Question: I advertised a vacant piece of land in my small home town which is in another state. I got a phone call from a prospective buyer who did not identify himself. He offered full price and accepted my terms which were all cash. I accepted his offer verbally and at the point of his identification, I realized that he was someone who was not well liked by my family back home. At this point, could I have pulled out of the deal?
I had accepted his offer verbally but had not signed any papers yet. I was afraid of a lawsuit so I went ahead with the deal. Needless to say, my family is not speaking to me. Your advice please?
Answer: There are two problems here.
First, you are entirely correct to accept the buyer's offer. Except in very rare cases such as a unit in an over-55 community, when you offer property for sale you are automatically offering it to everyone willing to meet your terms and conditions. To deny someone the chance to buy a property because you or your family do not "like them" -- whoever "them" might be and whatever it is that someone does not "like" -- may well be grounds for a discrimination suit.
Imagine if the roles were reversed. Would it be okay if you could not get a property because someone did not "like" you?
Second, are you sure you sold the property? An oral real estate agreement is worthless because it's unenforceable and likely does not address all the issues in a property sale. For instance, who is paying the transfer taxes? Or part of the transfer taxes?
You need to have a written agreement with your buyer -- and once you have a written agreement you need to tell your family that you're grateful to have a buyer who is ready, willing and able to meet your terms.
Question: I signed a contract (which I will never do again) with a full service broker to list and sell my house. I found a buyer on my own with no help from any broker and this person had no prior contact with my broker regarding the sale of my house!
The listing contract calls for the commission to be split between seller's broker (my agent) and a buyer's broker. I have no problem paying half the commission to my agent. However, the broker claims that I will still have to pay the full fee. Why should I have to pay them for NOT producing a buyer? What a crock! Bet you don't publish this one.
Answer: Your broker wants the full commission because that's what you agreed to pay.
As an alternative, you could have negotiated a different arrangement, you could have hired a broker who offered a menu of services (sometimes described as "flat-fee" brokerage) or you could have sold the property by yourself.
Most probably you agreed to an "exclusive right to sell" listing agreement. Under the terms of such a contract if the property is sold to anyone during the listing term -- whether through the broker or not -- then the broker is entitled to a full fee. Brokers prefer this arrangement because they are committing both time and dollars to market a property and -- not unreasonably -- want the best shot at getting back their investment. No doubt you, as a broker, would seek the same terms.
You could have negotiated an "exclusive agency" listing agreement which would have given one broker the exclusive right to sell the property during the listing term but also allowed you to sell independently without paying a fee.
Lastly, you might have had an "open" or "general" listing agreement which means any number of brokers could have offered the property for sale on a non-exclusive basis. At the same time, you would have had the right to market the property directly and not pay a fee to anyone if you found a buyer.
None of this -- or other ideas -- is a secret. Many books, news articles and web sites offer this information. Real estate fees are not mandated by law and there are many options in the marketplace. I, for one, have been writing about such things since the 1970s.
In many markets today it's difficult to sell a home. Would you have been happier if the property did not sell for six months? If it did not sell at all? If it sold for a lower price?
Suppose the broker showed the home many times, spent several thousand dollars on marketing costs and the property did not sell. Would that have been a better outcome? For whom?
Did the buyer see the property because of the broker's sign or ad? That would mean the broker "introduced" the buyer to the property. Without that introduction you would not have a buyer.
Did your broker have the buyer sign a sale agreement? If yes, the mere choice of sale agreements and their terms are an important form of negotiation. Another form, or different terms, may have resulted in a smaller net result for you.
In the same way that sale agreements are negotiable, so are listing arrangements. You can debate such issues as the term of the agreement, the fee, the offering price, the form of agreement, what's included in the sale, the size of any required deposit, etc. And, as with other agreements, if you don't like the proposed terms you can go elsewhere -- and so can the broker.
About that bet. Please send whatever it is that I "won" to the charity of your choice.
Question: My mother died and left her home to her heirs. At the time of her death, we all signed an informal agreement to allow my nephew (also an heir) to live in the house as long as he paid the taxes, homeowners' insurance and made the necessary repairs. He got behind on the taxes and lost the homeowner's insurance because of the condition of the premises. We now want to sell the property as it is becoming a liability to all of us. My nephew keeps blocking the sale by declaring bankruptcy. The first time he declared bankruptcy it was dropped because he did not meet the conditions. He has now declared bankruptcy again. What do we do? Can this bankruptcy block sale of the house?
Answer: What does it mean when you say there was an "informal agreement" among the heirs? If it means an oral agreement or something written on the back of a napkin it may be very difficult to tell what rights are held by your nephew, what agreement requirements have been violated, etc.
Also, what do you mean your nephew violated the terms of the homeowner's insurance policy? Did the insurance company send out an inspector? Or, is this just a matter of not paying a bill?
Speak with a local attorney who handles bankruptcies to determine what rights you have in this matter. With a bankruptcy it may be a court can force your nephew out of the property in the same way that a non-paying tenant can be forced out of rental unit.
There's an alternative to all of this: Explain to your nephew that as bad as things are now, they will be substantially worse with a bankruptcy and no family support. A unified family front may result in more cooperation than a court action. Perhaps the family can agree to provide three month's rent if he moves elsewhere. That would get him out of the property at a minimal cost.
Question: I've been trying to find out exactly how the "we buy houses" companies operate. I owe $38,000 on my home and the property is worth about $150,000. I am in bad health and would like to leave my home to my son. The problem is that he went into a bankruptcy two years ago. I don't believe my mortgage company will allow him to take over the loan if I will the property two him, so I have been thinking (when the time comes) to just sell to one of those "we buy houses" such as how much less they would offer.
Answer: First, your son can likely take over your loan regardless of what the lender thinks as long as he keeps up the payments. The Garn-St. Germain Act says a lender cannot call a loan when there is "a transfer where the spouse or children of the borrower become an owner of the property." Please see an attorney for details.
Second, if your son has been out of a bankruptcy for two years he may well be able to get a loan if he has re-established good credit, especially if the bankruptcy was caused by something beyond his control such as a job loss, accident or medical bill. He should at least speak with various lenders.
Third, "we buy houses" companies are simply buyers looking to purchase for as little as possible. Given that you are not a distressed seller, a better alternative if you want to sell is likely to be the use of a local broker to market the home. As your agent, the broker is obligated to get the best possible price and terms for you.
Please go no further with this until you have spoken with a community housing group and an attorney. You need a will and living will -- but you may not need to sell your home.
Question: I always get confused about the home-office tax advantage. I have work from home and have a designated part of my home to do so. While I would love the write off, my tax advisor has told me that the recapture tax you have to pay when you sell the residence often times doesn't make claiming the home deduction worth it. Have I been ill advised?
Answer: In general terms, if you regularly and exclusively use a portion of your residence for your business, and if you satisfy various tests, then you can write-off a portion of your residential costs as business expenses.
When you sell the property there are various and complex implications from home office deductions. For details, see IRS Publication 523, Selling Your Home and speak with a CPA or other tax professional for specifics.
Your tax professional has made recommendations based on the details of your particular situation, something to which we are not privy. There are, however, two strategies you might want to try: First, imagine that you sold the property today. How would your taxes from the transaction look with a full home office deduction and without? Second, get an opinion from another tax professional.
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