Dear Ask George: "My husband and I have just received an offer on my childhood home in Utah. The offer I have received is ten thousand dollars below my starting asking price. I have no problems in negotiating, but the potential buyer wants us to cover six percent of closing costs with the offer that he has given us.

That six percent added in with the six percent that my realty agent is charging me will severely cut into my actual "profit" from this sale. My husband's uncle, who used to be in real estate, has told us that my agent's commission should be included with the closing costs.

However, my agent says that the closing costs and his fee will be separate. I have tried researching this but can not find any information on this matter. So, who is right? Thank you very much in advance for any information you may be able to provide me!" -- Closing Cost Curiosity

Answer: Has your real estate agent -- your "listing agent," prepared a Net Proceeds statement for you, predicated upon several different scenarios such as paying six percent of the buyer's closing costs, three percent, and then zero percent? How many times has your property been shown since it was listed? Is the level of showings high, medium, or low based upon what you expected? Are your expectations realistic based upon Price, Exposure and Accessibility relative to the location of your market and the condition of your property? Is your agent encouraging you to accept this offer or does the agent feel you can do better?

In answer to your specific question as to "Who is right?" your husband's uncle or your real estate agent, they both are. It is a matter of semantics. The way both gentlemen should be answering your question is: "both the real estate commission and the buyer's request that you pay six percent of the sales price in closing costs that would normally be charged to the buyer, would come out of your proceeds of the sale. Obviously, your net proceeds would be six percent higher if you did not grant the buyer's request."

There are numerous reasons why a buyer might request that you contribute six percent of the selling price to pay for his or her closing costs. However, you must decide whether or not you wish to do that. In that regard, your decision is always better if it is based upon informed consent. Would the buyer be able to purchase your property for a lesser amount of seller contribution to the closing costs? You might wish to make a counter-offer reflecting that. Rely upon your real estate agent's recommendation. He or she should have the best feel and knowledge for the residential real estate market in your area.

Dear Ask George: "We opened a Residential Listing Agreement with a major real estate office (I'll call it "MREO") in California in October, 2004 with a six month listing period. Our house sold in February, 2005 and as we were signing the Residential Purchase Agreement, our real estate agent mentioned that our Listing Broker might be switching over to another major real estate firm in the future.

When I came home from a trip I took, there was a new sign on the lawn. Apparently, our real estate broker decided to create his own real estate company. In our contract it lists "MREO" as the confirmed agency. I am confused as to who I am dealing with, the "MREO" or the broker's new company? I listed with the "MREO" and agreed to pay a six percent commission because it was a large company. Can a broker just leave his parent company and form a new one and take all his clients?" -- Befuddled

Answer: The Broker of Record owns the listing. Your real estate agent works for the Broker of Record. So far, in your question, you were informed by the listing agent who works for the Broker of Record that the Broker of Record might be switching over to a different firm in the future. If I understand your question, when you returned home from your trip you found a different real estate sign on your lawn. I'm going to assume that your Broker of Record, with whom you have a Residential Listing Agreement, simply changed the name of his firm, but instead of the franchise your agent told you he might join, he formed his own, independent firm. If that is the case, you probably want to send him a letter requesting that he send you a written release that you have (or will have) discharged your obligations to him when you pay him the six percent fee specified in your listing agreement.

If, on the other hand, your listing agent was also a California Licensed Real Estate broker and changed your representation from the original Broker of Record to himself, without your written permission, then you should seek legal counsel immediately. If the transaction has not yet closed, you don't want to create problems at the Title Company which is a big reason to seek legal counsel. However, you also want to make sure that the necessary paperwork has been properly executed by all parties, including any real estate brokers.

Dear Ask George: "We recently purchased a house that we would like to eventually use as a rental home. The original intent was to buy the house, move in for a short time while we purchased and renovated the house we wanted to live in. We financed the home with an FHA loan and after closing re-read the 'intent to occupy' document. My question is whether we must refinance to be able to rent or is living in the property for six months to a year enough to satisfy the 'intent to occupy' document?" -- FHA Buyer

Answer: Refinancing is not a requirement of your FHA loan. You may refinance if you choose but you are not required to do so. As for the "intent to occupy" document, you purchased the home and subsequently occupied it as your primary residence. There is no specific period of time you must maintain such occupancy, just that you occupied the home. In my opinion, occupying the home for six months to a year certainly meets the intent of the "intent to occupy" document. However, please be aware that it is also my opinion that the FHA never intended for buyers to occupy FHA financed properties for only six months.

Dear Ask George: "We are considering moving to Texas. I have been told if a person is disabled they may be exempt from real estate taxes. Is this true? If it is, is it state wide and how does it work? Thanks and have a great day." -- Considering Moving

Answer: Yes, there is a "disabled" exemption but it may be different for each County in Texas. Real Estate Taxes in Texas are described in the document "Taxpayer's Rights, Remedies, and Responsibilities". In that document, it states regarding the disabled tax exemption, "You must apply timely for general, over 65, disabled or any local-option homestead exemptions with the appraisal district where your property is located. If your property is located in a taxing unit that overlaps into two or more counties, you must apply to each county appraisal district."

For example, I live in Harris County so I would access the Harris County Appraisal District website. Once there I would select "Additional Forms..." at the very bottom of the left-hand navigation bar, and then I'd select "Form10-11.pdf" under "Affidavits" and read page 2 of the 2 page form describing what kinds of disabilities carry an additional homestead exemption.

All of these documents and more are available to you on the web. (Click Here)

Dear Ask George: "I was looking for information pertaining to each state as to who pays to record the deed in a real estate transaction. If you know of a website or even a book that would help me out it would be greatly appreciated." -- Appreciative

Answer: Generally, unless the purchase and sales agreement provides otherwise, the purchaser ("buyer") pays to record the deed in a real estate transaction. There are other fees the purchaser also typically pays such as recording any mortgage loan documents.

Keep in mind, however, that a purchase and sales agreement can provide almost anything to be paid by the purchaser, with the exception of FHA and VA loans that restrict what types or kinds of closing costs the purchaser is or is not allowed to pay. I believe that it is fairly common practice in all 50 states, however, that the purchaser pays for recording the title, also called the deed, to real estate in the purchaser's name.

Published: May 24, 2005

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