Question: I have a client who is currently in escrow with a REO property. After the termite inspection, there were significant repairs that needed to be done. The seller agreed to give us a $2,600 credit "towards closing costs" for the repairs. However, they want us to do the repair "after" close of escrow, citing "liability concerns". Why do you think they would want us do the termite repair "after" and not during escrow?

Answer: As a matter of broad speculation and with no knowledge of any particular sellers, my thinking goes like this:

Suppose you made repairs before closing, damaged the property and then did not close? That would be one very good reason to keep a buyer from making repairs before settlement.

Do you know that the repairs will cost $2,600? Or could the cost be larger? At the very least it would make sense to have a careful and extensive examination of the property by a qualified pest controller before accepting the credit.

As to the why the credit was assigned toward "closing costs" rather than a particular problem, if it was me I might not want to have a written acknowledgement that could be referenced in the future showing that there may be a termite issue.

Question: It is close to a month since listing our Colorado house in a hot sellers' market. We've had two showings and one offer. Our home is one of a few older homes in a classy new development and is in a fantastic location in an exclusive area. Views, acreage, privacy, proximity to town ... . How long does one test the market? What would you advise re: patience, dropping the listing price, or dropping our listing and selling FSBO?

Answer: No doubt you have a nice property, however, Colorado has a huge number of foreclosures. RealtyTrac.com reports that Colorado is ranked second in foreclosures among all states.

In most jurisdictions there are average selling times. Speak with your broker to determine how long it takes to market a typical home in your neighborhood -- and then recognize that "average" means some sell faster and some sell slower.

As to changing prices, patience or whatever, the best step is to sit down with the broker and look at the marketing plan which was presented when you listed. Has the plan been followed? Are there changes that should be made?

Question: I purchased a condo in 2003. Shortly after moving into the unit I complained about excessive noise from a sump pump installation that the builder had made and that the alteration led to a smell coming into my upper level, mostly around the washer/dryer. A plumber from the builder alleged that "the plumbing is in violation to the building code".

I have been contacting the property management for the project since 2003 until recently. I am now informed that there was coverage under a warranty program that has now elapsed.

How could occupancy be granted for this unit with building code defects?

Answer: It is now 2007 and you first saw these problems four years ago. If the builder was not being responsive, then the solution was to call the local building inspector in 2003 to determine if the plumber's allegation was correct.

If there are code violations, then the local government can assure that repairs are made by the builder, if the builder is responsible.

Question: If my wife and I move back into one of our rentals and live there more than 24 months will we qualify for the $500,000 capital gains tax exemption?

Answer: Maybe. If the rental unit was obtained through a 1031 tax exchange you will have to own the property for at least five years, including two years of residency, to qualify for the capital gains write off.

If the rental unit was not acquired through a 1031 exchange, then you can live in it for at least two years and otherwise qualify for the capital gains write-off.

In either case, when you sell you may also face a "recapture" tax for depreciation taken while the property was used as a rental.

For specifics, speak with a CPA or other tax professional.

Question: I bought my Manhattan co-op in 1996 and this has been my primary and only place of residence. I am thinking of selling and will be making a substantial profit on the sale. What percentage, if any, must I pay in capital gains? Can I be exempt from the tax?

Answer: According to the National Association of Housing Cooperatives, "by act of Congress, co-op shareholders are treated the same as single family homeowners when they sell. If your co-op has been your primary residence for two of the five years prior to selling, the first $250,000 ($500,000 if married) of gain is excluded from federal income tax. You can use the exclusion more than once."

For specifics, see IRS Publication 523, Selling Your Home and speak with a tax professional.

Question: Could you please give me an idea about how much my home would go down in value if two 200 foot 50kw AM radio towers were put up 1,200 feet from my house and smack in front of my beautiful Rocky Mountain views. The area is zoned rural residential. My home is on 5.7 acres. The neighbors are 5 to 20 acre parcels and sadly they are even closer to proposed tower site. My home is valued now around $350,000.

Answer: A 1998 study by James A. Bryant and Donald E. Epley looked at the matter of home values and electromagnetic fields. Their study is interesting even though your situation involves radio towers and not power lines.

Bryant and Epley offer an astonishing observation: Even though factual evidence is missing, a court case -- Criscuola v. Power Authority of State of New York, 1993 -- shows that the "perception of a health risk from electromagnetic fields (EMFs) has been the basis of a diminution of residential property value and compensable damages. This case reaffirmed the trend in eleven states that proof of public fear is an adequate basis for compensation even though scientific evidence is lacking."

In other words, values can be reduced not because there is a real health threat but because of impressions, whether those impressions are right, wrong or off the wall.

"Cancerphobia," write the study authors, "has become an issue to any property owner who resides near a power line and the lenders who hold loans on those properties that may suffer a decline in market value. No known data exists to estimate the magnitude of the residential value influenced, but logic must produce a large value as every local community has power transmission lines."

To determine the impact on property values by the construction of nearby radio towers, speak with local appraisers who have studied the issue.

Question: After I purchased a home, the neighbors informed me that an old man committed suicide in the house. Can a broker withhold such information? Can a broker tell me if a former owner had AIDs?

Answer: The Fair Housing Act, says HUD, makes it illegal to "advertise or make any statement that indicates a limitation or preference based on race, color, national origin, religion, sex, familial status, or handicap. This prohibition against discriminatory advertising applies to single-family and owner-occupied housing that is otherwise exempt from the Fair Housing Act."

As well, says HUD, "If you or someone associated with you: Have a physical or mental disability (including hearing, mobility and visual impairments, chronic alcoholism, chronic mental illness, AIDS, AIDS Related Complex and mental retardation) that substantially limits one or more major life activities, have a record of such a disability or are regarded as having such a disability" then additional protections apply.

Thus a broker, landlord or seller cannot comment or speculate on the matter of whether or not someone has or had AIDS because on its face such a remark can be seen as a discriminatory statement.

There are a variety of "stigmatized" property rules in various states -- and no stigmatized property rules in many jurisdictions. In some areas suicides and murders are not regarded as material matters at all, in other areas they may be material information for a given time period if known to the broker.

Alternatively, and despite state rules, one could argue that the discussion of a suicide is also something that would violate the federal Fair Housing Act because a suicide might be seen as part of a chronic mental illness.

For the specifics related to your jurisdiction you will need to speak with a local attorney.

Question: My neighbor got permits to build a room and connect it to his house. The city made him get a survey which "magically" cleared the property line.

I recently had my own survey done and the neighbor is encroaching up to 4" by the rear corner of his new structure onto my side of the common wall. I consulted a lawyer and he did not give me many alternatives as to actions that I could take without costing a lot in legal fees.

If I try to sell my house will I have to disclose the encroachment? The construction took place a little over three years ago.

Answer: If the garage does encroach on your property then that will be determined with a buyer's survey. However, there may not be an encroachment, given that your neighbor produced a survey which was satisfactory to the city.

What you now have are dueling surveys. The matter should be disclosed in writing and the buyer should be required to get a survey as a condition of the sale so he or she can independently determine whether or not there is a material problem.

Will this matter impact the value of your property? In a hot market, perhaps not. In a cold market, most likely.

Have a real estate question? Send your inquiry to Ask Realty Times. 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. For past columns, please press Ask Realty Times.

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Published: May 25, 2007

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Have a real estate question for Realty Times? Wondering about buying, selling, financing, refinancing or renting? Here's where you can send your question to Peter G. Miller, OurBroker®, a nationally-known columnist, author and reporter. Peter G. Miller has written six books -- including The Common-Sense Mortgage -- a guide with hundreds of thousands of copies in print. Miller was the original creator and host of America Online's Real Estate Center and joined Realty Times in 1998. Send your questions to . Because of the volume of mail received, individual questions cannot be answered privately and not all questions can be used. Published letters may be edited for space and style and all letters become the property of Realty Times upon receipt.