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Ask Realty Times - July 16, 2004
by Peter G. Miller
Question: My husband and I built a new home last November. However, after being here for a short while we both miss country living. I've heard different points of views on selling so soon after building. How long should we live here before selling? We are both medical professionals. Our mortgage guy told us that we would have a penalty for refinancing before three years. Does that mean the same if we sell before that time? Also, we have had a former bankruptcy and are about three years out. Our credit is building back and we were able to get a building loan. We'd really like to move to the country but don't want a hefty penalty. Answer: Real estate is best seen as a long-term investment, say 5 to 10 years in most markets, but not all. In your situation you need to see what the penalty is and whether it applies. A penalty might be equal to six month's interest or some other amount or formula -- however the penalty may apply only if you refinance, not if you sell. For specifics, review the mortgage note. Because you've had a bankruptcy it may be that you're dealing with a sub-prime loan, a form of financing that can be expensive. It really would be best for you to hold the current property, pay the loan, and continue building good credit. As an alternative to selling, would it make any sense to rent your current residence? Also, what financing could you acquire at this time for a replacement residence? Maybe speak to more than one mortgage guy or gal. Question: Our home has been on the market for seven months. It's in a flood zone and too close to the freeway, according to the feedback we've gotten. We have lowered the price to $675,000 -- it was first listed at $755,000. Why can't we sell? Answer: All real estate is unique so without seeing the property it's not possible to make a specific comment. That said, your situation raises several questions: Do other houses in your community sell more quickly? If yes, what do they have that your property does not? You have listed your price for a given amount. How does your asking price compare with recent sales of like properties? Could I spend $675,000 and find a like house nearby that is not in a flood zone or near the freeway? If yes, why would I buy your property? Is being in a "flood zone" a real problem, or just a label? That is, does your home actually flood or have a moisture problem? Sit down with your broker and review the marketing plan. How many showings have you had? What do other brokers say? Instead of lowing the price, perhaps give buyers a credit toward closing. Question: I'm a computer engineer and my wife is a physician. We are planning to buy a new home around here with all our savings and dreams. Should we buy this home as joint owners or as a single owner (in my name only). I ask because of worries about unjustified malpractice suits. Answer: You wife is an individual apart from you. The two of you would typically hold title as husband and wife in a "tenancy by the entireties," a form of ownership that prevents the property from being taken if there is a successful claim against one spouse. That said, you have the right idea. You need to speak with an attorney and ask about malpractice insurance, the form of corporation within which your wife practices, state legal and political trends, holding title to real property, the use of trusts to protect property, etc. Question: I am debating if I should buy the house now. I live in Fremont, CA and work in San Francisco. I can't make a decision because I heard prices of homes in the Bay area will go down about 10 percent. I am looking to buy a house for about $500,000. Should I buy a house now or how long should I wait to buy one? Answer: No one knows for sure -- and that includes anyone who says prices will decline 10 percent. Real estate is a commodity. Prices can rise and fall -- and they do. If real estate were a sure thing, no one would buy stocks or bonds. Perhaps it would be best to ask more questions: How long do you intend to own the property? What if your employment location moves? Can you add value by fixing up with your own labor? Is it cheaper on a monthly basis to buy with today's mortgage rates then to pay a lower price (maybe) and face higher interest levels in the future (maybe, again)? Etc. Question: I'm an investor. My question is: How do I obtain a list of expired MLS leads? Answer: You work with a member broker or salesperson belonging to the local MLS service. Expired listings have enormous value as data. That data is the property of the listing broker and the MLS. It is not in the public domain. Question: I am going through a divorce, I have two children under the age of six. We both want the children to be able to stay in the home because it's in a nice neighborhood and the mortgage is affordable. We have been separated for three years now, I am paying the mortgage, we did refinance together about two years ago, only to get some money to pay off some debt. I cannot afford a higher mortgage, therefore I am unable to buy my husband out of his share at this time. We both agree I should remain in the house with the kids, but when the time comes when I can afford to buy him out, what should the house be appraised for, the amount it is worth at that time or the amount it was worth when we separated and I took over the payments? I've gotten different answers. Answer: You may have taken over the payments, but you occupy the property. Your husband retains an interest in the property, does not have the benefit of occupancy and should be compensated according to what the property is worth at the time his interest is bought out unless your divorce decree says something to the contrary. You both seem to have a good way of dealing with each other so also look into this idea: Refinance again -- rates have come down substantially in the past two years. Look for a loan with no cash requirement at closing, but a somewhat higher interest rate than the best rate now available and no principal increase.
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