Question: I have a buyer who needed closing cost help. In this case, what I did was I bumped the sales price and wrote a contract $12,000 more then asking price. My buyer never got any cash back, it all went toward closing costs. Is this okay?
Answer: It is a routine matter in real estate to negotiate prices and terms. The buyer in this case agreed to a higher price with the provision that the owner would credit him with a $12,000 "seller contribution" to cover closing costs.
So far, so good. However, lenders finance real estate on the basis of the appraised value or the sale price, whichever is lower. If the property does not appraise at the full sale price, this deal won't work.
Did the buyer expressly know the original listing price? If not, the buyer could complain -- and so could the seller because listing brokers are not allowed to suggest any price other than the list price.
Also, does the sale agreement show that there will be a seller contribution? Does it show that the buyer knew he was paying above list price? The first is necessary for the lender, the second for all parties -- and to protect you against future claims.
Question: We are buyers and have a contract to buy a house for $69,000 on a short sale. However during the title review process, $6,000 in liens appeared against the property. The seller is bankrupt and says they can't pay them. Now their broker wants us to sign a release form to recover our deposit, however we are $900 down because of lawyer fees, inspections, etc. We don't want to just walk away without recovering our costs, so should we sue for specific performance or try to get a lien against the property?
Answer: With most form agreements, but not all, the $6,000 in liens is the responsibility of the seller. You have a contract to buy at $69,000. You might agree not to sue for specific performance in exchange for the return of your $900. An attorney can write a property demand letter -- and that is still another cost.
However, is the seller actually "bankrupt" or just out of money? That is, is this matter before a judge? If the seller has declared bankruptcy your $900 might be just another claim, one that may be settled for pennies on the dollar. Also, it may be that court approval is required for a home sale -- so you may have a shot at this property in a bankruptcy court.
Question: My husband and I are in our mid-50's with our home mortgage nearly paid off (1.5 years to go). Our only daughter recently married and now has a baby on the way.
We are thinking of building an addition to our home that will accommodate the new family with a totally-separate living space. Looking toward the future, our daughter's family would take over the main house and my husband and I move into the smaller apartment.
Our intention is that the home will eventually be hers through inheritance -- but, wouldn't they be further ahead to invest in a home than paying apartment rent? Plus, we may need cash from our home for our retirement.
Should we rent the addition to our daughter to cover the loan expenses? What about a lease to own? What would happen in event our daughter's marriage failed -- we don't want to jeopardize our home security?
Answer: You first need to see if local zoning will allow you to construct an "accessory" unit. Then you need to speak with a real estate broker to determine whether it will be possible to recover your costs if the property has to be sold -- remember the usual rule is that sellers seek the least expensive home in the most expensive neighborhood they can afford. The addition of an accessory unit might put you at the high end of the local market.
There are other alternatives to consider. For instance: Why not get a small second trust and help your daughter and her husband with downpayment money so they can buy a home of their own? You could have a "shared-equity" agreement with them which would give each of you certain tax benefits as well as an ownership interest in the property.
Question: My uncle owns a house worth $300,000. There is a $110,000 loan on the property. Currently uncle and aunt are on the title. If both of them transfer this property to his niece by grant deed and after some time the niece gets a mortgage under her name, will the uncle be liable for a gift tax and will the niece have to pay an extra tax due to re-assessment?
Answer: Go no further with this. Loans typically cannot be assumed by new owners without permission of the lender. With some exceptions, when title changes the home has been "sold" for loan purposes.
If the idea is to give a gift to the niece, why not sell her the property, have the aunt and uncle take back a loan for $190,000 and forgive $12,000 a year as a non-taxable gift ? There will be transfer taxes to pay, a new loan for $110,000 to acquire and the niece will be responsible for tax increases since she owns the property. Also, the aunt and uncle will need professional help to deal with tax and title issues.
Despite the costs, the niece does get a house at a lot less than she would have to pay in cash or debt. The aunt and uncle can each give her $12,000 a year, so she would get full title in perhaps a decade (the money would go to pay off the loan -- but there must also be a fair market interest rate on the loan which must be paid off as well). That's not a bad deal.
Question: I have a contract to sell my house with a real estate agent and I am not satisfied with her efforts, can I break the contract? We signed on it over a month ago and she has ran a small ad twice in the paper and held one (no show) open house after I complained to her broker. The open house was advertised the day before it was to happen in a small print ad in the paper. I can't seem to get her to put it in a local real estate photo magazine like she said she would and I've asked her repeatedly to advertise in a nearby town and she keeps telling me she'll check on it and I hear nothing from her. I signed on for six months (new to selling) and I don't feel I should be bound by a contract if she isn't holding up her end of the commitment. Is it possible to get out of it?
Answer: You cannot "break" a contract, however both parties may agree that it's in their mutual interest to either change the marketing effort or terminate the agreement because the broker does not want a dissatisfied client. Speak with the office manager or company broker to discuss your concerns.
Question: I'm separated (not in any defined sense, we are just no longer living together) from my wife, and due to the house being pretty much maxed out on its mortgage ability, and the work I am personally doing to it, it should raise the value considerably in a relatively short time.
Because of this, I have asked my wife to sign a quitclaim deed to give up her interest in the house. She has agreed. However, she is still responsible for the mortgage. Can she come back later and try to say I coerced her into signing the quitclaim deed or some such thing? Should we exchange cash to make the deal stick?
Answer: You can pretty much bet that the proposed use of a quitclaim deed is the first sign of impending disaster.
Your wife will remain on the mortgage unless released by the lender or the debt is paid off (perhaps by refinancing in your name).
If she remains responsible for the mortgage, how will that impact her ability to borrow on her own if she wishes to buy her own property? Given the rising value of the property, what consideration did your wife get in exchange for giving up her interest in the property? If you're in a community property state, does she still have a claim to the property whether or not there is a quitclaim deed?
Go no further with this until you speak with a local attorney. Ask what's possible now, and what's possible if there is a legal separation or a divorce.
Question: I have a three-family home. I have renters in one of the apartments and when we tried to rent out the other two apartments the tenants would take down the signs and were rude to anyone that came to look at the apartments.
Now we are trying to sell the house. We didn't give the tenant written permission, but we verbally asked them if they wanted to purchase the home and they refused, so now we have an agent trying to sell the house and every time he has an appointment to show the house the tenant decides to have a party or leaves the house a huge mess.
This last week we were to have an open house and my tenant had a week or so notice and he decide to have a party and made the agent leave and would not allow him to show the apartment. My tenant is on a month-to-month lease and is late every month. What can I do?
Answer: With proper notice, end the lease.
Either you own this property or you don't. A tenant has a right to fair notice when a home is shown to rent or sell, but no right to obstruct the proper activities of an owner.
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