Listing Referral Gets Around Lazy Agent
QUESTION: Every time you recommend home sellers sign only a 90-day listing I feel sorry for you because, although you are right, I know how my fellow realtors criticize you because they want long six-month listings.
The next time some poor seller writes you about how they are stuck on a six-month listing with a lazy realtor, why don’t you suggest a listing referral to another agent? I just got such a listing away from a lazy agent who did absolutely nothing to get the home sold except put it in the multiple listing service and hope another agent would find a buyer.
As a friend of the seller, I went to the lazy listing agent and suggested I pay her a 20% referral fee if she would transfer the listing to me. She agreed. The listing had about two months remaining. Last week I sold the house. When the sale closes the original listing agent will get 20% of the sales commission for doing virtually nothing.
ANSWER: Thank you for the valuable suggestion. Getting a listing away from a lazy agent isn’t easy. I admire your courage. Congratulations on selling that home and making the seller feel better about realtors.
Living Trust Good Way to Hold Property
Q: In a few months my husband and I will be buying our first home. We are receiving conflicting advice from our parents on how to hold title. My parents say joint tenancy with right of survivorship is best. But my husband’s parents say tenants in common is best. Who is right?
A: If you hold title in joint tenancy, when one of you dies the survivor automatically receives the full title to the property. The decedent’s will has no effect on the property.
However, if you own title as tenants in common, each tenant in common can pass their share by their will to whomever they wish. In other words, the surviving co-owner does not automatically receive the deceased tenant in common owner’s share.
The alternative that I recommend is holding title in a living trust. You and your husband will be the beneficiaries and trustees. During your lifetimes you can deal with the property as you wish, such as selling or mortgaging it.
However, if one of you becomes incompetent or dies then the other beneficiary and trustee takes over management of the property. Other living trust advantages include avoidance of probate costs and delays, plus privacy. For example, when Bing Crosby died all his assets were in a living trust, so his assets were not subject to probate costs and nobody learned about all the real estate he owned. For further details, consult your attorney.
Big Cash Deposit Can Be Distraction
Q: Two weeks ago we accepted an offer to sell our home. The realtor told us what a lovely couple the buyers are. But after we accepted the offer, my husband was talking to some of his friends at the bank where he works and he learned the buyer has a shady reputation. The sale is supposed to close in 45 days.
I realize there isn’t much we can do now but pray the buyers complete their purchase as agreed. However, I wonder if we should have first checked out the buyers before accepting their offer. They made a $20,000 cash deposit, so we didn’t even consider checking their credit.
A: Your buyers used an old trick. Tempt the other party with lots of cash. It usually works to distract their attention.
If you are going to be carrying back financing, such as a second mortgage, you should investigate the buyer’s financial ability to pay. Your realtor can obtain a credit report and verify their employment. However, if you are making an all-cash sale, there really isn’t much the home seller can do to check out the buyers other than to rely on the realty agent’s information.
Once-Rejected Offer Can Be Reconsidered
Q: Shortly after we listed our home for sale another agent brought us a purchase offer which was about 10% below our asking price. On the advice of our real estate agent, we rejected it. But looking back, since we have had no other offers, that was a pretty good offer after all. Is there any way we can accept it now?
A: No. An offer rejection cancels it. However, you could go back to that buyer and offer to accept it. That means you are offering to sell your home to the seller on the terms originally proposed by the buyer. If the buyer accepts, you sold your home.
‘Rollover’ Applies to Portion of Triplex Sale
Q: Many other people probably share my situation. I live in one unit of a three-family triplex that I own. Due to a job transfer, I have to sell it. My profit will be about $80,000. Can I use that “rollover residence replacement rule” you often discuss?
A: Yes, but only on the profit attributable to the sale of your personal residence unit. Unfortunately, you will owe tax on the profit that applies to the two rental units unless you make an IRC 1031 tax-deferred exchange of the two rental units.
As you know, a principal residence seller can defer the profit tax if a replacement principal residence of equal or greater cost is purchased and occupied within 24 months before or after the sale. This tax break of Internal Revenue Code 1034 applies to the profitable sale of your personal residence unit.
However, the other two rental units can qualify for a tax-deferred exchange. More specifically, you can defer your profit tax by either buying another combination residence-rental building in your new city or you could buy a single-family house or condo plus a rental building, with the total cost and equity at least equal to the old property’s sales price.
You can use Internal Revenue Code 1034 for the personal residence portion and an IRC 1031(a)(3) Starker delayed exchange for the rental portion. Consult your tax adviser for full details.
Agents Provide Service in VA, FHA Repo Sales
Q: I am interested in buying a VA or FHA repossession house. Both VA and FHA lists are published weekly in our newspaper, but the ads say buyers must contact a local real estate broker. I did so and was told I had to make my bid through a broker. She said the fee she earns is 5% of the gross sales price. Why don’t VA and FHA sell these houses direct and save the 5% fee, so the prices can be lower?
A: Real estate agents perform valuable services such as showing VA and FHA (HUD) repos. These agents help prospective buyers prepare their bids and arrange the closings for the successful bidders. For these services, the real estate agents are very well paid in the form of a 5% sales commission. Since the commission doesn’t have to be split with another agent, most realty agents are eager to help bidders buy VA and FHA repos.
Letters and comments to Robert J. Bruss, a San Francisco-area lawyer, author and real estate broker, may be sent to P.O. Box 280038, San Francisco, Calif. 94128.
