Home seller scared into bad listing agreement

DEAR BOB: My mother signed a listing contract to sell herLauderhill, Fla., condominium. She said the listing agent told her a 6 percentsales commission and a six-month listing period were mandatory and there is afee imposed if the property is sold by a different real estate agent within 30days of the contract expiration. Are these statements true for Florida realestate? She had only two showings of her condo during the first two weeks ofthe listing and none since then. Her listing expires in October. What shouldshe do? –Mike K.

DEAR MIKE: That listing agent lied to your mother. Realestate sales commissions and listing terms are fully negotiable in every state.

Purchase Bob Bruss reports online.

A few brokerage firms set listing rules for their salesagents, such as a 6 percent minimum commission and a six-month listing term.But your mother was free to list with another agent upon different terms.Listing terms are not set by state law.

Your mother must be a very patient person. To have only twoshowings of her condo to prospective buyers and no purchase offers indicatessomething is seriously wrong.

Maybe it is overpriced. Perhaps it isn’t being activelyadvertised in newspapers and promoted in the local MLS (multiple listingservice) as well as on the Internet at www.Realtor.comand other Web sites. It sounds like that listing agent wasn’t using “duediligence” to get the condo sold.

Thankfully, the listing with that agent is about to expire.Your mother should interview at least three successful local real estate agentswho sell condos like hers, preferably in the same condo complex. She should asklots of questions about their client references of recent condo sellers andthen phone those sellers to inquire, “Were you in any way unhappy andwould you list your condo for sale again with the same agent?”

To avoid getting stuck with a bad agent again, she shouldeither sign a 90-day listing or a longer listing with an unconditionalcancellation clause after the first 90 days.

WHERE SHOULD PARTITION LAWSUIT BE FILED?

DEAR BOB: Many years ago my husband and his brother bought aproperty together. His brother died several years ago. His two childreninherited the brother’s half of the property. Unfortunately, they nevertransferred title into their names. They live in New York state. The propertyis in Colorado. My husband wants to sell, but they are not cooperating. Sinceseveral states are involved, in which state should he file a partition lawsuitto force the sale of the property? –Gloria G.

DEAR GLORIA: A partition lawsuit can only be brought by aco-owner in the state and county where the real property is located. Theout-of-state co-owner heirs will be summoned to appear in the lawsuit to raiseany objections they might have to a court-ordered sale of the property.

Because their names are not on the title, although they arethe heirs of their late father’s 50 percent of the property, when the propertyis sold their share of the proceeds will probably be held in trust for them.But that’s their problem, not yours. For details, please consult a local realestate attorney where the property is located.

GET A REVERSE MORTGAGE EVEN IF YOU HAVE A MORTGAGE

DEAR BOB: I am 74; my husband is 79. Our house is indesperate need of repairs. But our mortgage is not fully paid off. I understandthere is some way we can get a reverse mortgage anyway. Is this a good way forus to go? –Nancy P.

DEAR NANCY: Presuming you want to stay in your home at leastfive years, a reverse mortgage can be the ideal solution to your problem.

If your current mortgage’s balance is less than 50 percentof your home’s market value, you can probably obtain a senior-citizen reversemortgage. Part of the proceeds will be used to pay off the existing mortgage toeliminate its payments because the reverse mortgage must be recorded as a firstmortgage.

Your excess entitlement can be used to pay for your homerepairs or any other desired purposes such as lifetime income. To find areputable reverse-mortgage representative in your area, go to www.reversemortgage.org. Moredetails are in my special report, “The Whole Truth About Reverse Mortgagesfor Senior Citizen Homeowners,” available for $5 from Robert Bruss, 251Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instantInternet delivery at www.BobBruss.com.

WHAT IS STEPPED-UP BASIS FOR INHERITED FARM?

DEAR BOB: In 1972 my friend’s husband bought a farm (priorto their marriage). In 2003 he added her name to the deed. He died in 2005. Sherecently sold the farm. What was her basis for tax purposes? Was it the 1972purchase price or the market value in 2003 when she was added to the deed?–Ruthann T.

DEAR RUTH: The correct answer is “neither.”Because your friend inherited her late husband’s interest in the farm, she hadwhat is called a new “stepped-up basis.”

If the farm is located in a community property state wherethey lived, then your friend’s new stepped-up basis became the market value onthe date of her husband’s death.

However, if the property is located in a non-communityproperty state, because your friend already owned 50 percent of the farm, shereceived a new stepped-up basis on only half of the farm’s market value on thedate she inherited her late husband’s share. She should consult her tax adviserto calculate her exact stepped-up basis.

WATER CISTERN PREVENTS OBTAINING REVERSE MORTGAGE

DEAR BOB: I tried to help my mom get a reverse mortgage.After the lender put us through six months of gathering info and costlyreports, she was turned down because she has a water cistern and a well forwater on her property. The cistern tested fine for water pollutants, but thewell, which is used mainly for other purposes, did not. Mom has little incomeand her home is all she has to help pay for her care. What should she do?–Diana W.

DEAR DIANA: I have never heard of a water cistern except inthird-world countries. Depending on rainwater is not a reliable water supply.If the well water can be certified safe to drink, that could solve the problem.

Frankly, the lender was very smart to turn down the reversemortgage due to lack of a reliable drinking-water supply. If an adjustmentcan’t be made to make the well water safe to drink, maybe it’s time for yourmom to sell her home and move to an assisted-living facility.

WHY SMART HOME SELLERS OBTAIN PRE-LISTING INSPECTIONS

DEAR BOB: I need your opinion on having a houseprofessionally inspected before listing it for sale. I heard of a family thathad such an inspection and then listed it for sale. The house sold quicklyafter that. The person relating the story said some real estate agents considerit a waste of time and money to have such an inspection. What is your opinion?–Jan M.

DEAR JAN: The smartest home sellers have their homesprofessionally inspected before signing a listing. Then the seller knows aboutthe home’s defects and can either have them repaired before putting the houseon the market or they can be disclosed to prospective buyers up front.

Pre-listing home inspections are becoming very common. It isnot a waste of time and money for the seller to have a house professionallyinspected before putting it on the market.

$250,000 HOME-SALE EXEMPTION ALSO APPLIES TO INSTALLMENTSALE

DEAR BOB: If I sell my free-and-clear home where I havelived the last few years and claim that $250,000 tax exemption, what if I agreeto carry back a mortgage for my buyer? Will I get any tax breaks on thepayments? –Dale McG.

DEAR DALE: Yes. All your principal residence sale capitalgains are tax-free up to $250,000 (up to $500,000 for a qualified marriedcouple filing jointly) if you owned and lived in it at least 24 of the last 60months before its sale. The same exemption also applies to your installmentsale principal payments received when carrying back a mortgage for your buyer.

However, the interest income portion of each mortgagepayment you receive from your buyer will be taxable as ordinary income. If yourhome-sale capital gain exceeds your $250,000 (or $500,000) exemption, then partof each installment-sale payment will be taxable as long-term capital gain. Fordetails, please consult your tax adviser.

The new Robert Bruss special report, “Five Easy Ways toBuy Your Home and Investment Property for Nothing Down,” is now availablefor $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit cardat 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2006 Inman News

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