’s tour for local agents. Askwhat specific advertising he is doing for your home. Ask when he will beholding weekend open houses (don’t fall for the line “Open houses don’tresult in sales.”) Ask what he is doing on the Internet to sell your home.Ask if there is anything you can do to help him shape up and sell your home.
Be persistent but extremely polite. Don’t lose your cool.Tell the agent you are very disappointed and you expect him to phone you atleast once every week to report his progress selling your home.
If he refuses to cooperate, tell him you want your listingcancelled immediately in writing so you can list with a more effective agent.
Another alternative before canceling the listing is to speakwith his office brokerage manager. Explain why you are justifiably unhappy.That manager should either suggest switching the listing to a better agentwithin the same firm or agreeing to cancel your listing.
But before you re-list with another agent, please interviewat least three successful agents who sell homes like yours in your vicinity.Also, I suggest you study my new special report, “How to Sell Your Houseor Condo for Top Dollar in a Buyer’s Market,” available for $5 from RobertBruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736or instant internet delivery at www.BobBruss.com.
NO NEED TO REFINANCE A GOOD ARM (ADJUSTABLE-RATE MORTGAGE)
DEAR BOB: I own a rental property with an ARM. The mortgagebalance is about $74,000, and the property is worth around $714,000. My ARM isgetting close to its next interest-rate adjustment in November. The lenderurges me to refinance with a fixed-rate mortgage for 10 years. I am 76,retired, and think refinancing is risky and expensive. The rental income willmore than pay an interest-rate adjustment, which is tied to the 11th districtcost of funds index. What should I do? –Diana C.
DEAR DIANA: If I were in your desirable shoes, I wouldn’t doanything. It sounds like you have an excellent ARM with a low balance comparedto your property value. It is tied to the 11th District Cost of Funds Index,which moves as slow as molasses.
Unless you have a need to refinance to take out tax-freecash from your huge equity, I see no reason to refinance even after your ARMadjusts. Enjoy the cash flow.
“SELLER’S REMORSE” IS NO EXCUSE NOT TO SELL
DEAR BOB: I put my apartment units up for sale. A buyer madea purchase offer, which I accepted. He paid $2,000 good faith money. But Ichanged my mind and want to stop the sale. What penalties will I incur? –LarryY.
DEAR LARRY: It sounds like you have “seller’sremorse” disease. If I were the buyer’s real estate attorney and the buyerstill wants to purchase your apartments, if you refuse to deliver the deed as agreedin the contract, I would advise my client to file a specific performancelawsuit against you and record a “lis pendens” against the title.
Unless you have a valid legal reason to default, the courtwill issue a mandatory injunction ordering you to deliver the deed under theterms of the sales contract.
Before you refuse to perform under the contract, I suggestyou contact the buyer and the realty agent to have a friendly conversationabout being released from the sales contract. The realty agent has a stake inthis situation and might sue you for lost sales commission. For more details, Isuggest you retain a real estate attorney.
WHAT HAPPENS WHEN A REVERSE MORTGAGE MATURES?
DEAR BOB: I am considering getting a senior-citizen reversemortgage on my home. But what happens after I die? Who makes the decisionsconcerning the sale of my home such as selecting the real estate agent, askingprice, repairs to be made, and whether to “stage” the house for sale?Who makes the decision to accept an offer or make a counteroffer? What if myson does not accept an offer and the house sits empty? What action can thereverse-mortgage holder take? –Frank M.
DEAR FRANK: Presuming your son is your sole heir, if hedoesn’t cooperate with the lender to pay off the reverse-mortgage balance afteryour death, the reverse-mortgage lender can hold a foreclosure sale.
Then the lender gets paid the mortgage balance, and anyforeclosure-sale excess cash goes to your heir.
However, if your heir wishes to keep the house, he can obtaina new mortgage to pay off the reverse-mortgage balance and then own the housesubject to the new mortgage.
IF YOU ARE MORTGAGE LENDER, DON’T DREAD FORECLOSURE
DEAR BOB: Our neighbor recently sold her property andcarried back a $20,000 mortgage on the $120,000 sale. When the neighbor movedout of state, we assumed that mortgage and installment note. We thought if theborrower defaults, we could foreclose and the property would become ours. But afriend told us a public auction is required and we would have to outbid anyother bidders to retain the property. Is this correct? The payments are nowfour months in arrears –Susan M.
DEAR SUSAN: Don’t worry. As the foreclosing lender, you cansubmit a “credit bid” for the amount that is owed to you, includingattorney or trustee’s fees and other expenses of foreclosure.
With the monthly payments four months in arrears, it’s wellpast time for you to consult a local real estate attorney to start theforeclosure.
A public auction is required. If a bidder shows up and bids$1 more than the amount owed to you, including costs, then you receive thatcash and walk away happy. If no bidders show up, you get title to the propertysubject to any first mortgage, hopefully for a profit.
GOOD BOOKS FOR A NEW REAL ESTATE INVESTOR
DEAR BOB: My nephew is interested in acquiring, renting andperhaps selling residential properties. I told him I would try to get the namesof some good books for beginner real estate investors. Any suggestions? –Ed K.
DEAR ED: Two recent good books for your nephew are”Real Estate Investing for the Utterly Confused” by Lisa Moren (verybasic, but a good start) and “Buy Even Lower” by Scott Frank and AndyHeller (written by two successful investors). Both are available in stock or byspecial order at local bookstores, public libraries, and
TAX RULE FOR SELLING YOUR FORMER PRINCIPAL RESIDENCE
DEAR BOB: I have owned and lived in my home about six years.I want to build a single-family house on my large corner lot. Can I live in thenew house for two years without paying capital gains tax and, if I rent my oldhouse, am I still exempt from capital gains tax when I decide to sell?–Julianne S.
DEAR JULIANNE: If I understand your question correctly, youplan to move into the new house to be built and then rent your currentresidence for a few years before selling it. Until a property is sold, no taxconsequence occurs.
To qualify for the Internal Revenue Code 121principal-residence-sale tax exemption up to $250,000 (up to $500,000 for aqualified married couple filing a joint tax return), you must have owned andoccupied the home at least 24 of the last 60 months before its sale.
That means you can rent your old home up to 36 months beforelosing your IRC 121 principal residence sale tax exemption. For details, pleaseconsult your tax adviser or read my special report, “2006 Realty Tax Tips:Eight Chapters of Tax Savings for Homeowners and Realty Investors,”available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or bycredit card at 1-800-736-1736 or instant Internet delivery at
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2006 Inman News