Q–As a long-time Realtor and avid fan of your column, I enjoy reading the realty problems and solutions each week. But one problem I haven’t seen you discuss is dishonest home sellers who try to save the sales commission by waiting until a broker’s listing expires and then selling to a buyer who saw the house during the listing. This happened to me twice in the last year. When I learned about the sales to clients who saw the home listing I showed them. I had my attorney write a polite letter to the sellers reminding them of the “savings clause” in the listing. Both times I had no trouble collecting my commissions at the sale closings. When my listings weren’t renewed, although I did a terrific marketing job, I suspected dishonest sellers and I was right. How about discussing this problem sometime?
A–Thanks for raising a problem dear to the hearts of all Realtors. Most home sale listing contracts contain a savings or safety clause. It says the seller owes the listing broker a sales commission if, within 90 days (sometimes 180 days) after the listing expires, the homeowner sells the house to a prospective buyer who was shown the house during the listing term.
However, to be entitled to a sales commission in this situation, the listing broker must register the client during the term of the listing. This is where listing agents often mess up, by failing to give the seller a list of clients who were shown the residence.
Usually, it is prospective buyers who contact sellers after the listing expires, hoping to reduce the price because the seller won’t owe a sales commission. If it weren’t for the listing agent’s efforts, that buyer never would have seen the home. It is only right the agent should receive a sales commission, as you did.
Q–Our former home has been listed for sale over three months. We just renewed the listing for 60 days. The agent seems to be doing everything possible to get the home sold. It has several problems, such as location near a noisy freeway and small rooms. But our asking price is the lowest in the area. However, the nearby major employer is downsizing and the town’s economy is sluggish. I think we should move our furniture out of the house so we can paint and recarpet to make the rooms appear larger. But our Realtor advises against this. What do you suggest?
A–Most realty agents recommend leaving a house furnished until it is sold, because an attractive, furnished residence makes prospective buyers realize how nice the home will be for them.
However, some homes are best sold when they are vacant. Yours might be one of them. Whenever I sell a house, except to a tenant buying on a lease-option, I always get it into tip-top condition before listing it with one of my area’s most successful Realtors.
By necessity, these houses are vacant since I don’t live in them. They always have fresh paint, new carpets, and they sparkle. As a result, they sell within 30 to 60 days since they are priced right.
Long-time realty agents often say the only reason a house doesn’t sell is because it’s overpriced. I disagree. Frequently the problem is that the seller’s furnishings make the house unattractive. Since your house hasn’t sold with furniture, moving everything out so you can paint and recarpet sounds worthwhile.
Q–Thank you for writing about Starker tax-deferred delayed exchanges about six months ago. As a result, I sold my rental house in downstate Illinois at a net profit of about $65,000 and bought one close to my new home at a bargain price. But what irked me was that my CPA said you didn’t know what you were talking about. I even gave him Internal Revenue Code 1031(a)(3) and your Starker exchange special report. Needless to say, I now have a new tax advisor. The first question I asked her was “What is a Starker exchange?” She knew the answer. Shouldn’t my old CPA have known about Starker exchanges?
A–Yes. But you’d be shocked by how many CPAs and real estate attorneys are not familiar with Starker exchanges. Every time I refer to Starker exchanges, I get letters saying “I can’t find any reference to Starker exchanges in the Internal Revenue Code. You don’t know what you’re writing about.”
It’s true there is no reference to Starker exchanges in the tax code. The term came from the famous tax case where the late T.J. Starker traded his timber land to the Crown-Zellerbach company for property to be acquired later with the sales proceeds. Meanwhile, C-Z held the money. Although the tax code now sets specific rules, knowledgeable real estate and tax advisor still refer to these tax-deferred trades as Starker exchanges.
Q–I am one of those “tainted spouses” you frequently mention. My second husband and I often laugh about it. Before I married him, my late first husband and I used our “over 55 rule” $125,000 once-per-lifetime home sale tax exemption. My second husband realized I was a “tainted spouse,” but he married me anyway. That was six years ago. Since the new tax law abolished the “over 55 rule,” am I now an “untainted spouse”?
A–Yes. Anyone who used the old “over 55 rule” $125,000 home sale tax exemption can now use the new $250,000 per person home sale tax exemption. However, you must own and live in your principal residence any two of the five years before its sale. Your tax advisor has details.
———-
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.
