Q-A local Realtor is advertising a house for sale “as is.” It has been vacant over a year while the heirs argued over what to do with the house. Now they’ve decided to sell. The house needs complete renovation, but the asking price is a bargain. However, the Realtor cautions that she and the sellers make no warranties and will not repair anything. What can you tell me about “as is” sales. Should I buy this house?
A-An “as is” sale means the seller and the real estate agent make no warranties or representations about the property. However, they must disclose any known defects, such as a leaky roof.
Most prospective home buyers won’t touch “as is” houses because of the uncertainties, and buyer competition is minimized because most home buyers want a home in perfect move-in condition.
My suggestion is to include a contingency in your purchase offer making your offer contingent upon the results of a professional inspection report on the house. Be sure to accompany the inspector. He or she can explain whether the defects are serious and how much they will cost to correct. I’ve learned from accompanying many inspectors that most home defects that look bad really aren’t.
I can’t tell you whether you should buy that house. However, if you decide to make a purchase offer, be sure to include an inspection contingency clause so you can cancel the purchase if the professional inspection reveals the defects are more serious than you anticipate.
Title insurance
Q-I’m thinking about putting my house up for sale. I have owned it almost 40 years. Do I have to have the title insured before I list it with a real estate agent?
A-No. As part of the listing procedure, a good real estate agent will have the title status checked by a local title insurance company or attorney. When a buyer is found, the buyer and the mortgage lender will insist on a title insurance policy. At that time, a thorough title search will be conducted to make certain the title is marketable. Your real estate agent will handle the details for you.
Selling home yourself
Q-I want to save the sales commission and sell my home without a real estate agent. Please explain what is involved and how I go about doing this.
A-I could write enough material to fill this entire newspaper to answer your question. Selling your home alone requires extensive knowledge and preparation. I do not recommend selling without a professional real estate agent.
However, if you insist on risking a sale alone, I recommend you study the book “The For Sale By Owner Kit” by Robert Irwin (Dearborn Financial Publishing Co., Chicago, $15.95, available in stock or by special order at local bookstores and libraries). After reading it, you should realize how much work and risk are involved.
Low offer sweetener
Q-There is a house for sale in my town that has been listed with several Realtors over the past year. I think it’s worth about $50,000 below its asking price. If you wanted to buy this house that far below the asking price, what would you do to convince the seller to accept your low offer?
A-That’s easy. Include with your low purchase price offer a big earnest money deposit check. Be sure it is good because the seller or their real estate agent is certain to verify it with your bank.
Many times I have bought property substantially below the asking price by accompanying the purchase offer with a large earnest money deposit check. A substantial check will often impress the seller into accepting an offer far below the asking price.
Lockbox security
Q-I noticed you had several letters in recent months on whether home sellers should allow their real estate agent to put a lockbox on their house so Realtors can easily show the house to prospects when the owner is not home. When we sold our house last year, we allowed the agent to put an electronic lockbox on our front door. Several times we came home and found the back door left open. Also, agents left window shades open and lights on.
Then one day we came home and found our large-screen TV and stereo had been stolen. Our agent checked the last entry in the electronic lockbox. The police contacted the agent but could find no evidence she stole the TV and stereo. At first, our homeowner’s insurance refused to pay because there was no evidence of a burglary. We had to pay the deductible but they eventually paid for most of our loss. I just thought you should know even the latest fancy electronic lockboxes aren’t perfect.
A-Thank you for sharing your lockbox experience. Although there are risks to using them, I think the benefits for an agent being able to show the house on short notice to prospective buyers outweigh the lockbox disadvantages.
Time closing and save
Q-I’m just starting to look for a home to buy. A friend at work remembers you said there was a best day of the month to buy. But she can’t remember what day that is. Please clarify.
A-With home mortgage interest rates at 25-year lows, today is a great time to buy your first home. The day you sign the purchase agreement is irrelevant. Closing the sale usually takes 30 to 60 days after the sales contract is signed.
If you’re obtaining a new mortgage, it is best to close your purchase and record the deed on the next to last business day of the month. The reason is you thereby minimize cash required by only having to pay mortgage interest for the remaining days of that month. However, if you foolishly close early in the month, you must pay pro-rated interest to the end of the current month. This can become expensive.
Because home loan mortgage interest is charged in arrears, your first mortgage payment becomes due on the first day of the second month after the closing. To illustrate, suppose you close your home purchase on Nov. 29. Your first mortgage payment becomes due Jan. 1 and includes interest for December. However, if you close the sale on Dec. 2, at the closing you will have to pay interest for the remainder of December. Your first mortgage payment then becomes due on Feb. 1.
Flawed credit reports
Q-I plan to buy a home in early 1994, so I wrote to the three major credit bureaus to check my credit reports in anticipation of getting a home mortgage. All three have incorrect information about my account with a major national department store chain, which reports me as having been late with payments. However, when I wrote to the department store twice they never replied. What can I do to clear up this one bad item on my credit reports?
A-Congratulations on checking your credit reports to be certain they are correct. Now is the time to get any errors removed so your credit reports will be clean when you apply for a home loan.
Write to each of the credit bureaus and ask that they verify the incorrect report from that national department store chain. In your letter to the credit bureaus, be sure to specify you want the incorrect information either verified or removed from your credit report within 30 days. If the department store fails to verify promptly, then the credit bureau must remove the disputed adverse item from your credit report. Ask each bureau to mail you a copy of the corrected report.
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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. Address inquiries to Robert Bruss at Tribune Real Estate Features Service, P.O. Box 280038, San Francisco, Calif. 94128.
