Q–I’ve been interviewing Realtors in preparation for putting my house up for sale, so I can take advantage of today’s excellent market conditions and prices. Two were very professional and one was a big loser. All came highly recommended by my friends. One of the professional agents, with whom I am considering listing my home, recommends listing older homes like mine “as is.” He said this eliminates the possibility the buyer might sue for any defects that show up later. Is this good advice?
A–When a home is sold “as is,” that means the seller will not pay for any repairs and does not make any warranties or representations. The seller must still disclose all known defects or risk being sued when the defects are discovered by the buyer.
“As is” has its place in home sales, but I don’t think a house in reasonably good condition should be listed that way. When a buyer and their realty agent see an “as is” listing, it’s like a “buyer beware” warning. Most homes are not listed for sale this way. Unless your home needs major repairs you don’t want to do, listing your home “as is” will only dissuade potential buyers.
Q–For the last 16 years, my girlfriend and I have been living together. Now we’re splitting up. We own our house together, which we purchased for about $90,000. It’s now worth at least $475,000. My business accountant said because we’re not married, my girlfriend and I can only claim one $250,000 home sale tax exemption. Is this true?
A–No. New Internal Revenue Code 121 has no such restriction. If you and your girlfriend both hold title to your principal residence and have both occupied it at least two of the last five years before its sale, you can each claim up to $250,000 of tax-free home sale profits.
Perhaps your business accountant was thinking of the special rule for a married couple. If only one spouse holds title, but both spouses have occupied the principal residence an aggregate of two out of the five years before the sale, then up to $500,000 of tax-free home sale profits are available if they file a joint tax return in the year of sale. Your tax adviser has further details.
Q–I am a widow, 72, in good health. I own my home free and clear. My problem is that my house needs a new roof. I’ve had several estimates; the least expensive is $7,500. I have a modest savings that I hate to deplete. My income is Social Security plus a small pension.
I went to my bank, but they don’t make loans of less than $20,000. They say I don’t have enough income to qualify for a loan anyway. I don’t want to ask my sons for a loan, although I know they would probably just give me the money. What should I do?
A–Like many senior citizens, you are property rich but cash poor. It sounds like you could use some extra money, both for large expenses like that new roof as well as for everyday living expenses. I recommend you investigate reverse mortgages. FHA, Fannie Mae and Transamerica offer different plans.
Norwest Mortgage and GMAC have mortgage offices offering reverse mortgages in most states, and Financial Freedom Plan is located in Western states. You can arrange for a lump sum, monthly payments or payments only when you need them. Income is not a factor. Compare all the offerings to see which is best for your situation.
Q–In late May, our offer to buy a house was accepted by the seller. We arranged our mortgage and the house was appraised.
When the June 15 closing date arrived, our Realtor phoned to tell us there was a title problem. It seems the seller, an elderly man, took title with his late wife. But her estate was never probated. She died about 15 years ago. The title insurance company refuses to insure the title until the wife’s estate is probated. They held title as tenants in common. The seller seems confused. He refuses to hire an attorney. What should we do?
A–This situation should have been prevented by the listing agent. He or she should have checked the title at the time of listing to be sure the seller was the only title holder.
In many areas, it’s possible to get a free “property profile” from title insurers to check on title status.
Because title was held as tenants in common, presuming there was no living trust, it appears the only way to clear the deceased wife’s name from the title is to have a probate court proceeding.
A good probate attorney can often speed such hearings in a simple estate, but it will probably take at least a month or two.
If you want to cancel your purchase, the seller should willingly refund your earnest money deposit. But if you want the house, and the seller doesn’t act quickly to clear the title, you could bring a specific performance lawsuit to force him to take action. Please consult a local real estate attorney for details.
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Have a question about real estate? You can write to Robert Bruss in care of Tribune Real Estate Features Service, 435 N. Michigan Ave., Suite 1400, Chicago, Ill. 60611. Answers will be provided only through the column. Please note that laws vary from state to state and area to area. Consult an attorney for specific legal advice.
