Q–Several months ago my wife and I bought a large, newly constructed home in an upscale neighborhood. The builder won’t give us information about the cost of the land, which should not be included in our fire insurance policy. My homeowner’s insurance company appraisal estimated the “total insurable replacement cost.” Because of this, my insurance company does not recommend reducing my annual insurance premium of about $2,400. We want to be sure we have enough insurance but do not want to overinsure. Any suggestions?
A–Estimating the replacement cost of your house, excluding land value, should be relatively simple. Just multiply its square footage by the estimated construction cost per square foot in your area.
For example, if your home is 3,000 square feet and its estimated replacement cost for equivalent construction is $200 per square foot, your home’s estimated replacement cost is $600,000. Incidentally, in the 1991 Oakland firestorm, insurers learned foundations are often so severely damaged that they become virtually useless for rebuilding; therefore, the foundation’s replacement cost should be included.
For your peace of mind, get insurance bids from at least three insurance agents. Personal recommendations are the best sources of top-quality agents. Each agent should visit your home, measure its square footage and give you a written replacement-cost estimate.
Q–In February 1998, we bought a lot contingent on acquiring additional property so we could build a certain size home. The real estate agent prepared a contract and introduced us to the contractor who owned the additional 1,000 square foot of property we needed. All parties signed contracts, and it was agreed the property would be transferred when construction on our home began. Recently, we learned the contractor sold his land to another individual and can no longer sell it to us. We cannot build our home without this additional land. What should we do?
A–Run, don’t walk, to a real estate attorney’s office near the property where you plan to build. That attorney will probably recommend you file a specific performance lawsuit against that contractor.
If that sale hasn’t closed, you might be able to stop it and then sue for specific performance of your purchase contract.
Q–My mother recently passed away, leaving her mobile home to my sister and me. It is 22 years old, in excellent condition and located in a desirable California mobile home park.
We listed it with a real estate agent for $37,000, but three weeks later, we learned she knows less than we do about selling mobile homes. She now wants to change the listing, stating it is “the law” that she charge a minimum of $4,000 real estate commission regardless of the 10 percent commission in our listing agreement.
I phoned the owner of her brokerage and requested that he either appoint a new agent to represent us or cancel our listing. He never called back. What should we do? .
A–Your real estate agent lied when she said there is a $4,000 minimum real estate sales commission. That is not true. Real estate sales commissions are fully negotiable between seller and agent. You should file a complaint against that agent with the state real estate commissioner.
I am shocked the agent’s brokerage manager did not immediately contact you in response to your complaint. He or she should also be reported to the commissioner for failure to properly supervise a sales licensee.
It sounds like you have more than adequate grounds to cancel your listing for lack of due diligence and breach of fiduciary duty. You need a professional agent who specializes in mobile home sales, not an amateur.
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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, IL 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.
