DEAR BOB: In 1994 my son and I bought our house. The mortgage broker suggested we take title with my mother and my son’s girlfriend so we could qualify for a mortgage. Our purchase price was $241,000, with a $40,000 cash down payment. We all had good credit. Since then, my son and his girlfriend broke up. My mother is now almost 90. Both are willing to sign quitclaim deeds to clear their names from the title. However, as houses in our neighborhood now sell for around $700,000, a lawyer I talked with advised against any title change because he says that will trigger a huge property-tax reassessment. What should we do? – Beth R.
DEAR BETH: The obvious answer is to visit the local tax assessor’s office to determine if the quit claim deeds will trigger a full or partial property-tax reassessment.
Purchase Bob Bruss reports online.
If the answer is “yes,” I don’t see any easy solution to get your mother and the ex-girlfriend off the house title without a property-tax reassessment. Unfortunately, property buyers don’t think about future complications when acquiring real estate.
The big problem with unrecorded quit claim deeds, as I’ve explained before, is that there are possible legal complications if delivered conditionally. Even when they aren’t recorded until many years later, in some circumstances local tax assessors can seek “escaped” tax assessments. Each situation is different.
SHOULD REALTOR REFER CLIENTS TO MORTGAGE BROKER WHO CHARGES $400 PROCESSING FEE?
DEAR BOB: I am a Realtor who has referred my buyers to a local mortgage broker. There is no kickback involved. However, the mortgage broker to whom I refer clients now charges them a $400 processing fee, plus other charges. My mortgage broker usually deals with my hard-to-qualify buyers. Should I stop referring buyers to her? – Ted A.
DEAR TED: Mortgage brokers are well paid, typically 1 to 2 percent of the mortgage amount. It should not be necessary for the mortgage broker to add additional “junk” or “garbage” fees on top of the normal loan fee.
In addition, many lenders pay mortgage brokers a bonus “yield spread premium” for producing above-normal mortgage interest rates. Unless you can’t find another local mortgage broker to whom you can refer your buyers, I suggest you stop referring clients to that mortgage broker unless she stops charging your clients that unnecessary $400 fee.
WHAT IS A REASONABLE SALES COMMISSION FOR VACANT LAND?
DEAR BOB: I own some undeveloped land in a mountainous area about 600 miles from my home. The value has increased significantly since I bought it with plans to build a retirement home on it. But my plans have changed and now I want to sell. Friends tell me real estate agents charge higher than normal sales commissions for vacant land. What is a reasonable sales commission for vacant land? – Ellen L.
DEAR ELLEN: The traditional or customary real estate agent sales commission for the sale of vacant land has been 10 percent of the gross sales price. The reasons the commission rate is higher than for a single family residence include (1) the long marketing period, often six months or more, and (2) the difficulty of selling vacant rural land, compared to urban residences.
However, real estate sales commissions are fully negotiable. But please be careful. You might find a realty agent willing to charge a lower sales commission rate. Before signing a listing, check that agent’s references of recent land sellers to see if they would list with the same agent again.
The listing term for vacant land is usually longer than for residences. While 90 days is customary for houses, farm and land brokers often insist upon 180 days minimum listings.
The new Robert Bruss special report, “How to Avoid Buying or Selling a Bad ‘Lemon’ House,” 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 PDF delivery at www.bobbruss.com. Questions for this column are welcome at either address.
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