Ask George & Chuck: Questions from Consumers - February 22, 2005
by George Stephens & Chuck Jacobus
Dear Ask George: "My brother and I have an opportunity to purchase a house in complete disrepair in the greater Boston area. However, it is priced below market value. We plan on doing all necessary repairs and then selling it. It's a small house, and since I have already rehabbed four of my own homes, I am able to determine the needs to get this house in great shape. I have also sent all the contractors I have used in the past, communications requesting each one to supply quotes on the work to be done on said repairs. The house is selling for $225,000 in a neighborhood that 3 comparable houses sold for between $325,000 and $349,000 in 2004. The rehab will cost approximately $40,000. Depending on the market conditions when we sell, we stand to make between $30,000 and $60,000 profit. If we give it to a real estate broker to sell we will lose approximately $10,000. I have never sold a house on my own but from what I read, it's not the easiest thing to do. What are your thoughts on selling through a real estate broker, if we locate the prospective buyer instead of the broker, do we pay any commission?" -- Cost Conscious Sellers Dear Cost Conscious Sellers: In the MLS Property Information Network, Inc. (http://www.mlspin.com) serving New England and the Greater Boston area, the listing type you are speaking of is called an "Exclusive Agency" listing agreement. According to MLSPIN Rules and Regulations, "Exclusive Agency -- Shall mean, when applied to a Listing Agreement, a Listing Agreement under which the Listing Broker becomes the sole agent of the Seller and the Seller agrees to pay a commission to the Listing Broker if the Listed Property is sold through the efforts of any real estate broker. Under an Exclusive Agency Listing, if the Listed Property is sold solely through the efforts of the Seller, the Seller is not obligated to pay a commission to the Listing Broker or any other broker." I suggest you call some brokerage firms in the Greater Boston area and discuss that type of listing agreement with them. As for my thoughts, I fully understand your motives for wanting to maximize your profits. However, consider this: How costly would it be if you and your brother violated a Massachusetts or a federal statute and got sued by a purchaser? If you and your brother are going to make a going business out of this, a real estate broker's commission or fee should just be another cost of doing business. Besides, if you are going to be doing a certain number of purchases, you can probably work a negotiated commission out with the brokerage firm that ends up representing you. There is also the perception by consumers, that if the owner is selling his own property -- as you and your brother would be doing, you may be less than forthright or honest with them. However, when you hire a real estate broker to market your property, the broker is committed to the N.A.R. Code of Ethics. Dear Ask George: "I need help regarding a refund on a check I deposited with a title company. It has been over a month since closing and I have not received an over payment of $7,909.00 from them." -- Overpayment Past Due Dear Overpayment Past Due: Call the closer who handled your transaction. Make sure you have the form labeled "HUD-1" at the lower right side of the form. It details the money the Title Company received from you, where it went, and any amount either left owing to you or due from you (Line 303, last box at the bottom of the page). Tell the closer you never received the $7,909.00 from the title company and that you are demanding payment. Dear Ask George: "I have a dispute with my HOA regarding a sign and how the restrictions applying to advertising signs versus no trespassing signs should be enforced. In reading several of your other articles regarding HOAs and the legal disputes that arise, you suggest obtaining legal advice from someone specializing in HOAs. Can you suggest some generic means and methods of finding good legal representation?" -- Resentful Dear Resentful: First, read the document delivered to you, plus any amendments or additions, when you first purchased the property. Get a reasoned understanding as to what it states. Second, access your favorite search engine and enter "Homeowner+Association+[your state's two letter code]+[the city in which you live}+attorney" (without the quotations). You will find plenty of useful information about HOAs, as well as the attorneys who specialize in them. Ask not only about the hourly rate charged, but also how long they've been specializing in HOAs, if your state bar certifies attorneys ask if the attorney is Board Certified in Real Estate, and specifically how the attorney would advise you as regards the enforcement provisions of signs by your HOA. Dear Ask George: "My question relates to restrictive covenants for a neighborhood in Bedford, Texas. Our homes are duplexes. Now, after one owner has changed their side into a business front instead of the required garage, I find there is no legal remedy other than civil court. It appears these 'legal' covenants are not enforceable without spending legal fees. Is there any other remedy to this issue?" -- Scrappy Dear Scrappy: My co-author, Chuck Jacobus, J.D. and I agree that you can actually do a lot if you put your mind to it and are willing to spend some time. Can you find an appraiser (and/or maybe a local real estate broker) who is concerned enough to help and who can testify as an expert? You can get jurisdiction in a Justice of the Peace ("JP") court without a lawyer, so there will be no legal fees. Your number one remedy is injunctive relief, while the second could be damages because of a reduction in market value. Injunctive relief is probably simpler as you only need to show that the errant homeowner violates the restriction and/or the building code. Seeking Damages would require the expert testimony of the appraiser and/or real estate broker. |
