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DEAR BOB: I recently refinanced my condominium with Countrywide Mortgage, a major nationwide lender. But I was shocked when Countrywide’s appraiser valued my condo at only $468,000, which was less than my purchase price and less than identical units in the complex sold for in recent months. I brought this to Countrywide’s attention and demanded another appraisal (with an appraiser of my choosing). As I suspected, the second appraisal came in much higher at $625,000. But the Countrywide underwriter refused to use the second appraisal and instead used the median of the two appraisals. Later, I discovered Countrywide’s original appraiser did not even use any “comps” from the other recently sold units in the complex, which sold in the $625,000 range. I complained to Countrywide about the process and was told it was too late, as the loan was already completed. The Countrywide representative said she would get the original appraiser and have a three-way conference call so he could explain. That call never came. The Countrywide representative refuses to take or return my calls. Are there any agencies or watchdogs where I can take my complaint against Countrywide? –Lear S.

DEAR LEAR: That must be a very nice condo if it is worth over $600,000. Normally, I don’t name names in this column, but a $157,000 appraisal difference between two licensed appraisers is shocking.

Purchase Bob Bruss reports online.

The fact Countrywide would even hire an appraiser who didn’t show recent comparable sales prices in the condo complex in his appraisal is outrageous. In your price range, a “drive by” appraisal without comps is not acceptable.

Presuming your refinanced mortgage is now closed, there isn’t anything you can do about Countrywide’s bad treatment except take your future mortgage business elsewhere. Countrywide is a mortgage banker, which is virtually unregulated.

If you have not already obtained copies of both appraisals, you should do so and send them to the state office of appraiser licensing for evaluation. That first appraiser, hired by Countrywide, sounds like he is downright incompetent if his appraisal didn’t even show any recent “comp” sales from the condo complex to justify his low appraisal.

TRICKING FIRST-TIME SELLER INTO ONE-YEAR LISTING IS UNFAIR

DEAR BOB: I am selling my first home, a small house, so I can buy a larger house for my family. Being an immigrant, I am not familiar with real estate rules. However, a friend of a friend is a real estate agent. She told me how listings work and gave me a form to sign. I didn’t really understand it. That was about seven months ago. She has only brought a few prospects to look at my house, which is small but very well maintained. It has fresh paint and looks as good as possible. But I am very disappointed with the agent. She doesn’t return my phone calls and avoids me at social events. Upon reading my listing, I see it is for 12 months. How can I get out of this bad deal? –Tran T.

DEAR TRAN: I am shocked any real estate agent would even ask for a 12-month listing.

As regular readers of this column know, I recommend 90-day listings. If a 90-day listing expires with the home unsold, but the listing agent is doing a good job, you can always renew. But a 90-day listing prevents getting stuck with a bad agent, as happened in your situation.

Your listing agent obviously tricked you into that listing, presuming you didn’t understand.

I suggest you contact the manager of the brokerage where your realty agent works. Explain the problem and ask to either cancel the listing for misrepresentation or have the listing transferred to a better agent within the same firm.

Your goal is to get your home sale. The brokerage has the same goal. It is unfortunate you listed with an ineffective agent, but the brokerage manager can solve that problem for you.

ADVERSE POSSESSION REQUIRES HOSTILE OCCUPANCY

DEAR BOB: I found a property on which I want to do an adverse possession. I am in contact with the mortgage company that has a loan on the property. How can I save this house from city code enforcement? Do I have to pay the property taxes? –Kathy H.

DEAR KATHY: To acquire title to a property by adverse possession, you must physically occupy the property for the number of years required by state law where it is located. Your possession must be open (not secret), notorious (obvious), hostile (without permission), and continuous for the required time period.

Meanwhile, the city code-enforcement officials in an extreme situation could order the property vacated. I was involved in a case like that (not adverse possession) several years ago where the city declared a house I eventually bought as “uninhabitable.” Don’t mess with those folks.

Another problem is the mortgage lender could foreclose if the payments are not being made. Or the local property tax collector could hold a tax sale. For full details, please consult a local real estate attorney to discuss your alternatives.

NO EASY WAY TO AVOID TAX ON HOME SALE PROFIT OVER $500,000

DEAR BOB: My married sister is trying to sell her house for $1.7 million. She and her husband have owned and lived in it about 10 years. Their capital gain will exceed the $500,000 exemption. If they buy another house for $1 million, how will that figure in their capital gain? –Richard H.

DEAR RICHARD: Purchasing a replacement principal residence won’t help your sister avoid capital gain tax on the sale of her home. Forget that idea.

Presuming they owned and occupied the home at least 24 of the last 60 months before the sale, the capital gain exceeding the $500,000 exemption for a qualified married couple using Internal Revenue Code 121 will be taxed at the maximum 15 percent federal rate, plus any applicable state tax. That’s not so bad. For details, the sellers should consult their tax adviser.

NO FIVE-YEAR OWNERSHIP REQUIRED FOR TAX-DEFERRED TRADE

DEAR BOB: When making an Internal Revenue Code 1031 tax-deferred exchange, must I own the property for five years before selling in order to avoid tax? –Ottilia C.

DEAR OTTILIA: Presuming the property is held for investment or use in your trade or business at the time of the IRC 1031 trade, there is no minimum holding time. Of course, you must trade equal or up in both price and equity for another “like kind” investment or business property.

The only situation where a five-year minimum holding time occurs is when a rental residence is acquired in an IRC 1031 exchange and the owner later converts it to his personal home.

In that situation, to be eligible for the IRC 121 principal residence sale tax exemption up to $250,000 (up to $500,000 for a qualified married couple), the home must be owned at least 60 months and occupied as the seller’s primary home at least 24 of the last 60 months before the sale. For full details, please consult your tax adviser.

GET PUSHY BEFORE HOME BUILDER’S WARRANTY EXPIRES

DEAR BOB: Almost one year ago, I purchased my new house. The builder’s one-year warranty is almost expired. Yet there are several “punch list” items to be fixed. For example, the grout fell out of the bathroom walls, there is a broken window, and a sagging door. The builder has been dragging his feet to fix these items. What can I do to get him to finish these repairs? I am worried my warranty will expire and these items — which I presented to him soon after I purchased in December 2005 — will not be fixed. Do I need to contact an attorney? Should I hire a home inspector? –Jenna S.

DEAR JENNA: You must be an extremely patient person. I wouldn’t have waited more than 30 days before taking strong action with that builder.

I presume you have already sent the builder a written list of the specific repairs that need to be completed promptly. Don’t accept any more excuses for his delay.

Before you contact a local real estate attorney, it might be to your advantage to hire a professional home inspector to be certain you haven’t overlooked any serious problems.

I recommend members of the American Society of Home Inspectors (ASHI) because they have the toughest membership requirements. Local ASHI members can be found at www.ashi.org or 1-800-743-ASHI.

Because your warranty is about to expire, a real estate attorney might advise filing a lawsuit against the builder to show you mean business and to preserve your warranty rights.

The new Robert Bruss special report, “How to Buy Fixer-Upper Houses with Little or No Cash for Fun and Fortune,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).