Question: I am a real estate salesperson who listed a 1-bedroom, 1-bath condo last March. It's still for sale. Two people have looked at it-- in total. We have lowered the price two times and have offered a $1,000 bonus to the agent who brings a buyer. Nobody is even calling. Any suggestions would be greatly appreciated.

Answer: Before considering why the individual unit is not selling, what about other units in the condo development? Are they selling? If yes, how do prices compare for like units? How does your listing differ from those units which have sold?

As to that bonus, let's clarify: It cannot be offered directly to an "agent." A salesperson cannot accept compensation from anyone but his or her broker. The bonus can be offered to a broker who may then pass along some or all of it to a salesperson working under his or her authority.

What to do? It could be that you are merely having bad luck -- that does happen. More likely, there is something about the property which makes it noncompetitive with other listings -- it's price, location, condition, a huge dog, etc. Rather than lowering the price again, perhaps offer buyers a credit at settlement equal to x percent of the purchase price. This will allow more buyers to consider the property because the amount of cash needed up-front will be reduced.

Question: I have an FHA-backed loan but pay private mortgage insurance (MI). Doesn't that have me basically paying for double coverage? If not, could you please explain to me why I have MI on an FHA loan? If I'm correct, can you tell me how to go about canceling the MI mortgage?

Answer: Lenders have traditionally wanted borrowers to buy homes with 20 percent down. Since that is often not possible, many borrowers obtain insurance from a strong second party such as the Veterans Administration (VA), Federal Housing Administration (FHA) or a private mortgage insurance company (MI). With guarantees from a second party, lenders will allow purchasers to buy with 15, 10, or 5 percent down -- or less.

In exchange for such backing borrowers pay fees. In the case of FHA, the fee is typically 1.5 percent of the loan amount paid at closing plus .5 percent of the loan amount each month. With MI, the fees vary according to whether you have a fixed or adjustable mortgage, the amount down and the type of policy.

It may be that you have identified the monthly FHA insurance cost as a private mortgage insurance cost, that you do not have FHA financing at all, or that a lender has made a billing error.

In any case you're entitled to an explanation of all fees you pay. Make a copy of your most-recent monthly statement with the account number, write a cover letter explaining your concern and send the letter by certified mail with a return receipt to the president of the mortgage lender.

Question: We are first-time buyers who have been working with a buyer's agent, someone relatively new and the assistant to a more experienced agent in the same brokerage firm.

We are thinking of making an offer on a house listed by the experienced agent. Our buyer's agent says that this will not be a problem, because he will represent us and the more experienced listing agent will represent the sellers. This worries us, since the two are essentially a team. How do we get around this problem and make an offer for the house we like?

Answer: Do you have a written agreement for someone to act as your buyer representative? If yes, what provision -- if any -- does it have for such situations?

Some states allow what is called "designated agency" which means that within an office and under the authority of a single broker one salesperson may represent a purchaser and another salesperson may represent a buyer.

You are concerned that because the salespeople involved in this transaction work as a "team" and feel there may be a conflict. As well, since you are working with the less-experienced agent you worry that you may be at a disadvantage in the bargaining process.

Brokers, like us all, want to maximize fees from their work. That said, brokers do not want disputes with consumers and they are acutely concerned about such issues as agency (who represents whom) and conflicts (who shouldn't represent whom). Thus, your worries may be shared. Speak with your salesperson. If unsatisfied, talk with the office manager or broker/owner. Explain that you see a potential conflict-of-interest. Ask how this has been handled in the past.

It may be that the broker will want to terminate any written buyer brokerage agreement, at least as it relates to the specific property you like. Or, the broker might suggest working with another salesperson within the company. As well, the broker might ask that you retain an experienced real estate attorney to independently review all offers before signing.

Question: I recently got on the waiting list to buy a condo in a new community. I plan to rent it out and keep it as an investment. The condo sales agent told me they are requiring at least one person on the title to live in the condo, and that I would have to provide a signed affidavit. Can they do this? Can they enforce this?

Answer: In a condominium project each unit is individually owned and financed. However, lenders have long believed that when the percentage of units used as rentals exceeds a certain level, say 40 percent, then the entire project is actually an "investment property" -- including the owner-occupied units. This means all units will have tougher standards to finance and refinance; that units will be more difficult to re-sell; and -- because of these factors -- unit values will not be maximized.

As well, the lender for your unit wants to make a less-risky owner-occupant loan rather than an investment mortgage. The result is that lenders routinely require borrowers to state at the time of application and closing that they "intend" to occupy the property as residents and will move-in within 30 days after settlement. While this time-period may be somewhat flexible because of practical issues (moving across country, closing on a current residence, fixing-up the property, etc.), the intent is absolute -- you must use the property as a residence because that is a condition of the loan.

You may find that some condo projects absolutely ban rentals, some ban for a given period of time after ownership, some permit a given number of units to be rented on a first-come, first-serve basis, some have grandfathered in existing rental units and some have no bans at all. But if you agree to be an owner-occupant as a condition of the purchase and loan, then expect such promises to be enforced.

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: December 5, 2003

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