Editor’s note: Robert Bruss is temporarily away. The following column from Bruss’ “Best of” collection first appeared Sunday, July 16, 2006.
DEAR BOB: As a Realtor, I want to thank you for your recent item about the drawbacks of cutting home sales commissions below the customary rate in the community. My specialty is listings. I find working with buyers is much less productive (although I make exceptions for good referrals). I’ve been selling homes for 14 years and will “negotiate” the sales commission on expensive homes to remain competitive. However, I tactfully tell my sellers if I reduce my commission to 4 percent or 5 percent, the buyer’s agents will show my listings last only after showing the full-commission listings. Whether it’s ethical or not, that’s what happens. You might enjoy knowing about a recent full-commission, well-priced listing I had, which didn’t get even one offer after 60 days on the market. It’s a beautiful older home but on a very busy street. I suggested my seller raise the commission from 6 percent to 7 percent, with 4 percent to the buyer’s agent. She agreed. I held a well-publicized MLS (multiple listing service) “broker’s tour” with a deli lunch and got 125 local agents to re-tour the house. Within the week, the house sold for nearly the full asking price. Raising the sales commission can sell a house in a slowing market –Sharon R.
DEAR SHARON: Thank you for your insights based on longtime sales experience. Too many home sellers focus on the sales commission, thinking they are saving money if they cut the rate.
Purchase Bob Bruss reports online.
But, as the volume of home resales slows in most towns, the houses and condos listed with reduced commissions usually get shown last to prospective buyers.
Thanks for your example of raising the sales commission by 1 percent and calling attention to your listing that resulted in a sale, which otherwise might not have happened.
HOW TO CORRECT A DEED
DEAR BOB: The deed to our home says “Va and Sid, husband and wife.” How can we correct it to joint tenancy with rights of survivors? –Virginia C.
DEAR VIRGINIA: Depending on the state where the property is located, a local real estate attorney or title company can prepare and record a quitclaim deed from yourselves to yourselves “as joint tenants with right of survivorship.”
If you live in one of the 24 states allowing tenancy by the entireties between husband and wife, you will probably prefer that title method. Or, if you live in a community property state allowing it, you might select “as community property with right of survivorship.”
The quitclaim deed must include the legal description of your property, the local tax assessor’s parcel number (in most states), and the notarized signatures of you and your spouse so it can be recorded with the local recorder of deeds.
DAUGHTER’S NAME ON TITLE PREVENTS A REVERSE MORTGAGE
DEAR BOB: A few years ago, upon the advice of our attorney, my wife and I (now ages 72 and 75) added the name of our mentally challenged daughter to our free-and-clear home title in joint tenancy with right of survivorship. She lives with us and has been a real blessing, as she helps with the cooking and housekeeping. Our other two adult children love her and agree when we pass on, she should get the house to sell and provide for her care from its equity. The problem is my wife and I need to increase our income because my retired pilot’s pension was recently cut drastically. We investigated a reverse mortgage and learned it could solve our income problem. However, we can’t qualify because our daughter’s name is on the title and she is under 62. Any suggestions? –Henry R.
DEAR HENRY: My personal opinion is your attorney gave you very bad advice to add your mentally challenged daughter’s name to your home title. I know he and you meant well, but it tied up the property if she isn’t capable of understanding. It’s like adding a minor child to a title; they can receive title, but they can’t convey title.
If your daughter is capable of understanding, she can sign a quitclaim deed to you and your wife, thus removing her name from the title. Then you can qualify for a reverse mortgage and provide for her by amending your wills or living trust. If she is unable to sign a quitclaim deed, then a court-appointed guardian will be needed to remove her name from the title.
A reverse mortgage is ideal for your situation to provide lifetime income as long as you or your wife live in your residence. Your home equity can provide the income lost from your airline pension. More details are in my special report, “The Whole Truth About Reverse Mortgages for Senior Citizen Homeowners,” available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.
SHOULD CO-OWNER PAY THE $15,500 UNPAID PROPERTY TAX?
DEAR BOB: My father and his brother were left joint ownership of their mother’s house in 2002. Dad wants to sell the house and divide the sales proceeds. But his brother doesn’t want to sell. The house has no mortgage. My father has paid for a new roof and other necessary work. However, the brother doesn’t wan to sell. There are unpaid property taxes of about $15,500. The house is scheduled for a property tax sale later this year. If my father pays the $15,500 property taxes, can he obtain full ownership? Is there any other way he can obtain full ownership? It would be a shame to lose this house over unpaid property taxes –Scott C.
DEAR SCOTT: As a co-owner, if your father pays the $15,500 property taxes to prevent loss of the property at a tax sale, he is entitled to a 50 percent reimbursement from his co-owner brother. Also, he is entitled to receive 50 percent of the roof cost.
But your father is not entitled to receive full ownership of the property just for paying the property taxes. However, he can bring a partition lawsuit to force the sale of the property. That is the only legal recourse he has.
Of course, when the property is sold, then your father will receive back the 50 percent of the property taxes he paid on behalf of his brother, plus half of the roof cost. For full details, your father should consult a local real estate attorney.
WHY UNRECORDED LIFETIME DEED MIGHT BE INVALID
DEAR BOB: You recently had an inquiry from a lady who said her grandmother deeded real estate to her. The deed was signed and notarized, but not recorded before the grandmother died. The grandmother’s will gave the same property to her son. In previous articles, you said an unrecorded deed might still be valid. Why would there be a possibility in this situation the son could get the property based on grandmother’s will? –Jerome G.
DEAR JEROME: The legal issue is whether grandmother delivered the deed to her granddaughter conditionally such as, “Here is my deed, but don’t record it until after I die.”
The general rule in most states is such as conditional delivery is void after the grantor dies. If that was the situation, then the son takes title according to grandmother’s will.
This is a classic example why deeds should not be delivered conditionally to a grantee, such as the granddaughter.
Another problem could arise if grandmother changed her mind and sold the property during her lifetime to a bona fide purchaser (BFP) without notice of the prior unrecorded deed. The BFP would win. For full details, please consult a local real estate attorney.
CAN IMMIGRANT CLAIM $250,000 HOME-SALE TAX EXEMPTION?
DEAR BOB: Is a foreign national who has lived three years in his principal residence — paying U.S. taxes with a Social Security number but without a green card — entitled to claim the $250,000 or $500,000 home-sale tax deduction? –Gloria S.
DEAR GLORIA: Yes. Immigration status doesn’t matter as long as the foreign national (1) has held title to the principal residence at least 24 of the 60 months before its sale and (2) has occupied it for that time. Up to $250,000 principal-residence sale profits are then tax-free for a single home seller.
If the principal-residence owner is married, and the spouse meets the occupancy time test but is not on the title, then up to $500,000 principal-residence-sale capital gains are tax-free, thanks to Internal Revenue Code 121. A joint tax return must then be filed in the year of the home sale. Isn’t this a great country?
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