Q–We contracted to buy a brand-new house. The closing was delayed by the builder until March 1999. We had paid him a total deposit of $65,500 cash. The builder’s lawyer then told us we had 24 hours to close the sale. Since we couldn’t close that fast, the builder put our house on the market for sale. It was sold to another buyer on May 26, 1999. We never signed any release. How can we get our full deposit back with interest? How could the builder sell our house to someone else?
A–Something is fishy here. Why did you wait until a year later to take action to get your $65,000 refunded? If you wanted to complete the purchase of your new house before it was sold to another buyer, you should have hired a lawyer to sue the builder for specific performance of your purchase contract.
Unless the builder has gone bankrupt or left town, it’s not too late to get your $65,000 deposit refunded. I presume you have demanded the builder refund your money with interest. Please consult a local real estate lawyer to protect your legal interests.
Q–What is the relationship between the prime rate, which Federal Reserve Bank Chairman Alan Greenspan keeps raising, and mortgage interest rates? My wife and I were hoping to buy a house in 2000, but with interest rates being artificially forced up by Greenspan, we don’t see how we can buy. Why is he forcing “little people” like us to remain renters?
A–There is no direct relationship between the so-called prime rate and home mortgage interest rates. About all that can be said is they usually go in the same direction at the same time.
Federal Reverse Bank Chairman Alan Greenspan does not control the prime rate, which is supposed to be the interest rate at which banks make loans to their best borrowers. However, that’s no longer true. Many businesses and individuals borrow from banks at below the prime rate.
However, the Federal Reserve Bank Board does set the discount rate at which “the Fed” makes loans to its member banks. These banks then change their prime lending rate when the discount rate goes up or down.
Greenspan thinks the economy is overheated. His primary method of influencing the economy is to convince the Federal Reserve Bank Board members to raise the discount rate to prevent more inflation. I agree with you that raising interest rates hurts the individual consumer “little people” like us by forcing us to pay higher interest rates. However, if the economy slows down and rising inflation is prevented, his actions might be worthwhile.
Q–I am trying to buy some fixer-upper houses. They are old and need painting and new windows, but the contractor said the foundations are good. Is this a bad investment?
A–No. Just because those fixer-uppers need new windows doesn’t make them bad investments. However, installing new windows alone won’t add more market value than the windows cost, but the painting will add far more than its cost, probably two to five times as much.
Just be aware than necessary structural improvements, such as the new windows, won’t add much market value. Overall, aim for $2 of increased market value for each $1 spent on improvements.
Q–I contracted to sell my home on an eight-month listing. After three months, I have not received the offer I expected. I no longer want to sell my home. The realty agent said she will not show or advertise my house, but she refuses to cancel my listing contract. Can she refuse my request? If I decide to sell my home in a few months, I would like the option to do it the way I wish.
A–I recommend signing only a 90-day listing unless the agent includes an unconditional cancellation clause.
Is your listing agent using “due diligence” as required by the listing to get your home sold? Examples include putting your listing into the local multiple listing service, advertising your home for sale, holding weekend open houses, distributing brochures and advertising it on the Internet. If your agent is using due diligence, you cannot cancel your listing without owing the full sales commission.
If you are trying to get out of paying a sales commission, forget it. Realty agents have encountered sellers like that before, and most listings include a “safety clause” in case the home is sold to a registered prospect shortly after the listing expired.
Yes, a listing agent can refuse to cancel your listing contract if she has lived up to her side of the agreement. Unless she was doing a poor job, you are obligated to pay the sales commission if you cancel the listing without justification. Please consult a local real estate attorney for more details.
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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.
