DEAR BOB: As a real estate agent, I must strongly disagreewith you. Several weeks ago, you said home buyers (or the buyer’s agent) shouldask the seller, “Why are you selling your home?” That’s none of thebuyer’s business. I specialize in listing homes and I frequently encounterdistress situations, such as divorce, pending foreclosure, illness, and otherreasons for selling that have nothing to do with the desirability of theresidence. All the seller wants is a cash sale. Don’t you agree? –John T.
DEAR JOHN: No. It is the buyer’s business why the seller isselling. As a longtime (40-years-plus) real estate investor, I’ve learned itpays to know why the seller is selling so I can tailor my purchase offer tomeet the seller’s needs.
Purchase Bob Bruss reports online.
To illustrate, if the seller is in the foreclosure process,buyers need to know that so they can get the sale closed fast before theforeclosure auction. Or if the reason for the sale is a divorce, that usuallymeans an all-cash sale is required to divide the money equally.
Many times I’ve bought investment property where the sellerswere moving to a retirement community. Especially if the house is free andclear with no mortgage, I discovered retiree sellers eagerly carried backmortgages that gave me easy financing and gave them excellent securedretirement income.
Smart buyers and their buyer’s agents need to know why theseller is selling. A few sellers will lie. But my experience has been that mosttell the truth and all parties benefit.
ARE STUCK WINDOWS A HOME DEFECT?
DEAR BOB: On the home seller disclosure form, our sellersaid there were no defects. But we discovered the 1926 windows were paintedshut and some of the cords were cut. Are those defects? –Marianne R.
DEAR MARIANNE: Perhaps your seller misunderstood thequestion, lied or wasn’t aware of the window defects.
Personally, in my house I rarely open the windows. In thewinter I have the heat on and in the summer the air conditioner is on much ofthe time so the windows are closed virtually every day.
If you think the seller owes you damages for fixing thewindows, your problems are (1) proving the seller knew of the defects and (2)determining the amount of your repair cost damages.
Since the house was built in 1926, if you take the seller toSmall Claims Court, the judge is likely to say, “You bought an old houseso you shouldn’t expect it to be in perfect condition.” Or, the sellermight settle for a modest amount before trial. But it could be a total waste ofyour time if you lose and get nothing.
UNTIL YOU HOLD TITLE, YOU HAVEN’T INHERITED ANYTHING
DEAR BOB: My father died intestate without a will 25 yearsago. He owned a small cabin by a lake in the mountains in northeasternPennsylvania. My brother, three sisters and I are his only heirs. One of my”local” sisters living near the cabin is the estate administrator,which consists only of the cabin. The estate has never been probated. Mybrother, another sister and I live quite a distance away. The property taxes havebeen paid. But the cabin is in terrible disrepair and in danger of collapse. Ioffered to buy out my siblings for fair market value to fix up the cabin andmake it available for their use. All have agreed to sell me their shares exceptfor the sister who is the administrator. The place holds good memories for allof us and I don’t want it to fall into nonfamily hands. In a partition lawsuit,does the court have to order a public sale or can the judge convince thehold-out sister to sell me her share? –Norm B.
DEAR NORM: Since your father died without a will, your firststep is to open a probate proceeding for your late father’s estate in theprobate court where he was a resident when he died. A local probate attorneyshould be hired to do this.
Unless a probate court proceeding has been opened, thesister you said is the “administrator” has no legal authority unlessappointed by the court.
After the cabin title is distributed by the probate court tothe sibling heirs, then you all can decide what to do with the cabin. If thehold-out sister refuses to sell, you can’t force her to sell to you.
Your only legal recourse is to bring a partition lawsuit toforce the sale of the cabin with the sales proceeds divided among theco-owners. That doesn’t sound like what you want. However, bringing such alawsuit might force the uncooperative sister to sell to you. For more details,please consult a real estate attorney where the cabin is located.
MORTGAGE LENDERS DON’T HAVE TO ACCEPT TWICE-MONTHLY PAYMENTS
DEAR BOB: I want to make my mortgage payments when I getpaid, on the first and 16th of each month. I started doing this by making halfof my November payment on Oct. 16 and the other half on Nov. 1. The fullpayment was thus received by the lender before the past due date of Nov. 10. Idid this again for the December payment, half on Nov. 16 and the other half onDec. 1. However, the loan servicer is now trying to make me pay a late feebecause I did not make the “full payment” by the past due date. Themortgage agreement says nothing about how many payments I should make, justthat “full payment” must be paid on the first of each month. The loanservicer says I can call them each month to resolve this, but their systemdoesn’t allow for partial payments. I spent 20 years designing consumer loancomputer systems so I know this major bank can do anything management wants.They offered me a biweekly mortgage, with extra fees, but that’s not what Iwant. What can I do about this? –Linda H.
DEAR LINDA: Don’t waste your valuable time fighting yournasty loan servicer. You will lose. Mortgage lenders do not have to acceptpartial payments such as you attempted to make. I’m surprised your partialpayment wasn’t returned to you.
If your goal is to reduce your total mortgage interest bycutting the life of your 30-year mortgage, you can accomplish the same resultas a biweekly (every two weeks) payment mortgage. This is done by dividing yourmonthly principal and interest payment (not including property tax andinsurance escrow) by 12 and adding that extra principal amount to each regularmonthly payment.
The result will be making 13 monthly payments every 12months and cutting your mortgage to about 22 years (the same result as abi-weekly mortgage but without any extra cost).
WHO GETS FORFEITED DEPOSIT IF HOME BUYER DEFAULTS?
DEAR BOB: Is the industry standard, if a buyer defaults on acontract to buy a house, the agent gets to keep the deposit, or does the sellerget to keep all or part of the deposit? –Robert M.
DEAR ROBERT: There is no “industry standard.” Readyour sales contract to determine what happens to the defaulting buyer’sgood-faith earnest money deposit.
The deposit should be held by a third party, such as in therealty broker’s trust account, an attorney’s trust account or at a title/escrowcompany. But it belongs to the home seller. When a buyer defaults, the selleris entitled to keep that deposit, subject to the terms in the sales contractand applicable state statutes.
Some home sales contracts have a “liquidateddamages” clause. That means if the buyer defaults, the amount of thebuyer’s deposit is the limit of the seller’s damages and the seller cannot suethe buyer for further damages, such as lost sales profit.
Just to complicate matters, the sales contract often saysthe listing agent is to receive part of any forfeited deposit. When all elsefails, read the sales contract. For more details, please consult a local realestate attorney.
EX-NUNS DON’T WANT ANY HASSLES
DEAR BOB: I leased my renovated condo to two ex-nuns for ayear. I told them I was going to sell, and they agreed. But when they returnedhome from work one day to find a Realtor’s lockbox on their door, theypanicked. The agent removed it. But the ex-nuns say they signed a one-year leaseand don’t want any disturbance to their lives. Am I locked in until the leaseexpires in April, missing the spring sales season? They won’t even agree to a24-hour notice before a showing –Patty H.
DEAR PATTY: It sounds like those ex-nuns understand real estatelaw. If they have a one-year lease, you can sell the condo but the buyerpurchases “subject to” the terms of the lease.
Unless your buyer is an investor who wants tenants, mostprospective buyers aren’t interested in buying a condo that has a lease untilApril.
If the lease doesn’t provide for showing the property toprospective buyers during the lease term, you and the real estate agent have nolegal right to enter the condo to show it to prospects.
The fact you orally mentioned you plan to sell the condo isirrelevant. In real estate, everything must be in writing to be legallyenforceable. For more details, please consult a local real estate agent.
The new Robert Bruss special report, “When It’s Smartto Prepay or Refinance Your Mortgage,” is now 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.Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
Copyright 2007 Inman News