Q-At a Sunday open house I saw a $122,500 condominium which will be perfect for me. When I said I wanted to offer to buy the condo, the Realtor said I would have to put up a $5,000 earnest money deposit with my purchase offer bid.
I politely explained I want to only make a $1,000 deposit but I will increase it when I know the seller has accepted my offer and my mortgage has been approved.
However, the Realtor insisted I couldn’t make an offer unless I included a $5,000 deposit. So I walked out.
After I got home, I realized the agent was probably discriminating against me because I am black. Is it legal for a Realtor to refuse a purchase offer with a small deposit?
A-Unless a listing agent has been instructed by the seller not to accept purchase offers with low good faith earnest money deposits, the agent is obligated to present all offers to the seller.
Of course, realty agents try to get as large a good faith deposit as possible with a purchase offer to show the buyer’s sincereity, but there is no minimum required deposit. If the seller doesn’t think the deposit is large enough, he or she can counteroffer to require a larger deposit.
As for your question about possible illegal discrimination, without further evidence it is hard to say if the Realtor was discriminating based on your race.
Because a $1,000 deposit for a $122,500 condominium, to be increased after acceptance of the purchase offer and obtaining a mortgage, is reasonable, you may have been a discrimination victim. If I were you, I would file a discrimination complaint with the nearest office of the U.S. Department of Housing and Urban Development
Q-I’ve heard it is possible to save thousands of dollars by slightly increasing my mortgage payments. How much interest can I save by adding $200 to my monthly mortgage payment?
A-Without more details about your mortgage, it’s impossible to answer your question. By using a pocket financial calculator, in a few seconds your savings can be calculated.
For example, suppose you have a new $100,000 30-year mortgage at 8 percent interest with a $733.76 monthly payment. Increasing your monthly payment by $200 to $933.76 will pay off the mortgage in a little over 15 years.
The interest savings will be about $88,000 and the loan will be paid off almost 15 years sooner.
Q-My mother is dying of cancer. Her home is worth about $200,000. She has about $50,000 in savings and checking accounts. Other than some home furnishings and an eight-year old car, she doesn’t have any other assets. I am her sole heir. How much tax will I have to pay?
A-Don’t worry. Your mother’s estate is below the $600,000 federal estate tax exemption so no federal tax will be due. An estate tax return doesn’t even have to be filed for small estates like your mother’s. For further details, please consult your tax advisor.
Q-My husband and I recently bought our first home. Since then we have been bombarded by insurance salesmen who want to sell us mortgage insurance. Do you think we need mortgage insurance?
A-No. Mortgage insurance is really declining term insurance which will pay off your mortgage if your husband and/or you dies. If you have adequate life insurance, you don’t need mortgage insurance, too. But if you need life insurance, term insurance is usually the best buy.
Q-About 12 years ago I bought a house with a girlfriend. We planned to get married. Then one day she moved out and completely disappeared. Her friends say they haven’t heard from her. But I’ve heard she might be living in Europe.
Eleven years ago, I got married to another lady with whom I now reside in the same house. We have two wonderful kids, ages 10 and 8. But my old girlfriend is still on the title to this house and it bothers my wife. Frankly, I don’t blame her.
What can I do to clear up this title mess?
A-With the help of a local real estate attorney, you should bring a quiet title lawsuit to remove your ex-girlfriend’s name from title to the house. The primary issues will be how diligently you have searched to find your co-owner and if she has any equity in the house.
If she cannot be found, in most jurisdictions it is possible to serve her by publication. That means a notice of your lawsuit will be published in the local newspaper. If she doesn’t show up at the trial, then the judge will order the title “quieted” and her name removed from the title. You will then own the house in your name alone.
If you wish, you can then add your wife’s name to the title as a co-owner.
Q-I am a small real estate investor, owning six rental houses and condos. A friend told me I need a real estate license because I am in the real estate business. Is this true?
A-No. A real estate sales license is required only if you represent buyers, sellers, landlords or tenants in realty transactions for which you are paid a fee or commission.
Because you are acting as a principal on your own behalf and do not act as an agent for other principals, a real estate license is not required. Your attorney can give you further details.
Q-Many thanks for your article about how to buy a home on a lease with option to purchase. That Sunday afternoon we were all inspired so we went looking at houses for sale.
As we only had about $5,500 in our savings account, we knew that wasn’t enough to buy a house. But we found a nice three-bedroom home which had been listed for sale almost six months. The realty agent seemed very anxious. When we mentioned a lease with option to buy, she replied, “Let’s try it.”
Although she didn’t have any lease-option forms available, on a purchase contract form she wrote up an offer with $5,000 nonrefundable payment to the seller, including our first month’s rent of $2,000 with a $1,000 per month rent credit toward our down payment. Since the house is free and clear, the seller agreed to carry back the mortgage when we come up with $15,000, including our rent credits.
Since our $3,000 option money applies too, we plan to buy the house in 12 months. The realty agent wasn’t too happy about waiting 12 months for her sales commission but she said that was better than losing the listing.
A-Congratulations on your creative way of originating a lease-option. Another excellent method is to check the “houses for rent” newspaper classified ads.
After you inspect one you would like to own, ask the owner if he or she will lease with an option to buy if you pay $5,000 up front. Most landlords will be enticed by the cash and will at least consider a lease-option.
Another method of finding a lease-option is to run a classified newspaper ad for 30 days under “Houses Wanted” such as “Executive wants 3 BR, 2 BA house on five-year lease-option. Call Howard at 555-5555.” You will only get a few phone calls, but that’s all you need.
Further details are in my special report “How Realty Buyers and Sellers Can Maximize Profits with Lease-Options” available for $4 from Tribune Media Services, 435 N. Michigan Ave., Room 1408, Chicago, IL 60611. Please allow 6-8 weeks for delivery.
———-
The Robert Bruss special report “The 10 Key Questions to Ask Before Selling Your Home” is available for $4 from Tribune Media Services, 435 N. Michigan Ave., Room 1408, Chicago, IL 60611. Please allow 6-8 weeks for delivery.
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. Letters should be addressed to Tribune Real Estate Features Service, 435 N. Michigan Ave., Suite 1400, Chicago, Ill. 60611.
