DEAR BOB: As a real estate agent, I must strongly disagree with you. Several weeks ago, you said home buyers (or the buyer’s agent) should ask the seller, “Why are you selling your home?” That’s none of the buyer’s business. I specialize in listing homes and I frequently encounter distress situations, such as divorce, pending foreclosure, illness, and other reasons for selling that have nothing to do with the desirability of the residence. All the seller wants is a cash sale. Don’t you agree? –John T.
DEAR JOHN: No. It is the buyer’s business why the seller is selling. As a longtime (40-years-plus) real estate investor, I’ve learned it pays to know why the seller is selling so I can tailor my purchase offer to meet the seller’s needs.
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To illustrate, if the seller is in the foreclosure process, buyers need to know that so they can get the sale closed fast before the foreclosure auction. Or if the reason for the sale is a divorce, that usually means an all-cash sale is required to divide the money equally.
Many times I’ve bought investment property where the sellers were moving to a retirement community. Especially if the house is free and clear with no mortgage, I discovered retiree sellers eagerly carried back mortgages that gave me easy financing and gave them excellent secured retirement income.
Smart buyers and their buyer’s agents need to know why the seller is selling. A few sellers will lie. But my experience has been that most tell the truth and all parties benefit.
ARE STUCK WINDOWS A HOME DEFECT?
DEAR BOB: On the home seller disclosure form, our seller said there were no defects. But we discovered the 1926 windows were painted shut and some of the cords were cut. Are those defects? –Marianne R.
DEAR MARIANNE: Perhaps your seller misunderstood the question, lied or wasn’t aware of the window defects.
Personally, in my house I rarely open the windows. In the winter I have the heat on and in the summer the air conditioner is on much of the time so the windows are closed virtually every day.
If you think the seller owes you damages for fixing the windows, your problems are (1) proving the seller knew of the defects and (2) determining the amount of your repair cost damages.
Since the house was built in 1926, if you take the seller to Small Claims Court, the judge is likely to say, “You bought an old house so you shouldn’t expect it to be in perfect condition.” Or, the seller might settle for a modest amount before trial. But it could be a total waste of your time if you lose and get nothing.
UNTIL YOU HOLD TITLE, YOU HAVEN’T INHERITED ANYTHING
DEAR BOB: My father died intestate without a will 25 years ago. He owned a small cabin by a lake in the mountains in northeastern Pennsylvania. My brother, three sisters and I are his only heirs. One of my “local” sisters living near the cabin is the estate administrator, which consists only of the cabin. The estate has never been probated. My brother, another sister and I live quite a distance away. The property taxes have been paid. But the cabin is in terrible disrepair and in danger of collapse. I offered to buy out my siblings for fair market value to fix up the cabin and make it available for their use. All have agreed to sell me their shares except for the sister who is the administrator. The place holds good memories for all of us and I don’t want it to fall into nonfamily hands. In a partition lawsuit, does the court have to order a public sale or can the judge convince the hold-out sister to sell me her share? –Norm B.
DEAR NORM: Since your father died without a will, your first step is to open a probate proceeding for your late father’s estate in the probate court where he was a resident when he died. A local probate attorney should be hired to do this.
Unless a probate court proceeding has been opened, the sister you said is the “administrator” has no legal authority unless appointed by the court.
After the cabin title is distributed by the probate court to the sibling heirs, then you all can decide what to do with the cabin. If the hold-out sister refuses to sell, you can’t force her to sell to you.
Your only legal recourse is to bring a partition lawsuit to force the sale of the cabin with the sales proceeds divided among the co-owners. That doesn’t sound like what you want. However, bringing such a lawsuit might force the uncooperative sister to sell to you. For more details, please consult a real estate attorney where the cabin is located.
MORTGAGE LENDERS DON’T HAVE TO ACCEPT TWICE-MONTHLY PAYMENTS
DEAR BOB: I want to make my mortgage payments when I get paid, on the first and 16th of each month. I started doing this by making half of my November payment on Oct. 16 and the other half on Nov. 1. The full payment was thus received by the lender before the past due date of Nov. 10. I did this again for the December payment, half on Nov. 16 and the other half on Dec. 1. However, the loan servicer is now trying to make me pay a late fee because I did not make the “full payment” by the past due date. The mortgage agreement says nothing about how many payments I should make, just that “full payment” must be paid on the first of each month. The loan servicer says I can call them each month to resolve this, but their system doesn’t allow for partial payments. I spent 20 years designing consumer loan computer systems so I know this major bank can do anything management wants. They offered me a biweekly mortgage, with extra fees, but that’s not what I want. What can I do about this? –Linda H.
DEAR LINDA: Don’t waste your valuable time fighting your nasty loan servicer. You will lose. Mortgage lenders do not have to accept partial payments such as you attempted to make. I’m surprised your partial payment wasn’t returned to you.
If your goal is to reduce your total mortgage interest by cutting the life of your 30-year mortgage, you can accomplish the same result as a biweekly (every two weeks) payment mortgage. This is done by dividing your monthly principal and interest payment (not including property tax and insurance escrow) by 12 and adding that extra principal amount to each regular monthly payment.
The result will be making 13 monthly payments every 12 months and cutting your mortgage to about 22 years (the same result as a bi-weekly mortgage but without any extra cost).
WHO GETS FORFEITED DEPOSIT IF HOME BUYER DEFAULTS?
DEAR BOB: Is the industry standard, if a buyer defaults on a contract to buy a house, the agent gets to keep the deposit, or does the seller get to keep all or part of the deposit? –Robert M.
DEAR ROBERT: There is no “industry standard.” Read your sales contract to determine what happens to the defaulting buyer’s good-faith earnest money deposit.
The deposit should be held by a third party, such as in the realty broker’s trust account, an attorney’s trust account or at a title/escrow company. But it belongs to the home seller. When a buyer defaults, the seller is entitled to keep that deposit, subject to the terms in the sales contract and applicable state statutes.
Some home sales contracts have a “liquidated damages” clause. That means if the buyer defaults, the amount of the buyer’s deposit is the limit of the seller’s damages and the seller cannot sue the buyer for further damages, such as lost sales profit.
Just to complicate matters, the sales contract often says the listing agent is to receive part of any forfeited deposit. When all else fails, read the sales contract. For more details, please consult a local real estate attorney.
EX-NUNS DON’T WANT ANY HASSLES
DEAR BOB: I leased my renovated condo to two ex-nuns for a year. I told them I was going to sell, and they agreed. But when they returned home from work one day to find a Realtor’s lockbox on their door, they panicked. The agent removed it. But the ex-nuns say they signed a one-year lease and don’t want any disturbance to their lives. Am I locked in until the lease expires in April, missing the spring sales season? They won’t even agree to a 24-hour notice before a showing –Patty H.
DEAR PATTY: It sounds like those ex-nuns understand real estate law. If they have a one-year lease, you can sell the condo but the buyer purchases “subject to” the terms of the lease.
Unless your buyer is an investor who wants tenants, most prospective buyers aren’t interested in buying a condo that has a lease until April.
If the lease doesn’t provide for showing the property to prospective buyers during the lease term, you and the real estate agent have no legal right to enter the condo to show it to prospects.
The fact you orally mentioned you plan to sell the condo is irrelevant. In real estate, everything must be in writing to be legally enforceable. For more details, please consult a local real estate agent.
The new Robert Bruss special report, “When It’s Smart to Prepay or Refinance Your Mortgage,” 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.
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