Q-Since I started reading your articles, I have learned a lot about real estate. Although I agree with you 99 percent of the time, I must respectfully disagree with your constant advice for home sellers to interview three real estate agents and list their homes for sale with the best agent. That`s nonsense.
When my wife and I sold our home without an agent about two years ago we had it appraised, fixed it up into near-perfect condition, held only three Sunday open houses, and sold it to a young real estate investor who had his attorney draw up the sales contract. The attorney and the title insurance company did all the work.
At that time we didn`t know much about real estate, but we figure we saved about $7,000 sales commission. Although selling a home in today`s slower market might take longer, I don`t see any reason why a seller needs a real estate agent.
A-Congratulations on selling your home alone without professional marketing help. Very few home sellers are successful selling without an agent. Most do-it-yourself sellers eventually list their homes with an agent.
The reason I don`t recommend selling homes without a successful realty agent is most homeowners are not knowledgeable enough to sell alone. For example, most sellers are not aware of the legal requirements, such as full disclosure of all known defects if they want to avoid a buyer lawsuit.
Few owners know how to prepare a legally binding sales contract. You were very fortunate to find an experienced buyer who knew what to do. I presume he arranged his own financing, another major hurdle for most buyers and sellers. But the biggest problem most do-it-yourself home sellers have is marketing the home. Advertising is expensive, but very necessary. A hidden cost is the extra ownership expenses of paying the mortgage and property taxes for the several months it may take to sell a home.
By comparision, real estate agents use the local multiple listing service to notify all member agents about the availability of your home. In addition, agents advertise homes at their expense, hold weekend open houses, screen out unqualified buyers, supervise buyer-seller negotiations to keep them moving forward, help arrange mortgage financing and handle the 1,001 details necessary to successfully close a home sale.
Since most home sellers use a real estate agent, that shows why most do-it-yourselfers do not succeed without professional marketing help.
Q-We have a 90 percent PMI (private mortgage insurance) home loan which requires us to pay one-twelfth of our property taxes and fire insurance with each monthly mortgage payment.
At first we liked the program. But after the first year our loan was sold and we were switched without our permission to an out-of-state mortgage company which collects our monthly payments. Because the new loan servicer claims they did not get the property tax bill, they didn`t pay it.
When we received a ”late notice” from the tax collector, we forwarded it to the loan servicer who claimed it was our responsibility to make certain they got the tax bill. To make matters worse, the loan servicer didn`t have enough money in the escrow impound account and they wanted us to pay $370 more, all in one month.
We couldn`t afford that, so the loan servicer paid the taxes plus penalty and now they added the amount to our mortgage balance. Can they do this?
A-Probably not unless it is specifically permitted by the terms of your mortgage. Get out your copy of your mortgage documents to read them. If the loan servicer is trying to take advantage of you for their mistake, get tough and don`t let them get away with it.
In my opinion, the mortgage loan servicing industry is very corrupt, especially when it comes to administering tax and insurance impounds. I hate to say this, but I would like to see federal regulation of loan servicers to drive out the incompetents like your loan servicer.
Your situation is not unusual. But most loan servicers won`t admit their mistakes or when they are illegally taking advantage of borrowers. I realize it is no fun, but you have no alternative except to enforce your rights by demanding your loan servicer shape up. If necessary, consult your attorney for further details.
Q-We are first-time home buyers. A few weeks ago at a Sunday open house we liked the home and wanted to make a purchase offer. But when the realty agent found out how much we wanted to offer, based on what similar nearby houses are selling for, she said the sellers wouldn`t accept such a low offer. When we said we wanted to meet with the sellers, the agent virtually threw us out of the house which is still for sale. Do you think we should try again?
A-Yes. You should understand a real estate agent must present all purchase offers. Failure to do so is a breach of the agent`s fiduciary duty to the seller.
If that ever happens to you again, be sure to report the incident to the state real estate commissioner who will investigate and possibly revoke the realty agent`s sales license.
Since the first agent rebuffed you, it might be wise to present your offer through another local agent who will enthusiastically represent your interests when presenting your offer through the listing agent. If the offer is accepted, the listing and selling agents will then split the sales commission.
Q-We want to buy an apartment building. But we need to know what the true expenses are before we buy. What is the best way to check out the current expenses and rental income?
A-Ask the apartment building seller for a copy of Schedule E of their federal income tax return. I`ve never met an income property owner who overstates the rental income or understates the expenses on their tax returns. Q-We are novice home buyers. But several of our friends have recently purchased their first homes, so we figure we can do it too. Our questions are (1) what is the best way to be sure we can get the mortgage we need and (2)
how can we be sure the home is in sound condition?
A-Before you start seriously looking for a home to buy, stop by the loan department of your bank, S&L or credit union where you have your checking and savings accounts. Tell the loan officer you want to pre-qualify for a home loan.
Most lenders are only too eager to review your loan application and tell you the maximum loan you can obtain at that institution, subject to appraisal of the home you decide to buy. Of course, you don`t have to accept that loan and are free to shop around for better terms, but at least you`ll know the loan amount you can obtain there. However, be aware that all lenders are not the same and you might be able to obtain better loan terms elsewhere.
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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 280038, San Francisco, Calif. 94128.
