DEAR BOB: I just purchased my first home, a condominium. But I feel like I was robbed by my real estate agent. I stopped by a Sunday afternoon open house being held by the listing agent. The condo was exactly what I had been searching for. Great location. Nice complex about 6 years old. Affordable price. The agent was very helpful. Although I was a bit “light” on my cash down payment, she arranged a mortgage I could afford. But what really bugged me was, at the closing, the listing agent tacked on a $695 “administrative fee” to my closing costs. She didn’t even show up for the closing. I was told to “either sign the papers or you don’t get the condo.” I reluctantly signed. However, since the listing agent got all the sales commission (I didn’t have my own buyer’s agent, as you often advise), to charge me $695 extra seems outrageous. When I phoned her, she said that is “standard” to pay for her brokerage’s expenses, including the services of a “transaction coordinator” who, I admit, was very helpful. What is your opinion? – Silvia H.
DEAR SILVIA: If you were never informed of that $695 administrative fee and did not previously agree to pay it, as a buyer you are not obligated to pay.
Purchase Bob Bruss reports online.
You should now write a very polite demand letter for refund of the $695 by that listing agent within 10 days (send a separate copy to the brokerage office manager).
If you don’t receive a check within 10 days, your next stop should be the local Small Claims Court to file a breach of contract action for the $695.
You are 100 percent correct that a home buyer should not be asked to pay the listing agent’s $695 administrative fee on top of the sales commission the seller paid to her. The fact that listing agent didn’t have to split her commission with a buyer’s agent makes that $695 very high fee all the more outrageous.
WHEN YOU CASH OUT OF INVESTMENT PROPERTY, IT’S TAXABLE
DEAR BOB: My wife and I would like to sell our rental duplex. It is worth about $400,000 free and clear. We want to sell and give each of our daughters half of the proceeds so they can buy their own homes. What is the best way to sell and avoid tax? – George A.
DEAR GEORGE: A major drawback of selling investment property for cash is your capital gain is fully taxable. But the good news is the maximum federal capital gain tax rate is now only 15 percent, plus any state income tax where the investment property is located.
If you want to fully avoid tax on the sale of investment property, the only way to do so is to make an Internal Revenue Code 1031 tax-deferred exchange for another investment or business property of equal or greater cost. However, that doesn’t seem to be what you want to do.
Another alternative to consider would be to refinance the duplex to produce tax-free cash to give to your daughters for their down payments. But then you will still own the duplex and your tenants will be making your mortgage payments for you. For more details, please consult your tax adviser.
IF YOU DON’T OWN YOUR HOUSE, YOU CAN’T SELL IT
DEAR BOB: My mother died about 16 years ago without a will. I am her only living child (now age 44). My younger brother died several years ago in a motorcycle crash. Mother always wanted me to have her house after she died. My brother got some bank accounts held in joint tenancy with her. We never had any problem about dividing her estate. I have been living in the house with my husband for the last 16 years. Now we want to sell it. But the title is still in my mother’s name alone. There were never any court proceedings. The Realtor I talked with about listing my house for sale says she can’t take the listing until I get title in my name. What should I do? – Stevan H.
DEAR STEVAN: Please consult a local attorney who specializes in probate law. It will probably be necessary to probate what is left of your late mother’s estate, namely the house, to transfer title by intestate succession into your name. The fact your brother is deceased might complicate matters, especially if he left any children.
Your situation shows why it is so important to promptly probate estates. Over the years, I’ve heard about many situations like yours where estates aren’t properly probated until many years after the deceased died. Then the situation gets more complicated and expensive, as in your circumstance, before real estate titles can be conveyed.
The new Robert Bruss special report, “How to Become a Super-Successful Real Estate Negotiator,” is now available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at 1-800-736-1736 or instant Internet download 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).
What’s your opinion? Send your Letter to the Editor to email@example.com.