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Agent commissions vary on rentals

By Benny Kass, Monday, August 10, 2009.

DEAR BENNY: How do agents get commission on rental property? --Peter

DEAR PETER: To my knowledge, there is no standard formula to compensate a real estate agent for finding a tenant for you. From my experience, most agents will want a one month's rent for their commission.

However, this is negotiable. If, for example, you want the agent to manage the property for you (which is usually a good idea so that you won't be bothered every time the tenant wants a light bulb changed), the agent may take a percentage of the monthly rent -- ranging between 6-10 percent. more...

The high price of seller's remorse

By Benny Kass, Monday, August 3, 2009.

DEAR BENNY: We just received an offer on our home. It is a cash buyer with a 30-day closing and seven days for inspections. My wife and I waited until we had a good offer to look for a new home. We now feel like we made a big mistake and would like to get out of our contract. Is this possible? My wife has been ill, and the idea of moving is making her feel worse. --Michael

DEAR MICHAEL: Getting out of a signed legal document is not easy. You have "seller's remorse," but you have a binding contract with your potential buyer.

When a buyer defaults on a real estate contract, the seller generally has three options. more...

Scheming to save 'underwater' house

By Benny Kass, Monday, July 27, 2009.

DEAR BENNY: We're badly underwater in our house. Our business is hurting and we are struggling to make the house payment. We owe $340,000 on a house that would maybe sell in today's market for $200,000. We think the only way it makes sense to stay in our house would be if our mortgage holder would take a significant principal write-down, which they won't do.

Is it legal for us to let our house fall into foreclosure and have a friend of ours buy it for us at the foreclosure price? Then he sells it back to us using a private mortgage via Virgin Money or similar organization. We pay him a premium over the rate he is currently earning on his $200,000 so that he even makes a little money and we maybe "keep" our house. We realize that there is no guarantee our friend would be able to buy the house; someone else might beat him to it or the bank might set an unreasonable price, but we don't see any other choice except walking away completely. --Cathy more...

Pay dues, but mind your p's and q's

By Benny Kass, Monday, July 20, 2009.

DEAR BENNY: I am currently the president of the board of our homeowners association (HOA), which has 11 houses. There is an ongoing conflict that seems unsolvable. There is a large common area behind seven of the houses that is approximately 300 feet long and 60 feet wide that has beautifully maintained trees, bushes, small plants and an artificial stream that "runs" the length of the common area. The problem is the other four houses do not have access to the large common area, but the high maintenance cost is taken out of the HOA reserves, that all 11 homeowners pay into.

As you can imagine, owners of the inaccessible homes are continuously complaining about paying for something they do not have access to, causing an "us against you" mentality in our otherwise-wonderful cul-de-sac. --Greg more...

Debt-consolidation refi has advantages

By Benny Kass, Monday, July 13, 2009.

DEAR BENNY: With mortgage loan rates at record lows, I'm thinking of refinancing my 30-year fixed-rate loan. The lender is recommending that I roll into the refi amount the balances I owe on my car and two credit cards. The advantages would be that they'd be "paid off," the interest rate on the amounts would be lower than I'm currently paying on any of them, and the interest paid would be tax-deductible.

But I see a big disadvantage, too. The total of the amounts on those five-year (on which I still have three years to pay) and revolving loans would now be amortized over 30 years! Does it make sense to do that? How can I figure out if it's a smart move or not? --Janet more...

Is trading homes hard to do?

By Benny Kass, Tuesday, July 7, 2009.

DEAR BENNY: A few years ago, my son bought a small, but cute, home. My husband and I were empty-nesters with a large home. Recently, my husband passed away, my son got married and his wife is expecting. I would like to trade homes with my son, because he needs more space and I can't take care of a huge home by myself. Is there any way of doing this without too much money involved?

I do not have any mortgage on my home, but my son does. If he could just continue to pay his current mortgage and his new taxes, etc., I would pay the bills on the smaller home. Is this possible to do without the nightmare of taxes, closing fees, etc? --Andrea more...

Refi hit with title insurance 'junk fee'

By Benny Kass, Monday, June 29, 2009.

DEAR BENNY: We are in the final steps of completing a refinance of our barely year-old $410,000 mortgage. We were pleased with the interest-rate drop, and our local bank was generous in dropping many of the so-called "junk fees" associated with a refinance. However, we are being charged $1,007 for title insurance. When I asked our banker about this, the response was basically, "Well, yes, it is a rip-off but there is nothing we can do about it."

My question for you is what do we get for this $1,007? And if we refinance again in a year (you never know), I assume we will have to pay this again? --Shelley more...

Don't ditch the second home yet

By Benny Kass, Monday, June 22, 2009.

DEAR BENNY: My husband and I purchased a second home for $300,000 in November 2008. We were planning to move into that house and sell our current residence. We put $15,000 into repairs on the house. Our children do not want to move and we came to realize after the purchase that we are happier where we are. What should we do: sell and cut our losses since the market value has decreased, or rent? --Jackie

DEAR JACKIE: The first question is whether you can afford to carry two houses for a couple of years. Even if you decide to rent, you have to understand that being a landlord is not always lucrative -- and clearly never fun. You may have two to three months when the property remains vacant, and you still have to pay the mortgage, insurance and real estate taxes. Additionally, there are always minor (and sometimes major) repairs that will be necessary. And when there are tenants, they often find problems with the house -- real or imagined -- that you will have to correct. more...

The square-footage shocker

By Benny Kass, Monday, June 15, 2009.

DEAR BENNY: In December 2007, I took title to a condominium unit that was listed on the MLS (multiple listing service) as being 1,017 square feet, according to the public records. Recently I was going through a real estate handbook that I own, and it suggested that I have a copy of the appraisal in my files. Since I didn't have one, I requested a copy from my bank. I was shocked to find that the bank found the square footage to be 864 square feet, not 1,017.

Before I took title, my real estate agent met the appraiser at the condo unit and said that I didn't have to be there. The day after the appraisal, I called my real estate agent to ask if everything went OK and she said yes. more...

No reason for reduced commission?

By Benny Kass, Monday, June 8, 2009.

DEAR BENNY: In a recent column you wrote about getting agents to lower their commission if the seller lowers the asking price. Isn't it obvious that the commission is automatically reduced when the price goes down, as it is a percentage of the property price? There's no reason why the agent should reduce the commission beyond that automatic adjustment. --Dianne

DEAN DIANNE: Yes, it should be obvious, but from my experience, I have encountered agents who insisted on getting the commission based on the listing price and not the selling price. The listing agreement entered into between the real estate broker and the homeowner should make this clear. more...

Beware of 'wraparound' mortgage

By Benny Kass, Monday, June 1, 2009.

DEAR BENNY: I have a full-price offer on my duplex that involves a wraparound mortgage. I am a little leery of a small down payment with high-interest payments for a few years with a balloon at the buyer's refinance later. I'm told they are quite legal, but I really need to know the pros and cons. Can you enlighten me please? --Bobbie

DEAR BOBBIE: Here's how a wraparound mortgage works. Let's say that you sell your house for $500,000, and have an existing mortgage (deed of trust) on the property for $300,000. Title is transferred to your buyer, who pays you $10,000 in cash, and you take back a mortgage in the amount of $490,000. This is a second mortgage, because your existing mortgage is not paid off at the closing (escrow). more...

Prenup's real estate impact questioned

By Benny Kass, Tuesday, May 26, 2009.

DEAR BENNY: When my dad and stepmother got married they moved to Florida and bought a home together. Because there are children on both sides, they had a prenuptial agreement drawn up that states the home would be divided equally between the children when they both were gone. Sadly, my dad passed away recently, and we were just told that Florida law states that the deed to the house automatically goes into the surviving spouse's name. We were told that my stepmother owns the house now and we are out of luck.

She and her family do not intend to honor the prenuptial agreement and, according to the lawyer handling the estate, we have no recourse. My question is would the prenuptial agreement take over when my stepmother passes? What happens if she sells the house, buys another and puts the new house in her family's name? --Mike more...

Retirement requires smart tax move

By Benny Kass, Monday, May 18, 2009.

DEAR BENNY: My aunt is 76 years old and lives in her home. She also owns a detached rental property nearby. Her primary residence has been the same property for more than 10 years. She would like to move into a retirement community this year, but to afford this new lifestyle she would have to sell one of her properties soon. Would it be more cost-effective from a tax perspective to sell her primary residence or her rental property? Are there any tax benefits to selling rental property vs. one's primary residence?

I have heard about a one-time tax exemption on the proceeds of selling one's primary residence, but I do not understand the rules of this exemption. I was thinking it would be better to sell the rental property first to avoid inconveniencing my aunt's daily routines, and later convert the primary residence into rental property after she moves. more...

Hurricane strips owners of rental rights

By Benny Kass, Monday, May 11, 2009.

DEAR BENNY: I purchased a condo in Florida in 1990. I lived there for 17 years, and then moved with the assumption that I would be able to rent it, as was the case all the time. After Hurricane Charlie, the board said that the insurance company was going to charge too much of a premium if we had rental units. Only if your unit was rented at the time of this ruling could you rent it, and when the leases ran out, it could be rented for only four months in a calendar year. Is this allowed for original owners? more...

Seller: Price cut calls for lower commission

By Benny Kass, Tuesday, May 5, 2009.

DEAR BENNY: Isn't a contract a contract? I am about halfway through an eight-month listing agreement. The Realtor is pressuring me to again lower the asking price. He has shown me where similar homes for sale have recently had their asking prices reduced. I know the market is going that way, but I cannot afford to lower my price and don't have an urgent need to sell immediately.

Do I have any legal or ethical obligation to lower my price or can I simply stick to my guns and expect that my contract be continued as is? I assume that the listing contract is legally binding and cannot be changed. If I wanted to go to another Realtor, could I get out of it or do I need to wait for the contract to expire? more...

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