Should Personal Property Stay or Go? Spell It Out in Sales Contract
QUESTION: We would like your opinion if we were swindled by the seller and the realty agent on an expensive home we purchased in November.
My husband and I have been arguing if we should forget the matter or go after the seller and realty agent for fraud and misrepresentation.
The listing agent showed us a home which was vacant. The furniture had been removed but the washer, dryer, Wolf professional stove, big Sub-Zero refrigerator (the best), top-line KitchenAid dishwasher, beautiful dining room chandelier, nice light fixtures throughout, patio furniture and built-in TV-stereo system were in the house.
When we made our purchase offer, we presumed all these items were included in the purchase price because they were also itemized on the information sheet which the agent gave to us.
After some negotiation, we arrived at acceptable price and terms with the sellers. But when we got the keys to the house after the closing, we were shocked to see the seller had removed all the listed items except for the old washer and dryer.
When we protested to the real estate agent, he said the seller is entitled to remove the items because they are personal property and we did not itemize them on our purchase contract. That is true because we presumed they were included. The real estate agent refuses to talk to us further. What would you do in our situation?
ANSWER: The agent indicated all the personal property items were included in the sale when you were given the information sheet which itemized them.
The agent should have itemized the personal property on the sales contract to prevent any misunderstanding.
Legally, when real estate is sold, any personal property on the premises is not included unless that personal property has become a fixture by means of permanent attachment.
Examples would be the dining room chandelier and a built-in stove. But a free-standing refrigerator remains personal property and is not included in the sale of the real estate unless itemized on the sales contract.
Although the seller may not have had a legal duty to include the personal property you listed, the real estate agent whose principal was the seller created a duty by handing you the information sheet that included the items.
It appears we are not talking about petty cash but perhaps $15,000 or more of personal property. If you have tried unsuccessfully to negotiate with the realty agent’s broker, I suggest you retain an attorney.
Even if it costs you a few thousand dollars in legal fees, unless there are other facts, it appears you have a very strong case against the seller and realty agent.
What Seller Can Do About Stalling Buyer
Q: I had to sell my home quickly, so I placed a classified ad in the newspaper for a Sunday open house. A nice couple made me an offer, which I accepted.
I wanted a 30-day closing, but they talked me into 60 days, even though they only made a $500 earnest money deposit.
During the 60 days the buyers kept coming back to my house and each time they found things they said they didn’t like. They got me to reduce my price by $7,000, even though my brother already showed me that I had sold for far less than I should have gotten.
At first, I figured I was saving the real estate commission by not hiring an agent, but now I realize I sold far too cheap. The 60-day closing period has just expired and the buyers want an extra 30 days. I know they are stalling because they think mortgage interest rates might drop. Can I get out of this deal?
A: It sounds like you made a very costly mistake not to hire a professional real estate agent to market your home.
Hiring an agent would have prevented you from selling your home for less than its market value. More important, the agent could have advised you about the pitfalls of a long closing period, a small earnest money deposit, and allowing the buyers to repeatedly reinspect the house.
If your sales contract has a “time is of the essence” clause, you may be able to cancel the sale if the buyer was not ready, willing and able to close the sale by the specified date.
Should litigation become necessary, many judges will give a defaulting buyer a few extra days to close the sale. But a 30-day extension probably is not required. Please consult a real estate attorney before declaring the buyer in default on your purchase contract.
Unsure About Condo? Lease With an Option
Q: I have concluded I cannot afford nor do I really want to buy a single-family house. So, I am considering purchasing a condominium. However, I have heard so many pros and cons about condos I am undecided. I have friends who own condos who both love them and hate them. Do you think I should buy a condo or forget about owning a home?
A: Condos are a combination of apartment living and home ownership. Owners of condos get the same tax deductions for property taxes and mortgage interest as homeowners do.
My suggestion is to avoid studio and one-bedroom condos because they are usually difficult to resell and have less profit potential than larger condos.
Before buying a condo, talk with owners in the complex you are considering. Ask what they like and dislike about their homes. Also inquire about the percentage of renters.
If you find the units are less than 75% owner-occupied, maybe you should keep looking. Too many renters is not an advantage.
The best way to try condo living is to lease with an option to buy. If condos are selling slowly in your town, as they are in many communities, you should have little trouble negotiating a lease-option with a substantial rent credit toward your down payment. While you are renting, check into the owners association finances and see if you really want to get involved in condo ownership.
No Quick Tax Break on Fee for Refinancing
Q: We recently refinanced our home loan to get rid of an adjustable-rate mortgage. The lender kept raising our interest rate, although most interest rates are falling. I knew we were being cheated, so we got rid of that lender.
Following your frequent advice, we wrote a check to the new lender to pay the loan fee on our new mortgage. But I am confused about whether we can deduct the loan fee.
A: Sorry, but loan fees paid to refinance your home loan are not immediately deductible as itemized interest on your federal tax return, but you can amortize your loan fee.
To illustrate, if you paid a $1,000 loan fee to obtain a 30-year mortgage, you can deduct $33.33 each year for the next 30 years.
No Casualty Loss for Possible Future Loss
Q: Our home is located adjacent to a small creek. During heavy rains, this creek floods our back yard.
We are used to this and don’t worry about it. However, last fall we noticed the creek is undermining part of our back yard and is washing it away.
A contractor has advised us to either build a retaining wall or haul in heavy rocks to prevent future damage. The wall would cost about $15,000 and hauling in rocks would be about $8,000, but wouldn’t look as nice. If we do this work to prevent a future serious loss, can we deduct the cost as a casualty loss on our income tax returns?
A: Nice try, but Uncle Sam allows income tax casualty losses only for events that were “sudden, unexpected, or unusual.”
The threat of a future loss, no matter how certain it is to eventually happen, will not create a casualty loss tax deduction for the cost of preventing the damage.
Rent Your Old Home If Unable to Sell It
Q: We recently moved into our new home, but we have been unable to sell our old home. The real estate agent says things are slow in our town now.
Since our house hasn’t sold in over two months on the market, we are thinking perhaps we should keep it as a rental. What do you advise?
A: You can never own too much real estate. Since you apparently don’t have to sell your old home to help pay for your new home, if you think your old home is likely to increase in market value and there are no compelling reasons to sell, keep it.
The rent from your tenants will pay the expenses while the home hopefully appreciates in value.
Incidentally, except in winter resort areas, the winter months are the worst time to sell a home, so I am not surprised your home did not sell in the last few months.
The advantages of renting your old home include being able to depreciate it to shelter all or most of the rent from taxation.
Depreciation is a non-cash tax deduction for wear, tear and obsolescence. Of course, actual cash expenses for repairs, insurance, mortgage interest and property taxes are also tax deductible.
Short Listings Will Motivate a Realtor
Q: You don’t know what you’re talking about when you advocate home sellers only sign 30-, 60- or 90-day listings. In our town, the market is very slow and it takes an average of 112 days to sell a home. A 30- or 60-day listing is a waste of time.
I’ve been a real estate broker selling homes for 14 years and never take a listing for less than six months. Why don’t you come down out of your ivory tower and get out here in the trenches?
A: I have been a real estate broker for 22 years and have bought and sold many houses. The big drawback of long listings is they encourage the listing agent to become lazy.
I learned from experience that the shorter the listing term, the harder, smarter and faster the agent works. When a 30- or 60-day listing expires with the home unsold, if the agent is doing a good job, the seller can renew the listing. However, if the agent is doing a poor job, then the seller can switch to a better agent. Most sellers don’t have the luxury of taking six months to sell their homes.
I wish you well, but I would never sign a six-month listing unless it has a clause allowing cancellation at any time and without cost to the seller.
