Q–I have two questions. First, I closed on a 4-unit apartment on July 9. The seller and I agreed on a price in March, and after a city inspection, more than 70 code violations were discovered.
The seller had approximately 5 months to complete the repairs, but didn’t by the time we closed. In order to protect myself, I had my attorney draft an agreement that we both signed that gave the seller 60 days to complete the work detailed on the city inspection report.
It has been 30 days, and I’m losing money because two of the apartments still need work done to them. Do you have any suggestions?
I’m concerned about how long it will take for the repairs to be completed if I have to take him to court. I’ve heard it could be months.
Secondly, my loan on the property is a 30-year fixed rate at 7 1/2 percent interest. I’d like to take advantage of lower rates. Is it possible for me to refinance this soon after closing?
A–Let’s take your second question first. Unless your loan has a prepayment penalty, it is probably worthwhile for you to refinance. The question to ask is this: Can I save money by refinancing? Carefully compare the points and fees, if any, you’ll pay out against the savings in the interest rate.
As for your code violations situation, it would probably have been wiser to have delayed closing until the work was completed. As an alternative, you could have held back a significant amount of cash at closing to guarantee that the seller would complete the repairs. If there was no money held back, the controlling document will be the one that you and the seller signed.
Q–In the Multiple Listing Service listings, the amount of the buyer broker’s commission is sometimes followed by more figures, like 2.5 percent-15. What does this mean?
Also, I may soon be selling my house, which may be worth more than $600,000. If a broker gets 5 percent of the sales price, I’d be paying $30,000 in sales commission.
This seems exorbitant, especially if the house sells quickly. Can I ask the agent to take less?
A–The number to which you refer (it’s 15 in your example) is the amount that is discounted from the buyer broker’s share of the commission. This may be a fee, or money to pay for an escrow, etc.
As far as commission goes, you can certainly ask the broker to take less. But the real question is, why would you begrudge your agent his or her commission?
If the home sells quickly, it may well be because the broker priced it properly, marketed it well, and displayed excellent selling skills.
Here are some other questions to ask yourself: Would you feel the broker “earned” his or her commission if your property sat for 6 months? Could you have sold your property as quickly and easily?
Finally, did the broker get the highest price ever in your neighborhood for your property? That kind of selling doesn’t just happen. It’s derived from experience and a knowledge of the market.
By the way, 5 percent is already less than many brokers take. The typical commission is 5 to 7 percent of sales price.
And if the broker ends up representing you and the buyer in a dual agency, perhaps you’ll be able to negotiate a reduced commission.
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Write to Ilyce Glink c/o Real Estate Matters Syndicate, P.O. Box 366, Glencoe, IL 60022. Send e-mail to IlyceGlink@aol.com.
