Q–About seven months ago, we retired and bought a nice house. Our real estate agent told us the house across the street is a home for the developmentally disabled. We checked with the other neighbors and were assured it was no problem. The agent required and we signed a statement of disclosure. But at no time were we advised there was a second home for the developmentally disabled right behind the house we bought, separated by a 10-foot unused area, run by the same company. It has been there since 1985. We learned the former owners of our house demanded the builder buy back our house for this reason. We consulted a local attorney. He said we don’t have a serious complaint because,unless we asked, there was no need to disclose. We later learned he is a close friend of the builder. But we can prove we asked if there were any other neighborhood problems. Our greatest concern is the diminished value of our home and what we are required to disclose if we sell.
A–A home for the developmentally disabled is not a public nuisance. Unless the residents cause disturbances or are dangerous to the neighbors, causing a private nuisance to you, I don’t think you have any basis for a complaint against the real estate agent and the seller.
Although you asked if there were any other neighborhood problems and none were disclosed by the realty agent or the home seller, I don’t think the nearby special residence is a basis for either rescission of your purchase or payment of monetary damages.
When you sell, you are not legally required to disclose there is a nearby home for the developmentally disabled. Of course, if a buyer asks, you must disclose the facts. For your peace of mind, I suggest you consult another local real estate attorney, but I don’t think you have grounds for legal action.
Q–I own the last vacant lot in a prestigious residential subdivision, which is about seven years old. The price of houses in the subdivision ranges from $160,000 to $225,000. According to the local “experts,” my lot is not overpriced. Why hasn’t it sold?
A–The general rule is a lot is worth 20 to 25 percent of the total value of a residence. For example, if houses in a neighborhood sell for around $100,000, a vacant lot should be worth $20,000 to $25,000.
Is your lot’s asking price in the range of 20 to 25 percent of nearby home sales prices? If so, it’s asking price is reasonable.
Marketing a vacant lot is far different from selling a house. Your primary markets are home builders and buyers who want to build a custom home. Since you didn’t mention a real estate agent, I presume you are trying to sell without professional help. That is a major mistake.
List your lot for sale with an enthusiastic realty agent who will aggressively market your lot to these prospective buyer groups. Mailings to home builders are especially important, as is putting your lot listing into the local multiple listing service. Selling a lot often takes a long time, so a six-month listing is not unreasonable.
Q–We closed the sale of our home last month. The gross sales price was $178,500, before deducting the sales commission and other expenses. When we listed our home, the realty agent said our home was worth about $175,000. But we insisted on listing it at $185,000. Now we learn that two homes, almost identical to ours in the same neighborhood, sold in the last two months for $192,000 and $189,000. Shouldn’t our realty agent have told us about these sales? Is she liable to us for letting us sell below market value?
A–Your situation shows why it is critical for home sellers to interview at least three successful local realty agents when listing a home for sale.
If you had done that, you could have compared the three CMA (comparative market analysis) forms presented to you by the three interviewed agents. You then would have known the recent sales prices of comparable nearby homes as well as the asking prices.
If those two homes sold during the term of your listing, your real estate agent should have informed you about the sales prices. A real estate agent has a fiduciary duty to the seller to disclose all material facts that arise during the listing. Sales prices of comparable homes obviously are material facts you should have known about. For further details, please consult a real estate attorney.
Q–I am 28, single, with a good sales job and good credit. I have about $45,000 (thanks mostly to a big sales bonus) for a down payment on a house or perhaps a two-family duplex or maybe a triplex. Since I am a saleswoman, with fluctuating income, I’m thinking income from one or two rental units would help pay the mortgage during the months when my sales are slow. Should I buy a house or a small income property?
A–Congratulations on saving a substantial down payment at your young age. Single-family houses generally appreciate better in value than do small income properties because of the stronger buyer demand for houses.
My first real estate purchase, at the age of 27, was a triplex where I lived in a house at the front of the property and rented the two apartments at the rear. Those rents were sufficient to make the mortgage payments; all I had to pay out of my pocket were the property taxes, insurance and repairs. When I eventually moved out and sold on a lease-option to a neighbor, I got a very good profit. But I probably would have done better with a single family house.
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PLEASE NOTE: Real estate laws vary from place to place. Be sure to check the laws of your state and municipality before making decisions on real estate matters.
Write to Robert Bruss at Tribune Media Services, 435 N. Michigan Ave., Chicago, Ill. 60611.
