Question: A home was for sale at $475,500, we made an offer of $480,000 and did not hear back from the sellers and the property has remained on the market. Are the sellers obligated to respond?

Answer: You certainly met the price standard established by the seller. But real estate offers are complex documents and there may be other terms and conditions which were not acceptable to the owners.

Should the sellers have responded, at least to say they reviewed your offer? As a matter of courtesy, yes. As a matter of good business, yes. As a business obligation, no. Why not? Because while it may seem strange and discourteous, the fact that a home is being marketed does not create an obligation to accept or respond to a purchase offer.

Think of the times when a home is bought for a premium above the list price -- that's only possible because in real estate an owner is not required to accept a full-price offer. Or, think of the times an owner receives an absurd, low-ball, no deposit, no-money-down proposition. Should they be required to have further interchange with the would-be buyer?

In effect, when a home is made available for sale the owner is testing the market. It's the buyer who's making an offer. The catch is that if the property has been listed for sale with a broker, an owner may be required to pay a real estate commission if a broker brings in a ready, willing and able buyer who has met all listing terms.

In the case you describe, I would have responded -- and sought a better offer.

Question: We recently refinanced. Closing was on a Thursday and my loan was funded at closing. However, the old lender was not paid off until Monday. In effect, I wound up paying interest on two loans for four extra days. Is this fair?

Answer: You might want to see what state rules require -- and if they apply to your lender.

California, as one example, says lenders may not charge interest on first mortgages more than one day before the loan is recorded. The federal Office of the Comptroller of the Currency, an entity which supervises national banks, permits the charging of first mortgage interest from the day loan proceeds are given to the homeowner. Since a loan may not be recorded until several days after closing, it's possible and acceptable under the federal rules for national lenders to charge interest for more than one day before a loan is entered into local records.

Question: We are refinancing our home with a 10-year fixed interest rate loan. Should the interest rate be lower than a 15-year fixed rate loan if everything else is equal? Also, what are fair closing costs on a $100,000 loan?

Answer: Lenders are concerned with risk. The rate for a 15-year loan is less than for 30-year financing because a shorter loan is repaid more quickly. If the lender has to foreclose, less principal will be outstanding with the shorter loan -- meaning the lender has less risk. It follows that 10-year financing has less risk than a 15-year mortgage.

Many lenders group 10- and 15-year financing with the same rate while other lenders offer different interest levels for 10- and 15-year products, so it pays to shop around. At this writing, for instance, I found one lender online who wanted 5.25 percent for a 15-year mortgage and 4.87 percent for a 10-year loan, both with 1 point. That's enough of a difference to make shopping worthwhile.

As to closing costs, what's fair for a $100,000 loan will vary, depending on such factors as the expense of local taxes, whether title insurance can be "re-issued," and whether you are willing to trade a somewhat higher interest cost for a smaller cash cost at closing -- or even no cash cost.

Question: I want to sell the property I have occupied for 25 years. I had 100 amp service installed and recently a new furnace and air conditioner. My insurance company now says the wiring is not up to standard so they will not insure a purchaser. Can they do this?

Answer: Your insurance company has provided coverage to you for 24 years -- but that does not mean they are obligated to provide coverage for anyone else, perhaps someone with a bad claims history. As well, an insurance company is not required to provide coverage for properties which do not meet underwriting standards.

As to the matter of whether you have adequate electrical capacity, that's a fair question. With the increasing use of appliances and computers, homes tend to consume more electrical power than in the past. Older homes, in many cases, should have more power.

By any chance, did you increase the capacity of your heating and cooling systems? Have you expanded the house? In such situations it may be that additional electrical service is appropriate.

Your next step should be to contact the local building inspector for your community. Ask them to look at the property to determine if your system meets the code. If yes, get a letter from the building inspector so you have proof for the insurance company (and any buyer) that you have met the existing standard. If no, you must upgrade your system.

As to buyers, they have a fair and understandable expectation that a property is insurable. For this reason, you must resolve this question before you sell the home, otherwise you will have to disclose the problem to purchasers. That disclosure may trigger a demand for a discount -- enough money to upgrade the system, more if you're in a "buyers" market.

Have a real estate question? Send your inquiry to . Because of the volume of mail received, Mr. Miller cannot respond to questions individually or privately. Published letters may be edited for space and style. For comments regarding other Realty Times articles, please contact individual authors by pressing here.

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Published: September 19, 2003

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