Ask Realty Times - September 10, 2004
by Peter G. Miller
Question: We had our house on the market for four months and took it off the market. Does this negate the listing contract? Our assumption was that it did, but now I find that it did not. We would like to put the home back on the market with a different Realtor, but cannot because the previous contract is still in effect. Answer: A listing agreement has both a starting date and a termination date. During the term of the listing the broker has the right to market the property. Thus when you say you have taken the house off the market some questions arise: Can the broker no longer sell the home? What happens to the money spent by the broker to market the home? Is it simply lost? Four months may be a long time on the market in given areas -- or not long at all for certain markets and price ranges. Like the old song says, "You gotta love the one your with." Rather than lose marketing time, why not sit down with the broker and review the marketing plan. You both have the same goal and are best served working together. If you feel you cannot continue to work with the broker, then ask about an early end to the listing. Some brokers will agree, some won't and some will want to at least be paid for their costs. In any case, an open discussion with the broker might resolve your concerns. Question: My wife and I have been looking at properties in an overheated market for the last six months. Today we found a nice property priced well under market for sale by the owner. We would like to involve our broker in the process since she has worked so hard for us. Is it common practice to offer a broker a fee to walk a client through the process? How much or what percentage is appropriate? Answer: If you have a buyer brokerage agreement then purchasing a home from a self-seller is not a problem. Your representation is your business, just as you have the right to choose an attorney or accountant. One question to negotiate is who pays the broker's fee. Some self-sellers will pay some or all of the fee, some will pay nothing. If the home is truly priced below market, then it may make sense not to push the owners on this issue because if the price is low enough you're already ahead on a net basis. As to what's "fair" in terms of a fee, that's a matter determined in advance and separately with a buyer brokerage agreement. Question: I recently bought a home not knowing that it had mold spores in all the walls. What can I do? Answer: It's not surprising to find mold in a home. It would be surprising to find a home without 'em. As the Environmental Protection Agency explains: "It is impossible to get rid of all mold and mold spores indoors; some mold spores will be found floating through the air and in house dust." Are you sensitive to household mold? Do you require special fabrics, heating, air conditioning, etc. A few people are, most are not. Check with a physician or clinic to see if everyday mold is a problem in your situation. Question: I am purchasing a new home that is due to close within the next month (it is still under construction). I do not have my own real estate agent; I am using the builder's agent. I told the agent when writing the purchase agreement that I wanted a "quality contingency" so that I could chose not to close on the house if it was not built to my quality standards. The agent said that she would include a contingency that said that the house should be built to the same quality standards as the house down the street (which is identical to the home that I am purchasing and I have seen the inside). I agreed to this. Now, as the house is coming together, I see many flaws in the workmanship and the drywall finishing work, not to mention a bowed wall and ceiling in the basement. I have shown this to the builder and he does not want to fix it, reminding me that "this is not a custom home." I recently reviewed my purchase agreement and to my surprise, there is no quality contingency. I guess I didn't read it over carefully and I just trusted that the agent included it. If I want to back out of the purchase at this point, what am I responsible for? I have made several changes and updates to this home including different cabinets, trim, doors, flooring, etc. I don't mind losing my $500 earnest money, but I am worried that I will be responsible for some of the upgrades that I have made. Answer: Essentially, what you wanted was a home completed in a manner "satisfactory" to you. Given that there is no such clause in your purchase agreement, what is or is not acceptable quality is a debatable matter. A builder is obligated to construct a home which meets basic building code requirements. Those standards have to do with structure and safety rather than subjective matters such as "quality." After all, what looks like a great job to Smith may not impress Jones. That said, contact the local building permit office and ask that they inspect the property. A bowed wall and ceiling should be examined to see if they meet structural standards. Question: I have a house with a first mortgage fixed-rate 15-year at 4.875 percent. The house is worth $580,000. I pay $2,500 a month and the balance is now $243,000. I also have an equity line of credit totaling $183,000 at 5 percent for 10 years. Then it will become a 25-year adjustable-rate mortgage. I have used $40,000 to pay off bills. Now I have used another $90,000 for a 20 percent down payment on another home which cost a total of $455,000. This means I now need another mortgage for the second home for the balance of $355,000. How should I finance the second property? Answer: I don't think the second trust on home #1 is properly understood. If the fixed-rate period lasts 10 years then the remainder of the loan is likely to be for 20 years not 25. Please check with your lender. As to financing home #2, you are putting down 20 percent by borrowing on house #1 and getting an 80-percent, $355,000 loan on the second home. Assuming you have the credit and income to support such debt, that both properties are personal residences and not investment properties, and that no rental income is being earned then you might want to look at a LIBOR or 11th District Cost of Funds ARM. The risk, of course, is that either index will rise from today's low rates so you need to know that you can handle far-higher monthly payments if necessary. Alternatively, with fixed-rate loans below six percent, this may be a good time to get fixed-rate loans for both homes. The monthly cost may be higher, but future payments would remain stable. | 
