Q–For almost 10 years I was married to a husband who ran up large credit bills and was often out of work. Since we had joint credit accounts, his bad credit showed up on my credit reports even after I divorced him in 1994.
Now I’m on my own and have a great job with plenty of income to make mortgage payments on a home. When I applied to get pre-approved for a mortgage last January, I was rejected because of the late payments when I was married.
Is there any way I can buy a home without waiting until these late payments are taken off my credit report in several years?
A–Of course you can buy a home. Your best bets are to either buy a home with an existing assumable non-qualifying mortgage, such as an older VA or FHA home loan, or with seller financing.
Work with a realty agent who understands creative finance. Explain your credit problem up front. The agent will then show you free and clear homes where the seller is likely to agree to carry back a first mortgage. Seller financing is the best mortgage source of all.
Q–While we were away on a two-month vacation last year, a neighbor built a fence which is at least two feet on our side of the boundary line. He refuses to remove it.
When I contacted our title insurance company, they refused to help us. What should we do?
A–Your title insurance company was correct in refusing to get involved. If your structures encroached on your neighbor’s property, such as a garage, then your title insurance would settle the encroachment claim. But not when a neighbor encroaches on your land.
Please consult a local real estate attorney, who probably will write a letter to the neighbor requesting immediate fence removal. If that doesn’t work, then legal action may become necessary.
Technically, if you are 100 percent certain the fence is on your land, the fence belongs to you so you can remove it if you wish. Be sure to take action promptly so your neighbor doesn’t acquire a prescriptive easement.
Q–I am debating which of two realty agents should get the listing to sell my home. One agent, with excellent references of previous home sellers, wants a 6 percent commission. But the other agent charges only 4 percent commission.
However, the agent who charges the 4 percent says if another agent sells my home through the local multiple listing system then I must pay a 5 percent commission. Do you think I should sign up with the 4 percent commission agent?
A–Please select your realty agent on the basis of the agent’s past success selling homes in your neighborhood and on the agent’s client references. An agent charging a discounted sales commission is worthless if that agent can’t get your home sold.
Past home sales success is the best indication of how successful an agent will be selling your home. Ask that discount agent for references.
Q–I own a shopping center. The highway department will be taking 2.3 acres of my land to widen the adjoining streets. They are paying me a fair price for the land taken from my parking lot. But the result will be I will have fewer parking spaces remaining, thus making parking more difficult for my commercial tenants. I think this will hurt my remaining property.
Should I somehow be compensated for the reduced value of my stores and offices since less parking will be available?
A–Yes. You are entitled to severance damages to your remaining property. Please consult an appraiser and attorney experienced in condemnation matters to appeal the condemnation award.
Q–For almost 10 years I’ve owned a vacant lot. I planned to construct a commercial building on it but can’t get financing.
Recently, I received an unsolicited purchase offer for my lot, which will give me a net profit of about $275,000. Is there any way I can make one of those Starker delayed exchanges you explained to avoid tax on my lot sale?
A–Yes. Vacant land held for investment or use in a trade or business is eligible for an Internal Revenue Code 1031 tax-deferred exchange. Your situation is perfect for a Starker delayed tax-deferred exchange.
Please consult a tax attorney to prepare the exchange agreement. When the sales proceeds are received, be sure they are held by a third party beyond your constructive receipt. A bank trust department makes an excellent third-party intermediary to safely hold the money.
You have 45 days after the sale closing to designate the property you want to acquire with the sales proceeds and 180 days to complete the acquisition. The acquired property must be held for investment or use in a trade or business. This means you cannot acquire a residence for your personal use. Your tax adviser has complete details.
Q–We have our home listed for sale. The realty agent brought us a very low purchase offer, which we countered. But we never heard from that buyer again. The agent said the couple seemed “odd” and rather “flakey.”
It occurred to me that when a future purchase offer is presented we should ask the realty agent to obtain a credit report on the buyer. When I asked our Realtor about this idea, she said it is never done unless the seller is carrying back a second mortgage. Is this correct?
A–Yes. Unless you have written permission from the buyer to check their credit report, you are not allowed by law to do so. There are serious penalties for obtaining a credit report on a person without their permission.
As a home seller, you are not extending credit to your buyer, so you have no need to check the buyer’s credit. However, as your realty agent explained, if you are asked to take back a second mortgage then you can and should obtain a credit report to check the buyer’s history of on-time payments.
Q–I work in the office of a property management company and have become very interested in the high commissions that can be earned leasing real estate. As I have a difficult time passing tests, please give me a list of states which do not require real estate license exams where I can become a leasing agent.
A–Commercial leasing commissions often far exceed the meager earnings of residential realty agents. You have chosen a very profitable specialty.
However, all states require real estate salespeople, brokers and mortgage loan brokers to take exams before obtaining a realty license. Most states also require completion of specified real estate courses either before taking the exam or shortly thereafter.
Write to the real estate commissioner at the state capitol where you wish to work for complete details.
Q–You said recently that the best time to sell a home is April through June. But when is the best time to buy a home?
A–Anytime is a good time to buy a home. However, you must be prepared to negotiate hard and have superior knowledge about local home sale market conditions. Learn all you can before making a purchase offer.
Be sure to inspect at least 25 houses in the vicinity before you even think of making an offer. I once met a real estate seminar leader, Bill “Tycoon” Greene, who said to never make a purchase offer before inspecting at least 100 houses. While I think that’s too many, his idea was the more houses you inspect, the more of a neighborhood expert you will become before buying a home.
To be more specific as to the best time of year to buy a home, it’s between Thanksgiving and New Year’s Day. Few home buyers are in the market then. Anxious home sellers will welcome any offer received at that time of the year. However, I wouldn’t wait until then to buy a home because home prices might escalate.
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Write to Robert Bruss at Tribune Media Services, 435 N. Michigan Ave., Chicago, Ill. 60611. But please note: Real estate law varies from place to place, so check the laws of your state and municipality before making decisions on real estate issues.
