Ask Realty Times - July 29, 2005 by Peter G. Miller
Question: We just moved into our new home. It's 10 years old. We purchased this home in early July. Due too the unusual heat we've been experiencing, we turned on the AC but to our dismay it's not functioning up to par. We had an inspection done as part of the acquisition and it came with seller's one-year home warranty. The home warranty company told us the unit is working fine but it's too small for a 2,500 sq. ft. house and thus cannot get the house to cool down. Two more companies came out to our home and they both said the same thing. It would cost us $3,000 to $5,000 to replace and fix, which is hard for us to swallow. Can I go after the seller and the inspector to re-coupe the cost? We wouldn't have paid that much for the house had the HVAC issue been disclosed to us. Answer: Here's the problem. The air conditioning system works. It has worked for ten years. The sellers may well have been happy with the cooling power of the system and so to them it operated satisfactorily. You may prefer a far-lower temperature, something beyond the system's capacity. Perhaps there are other ways to approach the problem. Maybe go to zone air conditioning and get additional cooling power rather than a total system replacement. Or buy one or more window units. Or see if the system works better in less extreme conditions. As to going after the seller and inspector, speak with a local attorney regarding possible remedies. Given that the sellers did what they promised and provided a working air conditioning system this is unlikely to go further. Question: Recently I listed a piece of land for sale. My broker advised me to offer it at $275,000, I said that I wanted to list it at $325,000 which is what we did. My broker got the listing on a Friday, then made a couple of calls to builders. On Saturday, she got an offer for $305,000 and she said that I should take that, because there were no comps in the area higher than that price. The builder who bought it has put the property back on the market for $425,000 and has it listed with the same broker (my salesperson's name is not on the listing, but it's the same office). I think this is unfair. How can I complain? Answer: To start, a broker is paid on the basis of performance, so a quick-selling home is not an issue -- consider the alternative. As to pricing, when a property is sold the new owner certainly has a right to again market the land. The fact that it's being offered for $425,000 does not mean it will sell for that price. You need to sit down with the broker and the salesperson to review your sale. If you are not satisfied with their explanations -- and they did sell the property for the highest price to this point -- then you can contact your state real estate regulators and ask that they examine the transaction. A list of state regulators can be found at ARELLO.com. Question: Is it still a good time to buy a house or will the real estate bubble burst soon? Answer: Let's say you bought today and then prices fell. Let's also say that you sold in ten years for 100 percent more. Would now be a good time to buy? Not relative to a time with falling prices, but surely a good time to buy if prices ultimately shoot up. No one knows if there is or will be a real estate bubble. However, real estate is a localized commodity so what happens nationwide may not happen in your community or on your block. Take a careful look at the local real estate market to determine if buying now makes sense for you. Is the local job base growing? Is the population increasing? Is new home construction keeping up with demand? Etc. Question: I sold an investment property with four occupied units, but did not receive rent from the tenants before the property was sold. I did receive the rents after closing. Must I turn the money over the new owner? Answer: The rent was income earned prior to closing. That payment was delayed does not change the fact that the property was used by the tenants during your term of ownership. Unless there is a contract clause to the contrary, the money is yours. Please have an attorney or tax professional review the specifics. Question: We sold our home in 2003 (after living in it for four years), then built a home and moved into it in February 2004. We'd like to sell our current home now, purchase a lot, then build in mid-2006. We're about six months short of the two-year owner/use criteria. Will we able to avoid the capital gains tax from the sale of our home (it will be less than $500,000) if we roll all of the gain into the purchase of a lot? Answer: There is nothing to rollover. That concept ended when the tax rules changed in 1997. What you have is this: A home that you have lived in less than two of the past five years. Two suggestions: First, see if you qualify for any of the IRS safe harbor provisions for those who sell in less than two years. Second, buy the lot now but live at the current property for another six months. This should not be a severe hardship since it will take time to build the new home and sell the current one. Please see a tax pro for details. Question: Can an FHA appraisal double as a home inspection? Answer: Certainly there is value to an FHA appraisal -- and certainly an FHA appraisal is required to obtain an FHA-guaranteed loan -- but an appraisal and a home inspection are two different services involving different professional skills and purposes. An appraisal is an independent property valuation while a professional home inspection is a thorough examination of the property to determine the condition of its structure, major systems and the need for repairs. Question: We recently decided to sell our home after six years. Because we had a good experience with the broker who helped us buy the house and decided to enlist her help to sell. However, we have now decided we do not wish to work with this broker any further, but we have a six-month listing. Everyone tells us that two months is standard. How do we get out of this agreement? It's my house so I should be able to say I don't want to sell anymore. Is that possible? Please help me with this. My husband and I are under an enormous amount of stress over this. Answer: You don't have to sell -- but you may be responsible for paying a real estate commission. The logic is this: You agreed to allow the broker a given period of time to market the property. The broker has expended time and money in exchange for the opportunity to market the home under conditions you have set. However, brokerage is a local business and no broker wants a poor reputation. Many brokers will agree to end a listing if the sellers will pay actual costs for advertising and such or a token fee. Some will end a listing agreement as a matter of good will and at no cost because they do not want to work with an unhappy seller. Many brokers actually include a provision giving the seller a few days to end the listing at any point during its term without cost. Sit down with the broker, explain that you want to end the agreement and see how she responds. The betting here is that this can be worked out. As to the length of a listing agreement, that's a negotiable matter -- there is no "standard" listing term. It's an issue to be worked out by sellers and brokers. This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought. | 
