Q-We want your opinion on a bargain house we have been considering buying for the last two months. It is a two-bedroom house on a small lot on a very narrow street in what we consider a lower-income neighborhood. But the price is a steal, and the seller will finance our purchase with only a 6 percent downpayment, to pay the Realtor`s sales commission. We talked with several of the neighbors, and they seem like very nice working-class people. Although we realize this house is not perfect, and it needs some fix-up work, what do you think?
A-Keep looking. If you have been thinking about buying this house for two months, I think you are trying to tell yourself not to buy. The problems you describe are known as incurable property defects. It is best to avoid these drawbacks unless there are overwhelming advantages.
In most towns the demand for two-bedroom homes is very limited. Most home buyers want at least three bedrooms and two bathrooms. But the location on a small lot in a congested lower-income neighborhood is another incurable defect.
The only advantage you listed is the low downpayment with the seller financing. Unless you cannot afford to buy another home without the incurable defects you listed, I suggest you keep looking.
Q-I look forward to your sound advice and wouldn`t miss reading any of your excellent columns. However, as a professional inspector I beg to differ with you about the five-day time limit you suggest for having a professional inspection. My firm prides itself on prompt inspections, but we find it very difficult to arrange for an inspection, check the necessary information, such as building permits, and prepare a written report within less than a week. I think you should reconsider and recommend at least 7 to 10 days for the inspection time in a home purchase offer.
A-Thank you for the suggestion. Perhaps I have been spoiled by outstanding service from professional inspectors. But I also am thinking of the home seller who does not want to tie up his or her home while the buyer hires a professional inspector.
If property appraisers can complete their appraisals in a week or less I don`t see why professional inspectors also cannot hussle to give top quality service. However, I will amend my suggestion to set a 7-day time limit for a professional property inspection contingency in a home purchase offer.
Q-We want to buy a small apartment building, live in the manager`s apartment and rent the remainder of the property to tenants. However, the apartment buildings we have been shown by Realtors all have income-expense statements with projected income. I wonder why the current owner doesn`t raise the rents if it is as easy as the agents tell us. It seems to us we should buy based on the current rather than projected income. But the agents try to get prices based on future income. What do you think?
A-I think you are right and the agents are wrong. Always buy income property, such as apartments, based on current rather than projected income. The reason is to attain the projected rents you will have turnover vacancies that will necessitate repairs possibly to attain the projected rents. If you are going to incur the renovation costs, you, not the seller, should reap the benefits. Make your purchase offer based on current, not projected, net income.
Q-Recently I read your article in the Los Angeles Times about how to assume a nonassumable mortgage. Your advice saved me a small fortune. I am the sole heir of my father, and I inherited his house, which has an old 6.5 percent mortgage. When I notified the mortgage company they said I would have to pay off the loan. But the next weekend I was in L.A. to settle my father`s estate and read your article. The following Tuesday I phoned the lender to talk with a supervisor to explain that I had inherited the house and will be moving in. After I cited your article about the Garn-St. Germain Law I had no trouble assuming that beautiful mortgage. You should warn your readers about those greedy mortgage lenders who try every trick. Many thanks.
A-I appreciate your feedback because it tells me that lenders are still up to their old dishonest tricks. Many lenders tell their loan clerks to inform all inquirers that all their loans cannot be assumed when, as you know, the truth is otherwise because many loans are assumable even when the loan has a due-on-sale clause. If in doubt, consult a real estate attorney. (The Garn- St. Germain Law, passed by Congress in 1982, allows people in certain circumstances, such as in the case of inherited property, to take over otherwise nonassumable loans.)
Q-Please help us find a good real estate agent to sell our home. We listed it with a real turkey of an agent last July. As we were out of town most of the summer, we didn`t realize what a horrible job she was doing. Although she is a Realtor and we thought they had a code of ethics, we found out later she never put our listing into the Multiple Listing Exchange as she promised to do. As a result, we learned hardly any local agents knew our home was for sale. She was trying to sell our house herself so she would get both ends of the sales commission. When her listing expired in September, we switched to the agent who sold our neighbor`s home two years ago. But he turned out to be a loser too, as he is now semiretired, has an answering machine and nobody ever gets to talk with him except through his stupid answering machine. His listing finally expired with no offers so we are ready to start fresh. How can we find the best agent to sell our home?
A-Most real estate agents do excellent jobs for their clients. I am sorry to learn you picked two losers.
To choose the best real estate agent, limit your choice to agents who actively sell homes in your neighborhood. Notice which ”for sale” signs have been replaced with ”sold” signs. Phone the agency to interview the successful agents who sell homes near yours. Disregard any agents who want your listing but who have not sold homes in your vicinity.
Also read the newspaper ads to learn which agents advertise homes for sale in your neighborhood. Check with those homeowners to learn if they are satisfied with their agent`s service.
Your goal should be to interview at least three agents who are successful in your area. Ask their opinions of your home`s market value. Each should prepare a written market analysis showing recent sales prices of nearby comparable homes, current neighborhood listings and homes that did not sell
(usually because they were overpriced).
Ask each agent lots of questions about the firm`s services, fees and anything else you want to know. Be sure each agent gives you names and phones of his or her three most recent sellers. After each agent leaves, phone these references to ask, ”Were you in any way unhappy with your agent and would you list a home for sale again with the same agent?” You soon will know which agent should receive your listing.
———-
Please note: Real estate laws differ from place to place, and laws of your area should be checked before making decisions on real estate problems. Robert Bruss will answer inquiries addressed to Tribune Real Estate Features Service, P.O. Box 6710, San Francisco, Calif. 94101.
