Question: I recently listed a bank-owned property and received an offer for the asking price, as is and for cash. After sending the offer to the bank they refused to sell it for the listed amount. They did not sign the final contract but called to say it was accepted. Do they have the right to refuse to sell at listing price?

Answer: There are three issues here.

First, the question is not whether the offer was at the asking price, "as is" and all cash. The question is whether the precise terms and conditions of the listing agreement were met. Were there other requirements in the listing that were not accepted by the prospective purchaser?

Second, real estate agreements count when they're in writing. Without a signed acceptance, a verbal okay is worthless.

Third, sellers (whether banks or not) have a right to refuse an offer, even one that meets all terms found in a listing agreement. However, there are two major caveats:

1. The refusal must not be for discriminatory reasons.

2. If the terms of the listing have been met then the seller can be responsible for the entire commission. After all, the broker was hired to sell the property under certain terms. If those terms were met then the broker, just like any other professional who completes a task, should be paid.

For details, please review with your attorney.

Question: What is your opinion regarding tax and insurance escrows for a mortgage with a 62% loan-to-value ratio and an A+ rated borrower who prefers to pay their own bills?

Answer: When lenders make a mortgage the loan is secured by the property so it's in their interest to assure that taxes and insurance are properly paid. When a borrower puts up less than 20 percent of the purchase price (an 80 percent loan-to-value ratio), lenders typically insist that the borrower pay 1/12th of the annual cost for taxes and insurance with each mortgage payment.

The money paid to a lender for taxes and insurance is held in an "escrow" or "trust" account and used by the lender to pay insurance and property tax bills when due.

In your situation there is now a strong loan-to-value ratio, but was this the original LTV? Let's say it was. In that case a borrower typically has the option of paying taxes and insurance costs through a lender.

Many borrowers prefer to pay their taxes and insurance directly. They can deposit the money in an interest-bearing account and better control their funds.

Alternatively, borrowers who have the option of paying their taxes and insurance directly often make deposits with a lender, even though they may lose some interest. Why? The money is collected regularly each month, so it's a kind of forced savings that many people find comforting.

In the end, if you have the option to escrow or not escrow, it comes down to a matter of personal preference.

Question: I am getting ready to purchase my first home from a private seller. No broker is involved. I am renting the house and it needs a lot of work.

When we first moved in it was agreed that it would be rent-to-own and now it has turned into a you have to get a mortgage. Since the neighborhood is popular the owners now want $30,000 more than they did before and they don't want to fix anything.

One of the major problems is that the house has mold spores in the closets. We were told someone would be out to fix this and we have yet to see this problem fixed. The roof also leaks and we don't want to buy it unless they fix at least one major problem.

Can they sell this house to us without having to fix these problems?

Answer: A rent-to-purchase arrangement usually means that some or all of the rent will be applied to the purchase price if the tenant elects to buy -- however, a buyer will still need a mortgage for the balance of the purchase price in most cases. The purchase price, incidentally, is typically set and known in advance.

Do you have a written agreement which describes the sale price and rent-to-buy arrangement? If not, what do you have?

What is the attraction of this property? You say it leaks, has mold, and the price has increased.

Three thoughts: First, show whatever written agreement you have to an attorney or legal clinic to determine what rights, if any, you have to purchase. Second, call the local housing department to determine if the property meets code standards. Third, get a real estate broker and see what alternatives may be available in your community. Interest rates at this writing are low compared to several years ago, so you may be able to borrow more and buy a better property.

Question: I have been searching for a house for more than four months but unfortunately haven't found one that meets my needs; prices are constantly rising and now I see that interest rates have started to increase. Now I am afraid of buying a house because most of the properties are over-priced in the market and I wonder if the prices will fall after interest rates climb. Please suggest whether I should buy the house right now or wait, and if I should hold off, how long.

Answer: If properties are "over-priced" why are values rising?

It's best to look at real estate as something you will own for the next five or ten years and perhaps longer. Were homes "over-priced" five years ago? Would you now like to buy at those levels?

Homes in need of repair are routinely sold. Savvy buyers often like such properties -- especially after the sale price has been suitably adjusted.

Real estate is a commodity. Property values rise and fall and there are no guarantees that prices will only rise in the future, especially after inflation. In considering whether to purchase, look at your current and expected housing needs, tax benefits and local trends such as job and population growth. See what makes sense for you in the context of your community.

Question: What would be considered a fair split (i.e. broker/agent) when the agent maintains his own office at home, and does his own advertising?

Answer: Commission splits between brokers and salespeople are negotiable, so the real question is this: Can you do better with another broker? For instance, would you accept a better split from a broker who does less business?

Question: If a new tenant moves into an apartment should that tenant be entitled to new carpet and blinds? If a tenant's electrical power goes out is the landlord at fault? Also, what if the tenant had a large amount of food stored in the refrigerator and it got spoiled because of the electrical power outage. Should the landlord reimburse the tenant for all the food they had to throw away? My last question: When should landlords get back to you when a housing matter has taken place? If the landlord has personal problems should they put that before tenant matters?

Answer: Many tenancies only last a year or two while carpets and blinds have a far-longer lifespan, so -- no -- unless there is a ridiculous local rule to the contrary a landlord is not required to replace such items with each new lease.

General power failures are rarely a landlord's fault. Power is sometimes lost throughout large areas -- as an extreme example, consider the 2003 blackout that impacted several states. A landlord can't go down to the generating station to pull a switch or string wire on your block -- thus a landlord has no liability when such general problems occur. If the cause of the failure is inside the house, then the landlord has a responsibility.

Lastly, a landlord is not on call 24-hours-a-day. Health and safety emergencies are typically resolved by calling proper personnel such as the police, fire department or an ambulance. Non-emergencies, of course, do not require immediate feedback.

Like all of us, landlords have personal obligations and not all tenant issues can be resolved instantly. Alternatively, landlords should be courteous and responsive to tenant concerns, as would any business person.

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.

This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought.

Published: December 26, 2003

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