Question: I have a friend who I believe has her real estate license. She uses real estate records to check out famous people she would like to meet such as sports stars. She is able to find out where they're living, their mortgage, what they put down on the house, their property tax info, who the house is owned by, how many properties they own, etc.

I understand this is "public" information, but as a police officer, I can't just run people to find out this info. I have to justify why I need information about them, even if it's just to see if they have a driver's license, etc. This seems like an invasion of privacy and I'm sure the people she has run have no idea she knows what she knows about them. Does she have a right to do this?

Answer: As a matter of public policy in most jurisdictions we make available certain information about individuals which might seem private. For instance, home ownership information is generally available to the public, as are mortgage claims against a property. Subtract liens from purchase prices and you have some sense of what a buyer paid in cash to acquire a home.

The logic of placing real estate information in public records is that it protects both property owners and lien holders. For instance, in a sale we check the public records to know who has a claim against the property and the value of that lien. Once the property is sold we can then assure that the selling homeowner gets all the sale money less the amount needed to pay off creditors. The very same system also helps us avoid payments for false claims.

As a police officer you have access to information which is not public and should not be public -- including unproven allegations, rumor and innuendo -- thus the public policy requiring you to justify your requests.

Should the real estate information system be used as a way to find dates among the rich and famous? That surely was not the intent, but stranger things have happened.

Question: We sold our house first house for $600,000 and purchased an $800,000 house with $200,000 down. Our real estate agent convinced us to get a 40-year mortgage, but by the time escrow closed, the loan turned out to be for 30 years. This made our mortgage payment considerably higher than we comfortably can afford. We've been in this house for 1 year and 4 months. Our question is, can we sell now (assuming we can sell it for $850,000), or do we have to wait two years to avoid paying taxes on capital gain?

Answer: You have two separate transactions. If you lived in house #1 -- the property sold for $600,000 -- for two of the five years prior to selling then as much as $500,000 ($250,000 if single) in profits from that sale should be tax-free.

As to the second home, here's part of the answer:

The IRS says "to exclude gain, a taxpayer must both own and use the home as a principal residence for two of the five years before the sale. The ownership and use periods need not be concurrent. The two years may consist of 24 full months or 730 days. Short absences, such as for a summer vacation, count as periods of use, but longer breaks, such as a one-year sabbatical, do not. The taxpayer also must not have excluded gain on another home sold during the two years before the current sale."

While your best choice is to not change ownership until two years of residency have passed, you may be able to qualify for a partial capital gains write off if you have a "safe harbor" such as a health event which requires a change of residence, a new job at least 50 miles from your current place of employment or an unforeseen circumstance such as a divorce or natural disaster.

For specifics, please speak with a tax professional.

Question: I'd like to know what is the best and safest way to own real estate: By buying extra insurance or forming a limited liability corporation (LLC)?

Answer: Why not an LLC with appropriate insurance?

You should speak with an attorney and insurance broker to determine the best options for your area -- and don't forget about tax issues.

That said, another way to reduce landlord liability is to require tenants to have renter's insurance. This is good for tenants because it means they have an insurable interest if something happens to their personal property -- in other words, they won't just look to the landlord for compensation and if they have a claim against you, then less should be due.

Question: My in-laws put their house up for sale in Southern California over a year ago when they moved up to the Portland area to be near our family. After a year, they changed brokers and have dropped the price several times and it is now $125,000 less than the original asking price. They are here in Portland with an empty house in California. How can they sell this house in such a stalled market especially if they are not there to physically do anything about it?

Answer: Some brokers would argue that a home sells better when the owners are in place because there's furniture, photos, rugs and human touches through the house.

However, in this case that ship has sailed.

In many markets you see repeated price reductions, but is that the only tool available to sellers? How about changing the terms of the deal -- offer a "seller contribution" so that a purchaser has few if any closing costs. For cash-short borrowers, little or no cash up-front may be a real attraction, especially if monthly payments are not an issue.

For specifics, speak with your broker, review the marketing plan and get an updated fair market value for the property.

Question: How do you compute an approximation of fair rental value?

Answer: If your need is to project a fair market value for a loan application or other purpose, then look at like rentals in similar condition as close as possible to the subject property. Brokers can help you get this information.

If your need is to see what the market will bear, then follow the steps above and offer the property at a reasonable rental relative to the marketplace. The view here is that landlords do best by not overpricing rentals because you can get a larger pool of renters. That can help you find tenants who will make their payments, take good care of the property and continue their leases.

Question: I am from UK. So where is the best place to buy in America at the moment for a developer who wants to buy, do up, and turn around for a profit? That is, which is the upcoming area?

Answer: It would be nice to suggest one location or another, but real estate in the U.S. -- and probably elsewhere -- does not work like that.

In a single metro area, for example, you may well find significant differences in both current growth and potential. The reasons for such distinctions are endless, but could include excess sewage capacity in one area and not another, the planned construction of new roads or the preference for property near an historic area.

Given that real estate is localized, the best choice is probably to partner with a U.S. developer -- you put up cash and the developer will put up insight, experience and construction know-how.

Question: I filled out a seller disclosure form when I sold my home a year ago. Now the seller says I was untruthful by not stating a structure was to be built by the neighbor to the rear which they claim has reduced their view. They have had an attorney write me asking for a $50,000 payment for the damages or they say they will sue me for that amount plus costs.

They are basing their claim on my non-disclosure, a neighbor's statement that I told him I would sell my property if the structure was built, and a real estate appraisal that shows the property now to be worth $50,000 less.

The structure in question was given a city zoning variance concerning height. No structures were to be over a certain height in the neighborhood and he was approved to extend it upward by some 14 feet.

No construction had started when the property sold. I did not put this in the disclosure because the local government had approved the variance and it was to built on a side of his lot that would not obstruct my view. In other words, the view was a moot question and one I never considered.

I have hired a lawyer and paid $1,000 to fight the issue. What will happen in this matter?

Answer: Take a look at your sale agreement. By any chance does it say that the buyer is responsible for looking at local planning maps or checking with officials? If yes, that would help your position.

Your attorney will review the full agreement and disclosures and then suggest what specific course to take. Unfortunately, once letters from attorneys go out you need an attorney of your own to advise you, otherwise you're at a huge disadvantage.

Question: I'm thinking about buying in an area that has an abundance of homes on the market. However, I would like to buy a waterfront condo on one of the canals. From what I understand, waterfront property will just keep going up -- even when the rest of the local market is depreciating. Is this information true? How will I know if I am paying too much? What kind of incentives should I expect?

Answer: Here's what's true: In a slowing market the most attractive properties are the ones most likely to appreciate, hold their value or go down the least. However, there's no magic rule which says the value of any property will go up eternally with no declines along the way. A general economic slowdown might lower values across an entire area. As the expression goes, a falling tide lowers all boats.

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