by Peter G. Miller
Question: How long after a real estate contract expires can a broker claim a commission when an agent has showed to a client?
Answer: Many listing agreements contain what is called a "protection period" clause. The idea is that if a prospect is shown the property during the listing period but elects to buy sometime later then the broker is still entitled to a commission. Example: Broker Weems has a three month (90 day) listing. Buyer North is shown the property two days before the listing expires but does not elect to make an offer for a week. With a proper protection period Broker Weems would still be entitled to a fee.
The length of a protection period is negotiable at the time the listing arrangements are created. There is no normal, usual, standard or required protection period. No less important, protection periods must end automatically if the property is listed with another licensed broker -- any licensed broker, not just a broker who is part of a particular professional group.
Question: I'm very interested in investing in real estate: Is house flipping a good strategy even though the local market is going down?
Answer: The idea of flipping homes is to buy low, sell high and re-sell as quickly as possible. In a market where home prices are falling -- which means many local markets today but not all -- why would a buyer want to pay a higher price when all around values are tumbling?
Real estate is not like stock. There's no such thing as "short selling." If you want to invest in real estate, look at your local community and think about housing demand: Is the area population growing? Is the job base expanding? Are lots of new homes being built? Maybe start with a duplex where you can live in one unit and rent the other -- you would then be able to get owner-occupant financing.
For specifics, speak with local real estate brokers.
Question: I want to make improvements which will substantially improve my property. I will pay for these improvements with savings; that is, I won't be borrowing. Do I need 'permission' from my lender to improve my home? Can they technically prevent me from adding on to my house?
Answer: No permission is needed. Your home is security for the loan, thus the lender will be elated at anything which increases its value.
Making improvements also means you will need to increase your property insurance coverage. You should be certain that improvements are made according to local building codes and that as required work is done by licensed, bonded and insured professionals.
Question: I own a townhouse and I'm the only name on both title and loan. However, due to a few circumstances, my brother and I have decided that it's in the best interest for the both of us if I take my name off of the loan and have him assume it. What's the easiest way to do this? What are the proper procedures? The only thing I can think of is to having my brother add his name on title and then refinance under one name. Does that work?
Answer: If you change the title you have "sold" the property and there can be transfer taxes and other costs. Once title changes, the lender has the right to call the loan so the property will have to be refinanced unless the lender is willing to allow an assumption.
I'm not sure what circumstances require selling the property to your brother, however before going further please speak with a local real estate attorney to see if your needs can be met without a title transfer.
Question: I would like to know where the next emerging hot real estate market will take place in the United States or Canada.
Answer: Me too.
The marketplace is now in flux in many areas. Long-time hot spots such as Las Vegas and much of Colorado, Florida and California have cooled. The National Association of Realtors, however, has reported strong markets in Wyoming, Iowa and North Dakota during the second quarter.
However, what happened in the second quarter does not tell us what will happen in the future. We don't know what will happen tomorrow, it's all conjecture.
It might make sense to consider areas where population and job growth are strong and where new construction is limited. Such factors should suggest rising real estate values -- but, of course, no one can make any promises.
Question: What happens when a new developer steps in and wants to change the look of the homes he will be building in a gated community? He wants to change the rules, to suit him, but we the homeowners want to keep the Covenant and Restrictions we received when we bought our homes. If we vote, he wins because he owns more property and the Board (his people) votes with him. Do we have to abide by their decision?
Answer: You could look at this as a dispute regarding architectural controls, or you could argue that you purchased with the understanding that the community would have a given look and style. Contact a real estate attorney to review the advertising and promotion of the property.
Question: Our area experienced severe flooding in late summer in both 2006 and 2007. We sold our house in 2004 and the people who bought the house sent a letter this month stating they had suffered over $20,000 worth of damage in the past year from flooding. They are taking us to court for failure to disclose a sump pump which was outside the house. When we bought the house (which has an exposed lower level) my husband built a deck over the sump pump with an area in the deck which could be opened to access the pump. In the 14 years that we lived in the house we never experienced any water seepage, flooding or other type of water damage. When we sold the house we completely forgot the sump pump was there. The buyers also called us last year (after two years in the house) to say the air conditioner had gone out and they wanted us to pay for half the cost of a new one. We are wondering what our options are in this matter.
Answer: You're are certainly not responsible for acts of nature, you likely did not guarantee the air conditioner for eternity and the buyers had an opportunity to have the property examined by a home inspector. However, if you are being sued you have no option but to find an attorney to handle the matter. Once you do, I suspect the matter will go away because the buyers did not make immediate claims.
Question: My dad purchased a home five years ago from his sister; at the time my dad was 75 years old. Due to some negative credit, the bank required him to have someone co-sign on his behalf. My brother ended up co-signing for my dad so his name is on the deed as joint tenant. My dad put up the down payment, makes the monthly mortgage payment, and pays the property taxes and insurance; whereas by brother contributes nothing. At the time of purchase it was understood that my brother would only have to co-sign in order for my dad to get the loan, and therefore, would not have to contribute the paying the mortgage.
My dad is now 80 and for the last year he's been trying to get my brother to sign a quitclaim deed. My brother borrowed $25,000 five years ago and is paying interest only and my dad has even offered to forgive him the loan; however, he refuses to sign saying that since he co-signed and his name is on the deed he's entitled to half the property. He stated that his creditworthiness is worth something and had he not co-signed, my dad would not have been able to buy the home in the first place.
What recourse does my dad have and is my brother entitled to anything even though he did not contribute any monies to buying the home or the mortgage payments?
Answer: No one wins with family disputes. Your brother is right in the sense that the use of his credit standing is worth something. Your father is right in the sense that families often have friendly financial dealings that would never happen with non-relations.
Since you brother's name is on the title it cannot be removed without his approval. Perhaps there's a family member respected by both parties who can speak with each side and come up with a reasoned compromise.
Be careful to avoid extreme reactions such as having a suit for partition to force the sale of the property or a change in the father's will. Cooler heads should prevail.
Question: We are purchasing a new home and a close friend of ours has elected to forfeit her entire commission to us. Is there a way for her commission to be forfeited where she will not be taxed? I know the commission has to be reflected on the HUD statement but is there a specific way to ensure that she does not get taxed?
Answer: If she is paid she will need to declare the income, but why should she be paid? Can the purchase be structured so the sale price is discounted by a given amount and your friend is paid nothing?
However, there's another issue here: Is the friend a broker or a salesperson? If a broker she can make whatever deal she wants. If a salesperson she works under the authority of a broker and the broker must determine how the fee is to be handled.
Have a real estate question? Send your inquiry to Ask Realty Times. Because of the volume of mail received, Mr. Miller cannot respond to questions individually or privately. Published letters may be edited for space and style. For comments regarding other Realty Times articles, please contact individual authors by pressing here. For past columns, please press Ask Realty Times.
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.
Answer: Many listing agreements contain what is called a "protection period" clause. The idea is that if a prospect is shown the property during the listing period but elects to buy sometime later then the broker is still entitled to a commission. Example: Broker Weems has a three month (90 day) listing. Buyer North is shown the property two days before the listing expires but does not elect to make an offer for a week. With a proper protection period Broker Weems would still be entitled to a fee.
The length of a protection period is negotiable at the time the listing arrangements are created. There is no normal, usual, standard or required protection period. No less important, protection periods must end automatically if the property is listed with another licensed broker -- any licensed broker, not just a broker who is part of a particular professional group.
Question: I'm very interested in investing in real estate: Is house flipping a good strategy even though the local market is going down?
Answer: The idea of flipping homes is to buy low, sell high and re-sell as quickly as possible. In a market where home prices are falling -- which means many local markets today but not all -- why would a buyer want to pay a higher price when all around values are tumbling?
Real estate is not like stock. There's no such thing as "short selling." If you want to invest in real estate, look at your local community and think about housing demand: Is the area population growing? Is the job base expanding? Are lots of new homes being built? Maybe start with a duplex where you can live in one unit and rent the other -- you would then be able to get owner-occupant financing.
For specifics, speak with local real estate brokers.
Question: I want to make improvements which will substantially improve my property. I will pay for these improvements with savings; that is, I won't be borrowing. Do I need 'permission' from my lender to improve my home? Can they technically prevent me from adding on to my house?
Answer: No permission is needed. Your home is security for the loan, thus the lender will be elated at anything which increases its value.
Making improvements also means you will need to increase your property insurance coverage. You should be certain that improvements are made according to local building codes and that as required work is done by licensed, bonded and insured professionals.
Question: I own a townhouse and I'm the only name on both title and loan. However, due to a few circumstances, my brother and I have decided that it's in the best interest for the both of us if I take my name off of the loan and have him assume it. What's the easiest way to do this? What are the proper procedures? The only thing I can think of is to having my brother add his name on title and then refinance under one name. Does that work?
Answer: If you change the title you have "sold" the property and there can be transfer taxes and other costs. Once title changes, the lender has the right to call the loan so the property will have to be refinanced unless the lender is willing to allow an assumption.
I'm not sure what circumstances require selling the property to your brother, however before going further please speak with a local real estate attorney to see if your needs can be met without a title transfer.
Question: I would like to know where the next emerging hot real estate market will take place in the United States or Canada.
Answer: Me too.
The marketplace is now in flux in many areas. Long-time hot spots such as Las Vegas and much of Colorado, Florida and California have cooled. The National Association of Realtors, however, has reported strong markets in Wyoming, Iowa and North Dakota during the second quarter.
However, what happened in the second quarter does not tell us what will happen in the future. We don't know what will happen tomorrow, it's all conjecture.
It might make sense to consider areas where population and job growth are strong and where new construction is limited. Such factors should suggest rising real estate values -- but, of course, no one can make any promises.
Question: What happens when a new developer steps in and wants to change the look of the homes he will be building in a gated community? He wants to change the rules, to suit him, but we the homeowners want to keep the Covenant and Restrictions we received when we bought our homes. If we vote, he wins because he owns more property and the Board (his people) votes with him. Do we have to abide by their decision?
Answer: You could look at this as a dispute regarding architectural controls, or you could argue that you purchased with the understanding that the community would have a given look and style. Contact a real estate attorney to review the advertising and promotion of the property.
Question: Our area experienced severe flooding in late summer in both 2006 and 2007. We sold our house in 2004 and the people who bought the house sent a letter this month stating they had suffered over $20,000 worth of damage in the past year from flooding. They are taking us to court for failure to disclose a sump pump which was outside the house. When we bought the house (which has an exposed lower level) my husband built a deck over the sump pump with an area in the deck which could be opened to access the pump. In the 14 years that we lived in the house we never experienced any water seepage, flooding or other type of water damage. When we sold the house we completely forgot the sump pump was there. The buyers also called us last year (after two years in the house) to say the air conditioner had gone out and they wanted us to pay for half the cost of a new one. We are wondering what our options are in this matter.
Answer: You're are certainly not responsible for acts of nature, you likely did not guarantee the air conditioner for eternity and the buyers had an opportunity to have the property examined by a home inspector. However, if you are being sued you have no option but to find an attorney to handle the matter. Once you do, I suspect the matter will go away because the buyers did not make immediate claims.
Question: My dad purchased a home five years ago from his sister; at the time my dad was 75 years old. Due to some negative credit, the bank required him to have someone co-sign on his behalf. My brother ended up co-signing for my dad so his name is on the deed as joint tenant. My dad put up the down payment, makes the monthly mortgage payment, and pays the property taxes and insurance; whereas by brother contributes nothing. At the time of purchase it was understood that my brother would only have to co-sign in order for my dad to get the loan, and therefore, would not have to contribute the paying the mortgage.
My dad is now 80 and for the last year he's been trying to get my brother to sign a quitclaim deed. My brother borrowed $25,000 five years ago and is paying interest only and my dad has even offered to forgive him the loan; however, he refuses to sign saying that since he co-signed and his name is on the deed he's entitled to half the property. He stated that his creditworthiness is worth something and had he not co-signed, my dad would not have been able to buy the home in the first place.
What recourse does my dad have and is my brother entitled to anything even though he did not contribute any monies to buying the home or the mortgage payments?
Answer: No one wins with family disputes. Your brother is right in the sense that the use of his credit standing is worth something. Your father is right in the sense that families often have friendly financial dealings that would never happen with non-relations.
Since you brother's name is on the title it cannot be removed without his approval. Perhaps there's a family member respected by both parties who can speak with each side and come up with a reasoned compromise.
Be careful to avoid extreme reactions such as having a suit for partition to force the sale of the property or a change in the father's will. Cooler heads should prevail.
Question: We are purchasing a new home and a close friend of ours has elected to forfeit her entire commission to us. Is there a way for her commission to be forfeited where she will not be taxed? I know the commission has to be reflected on the HUD statement but is there a specific way to ensure that she does not get taxed?
Answer: If she is paid she will need to declare the income, but why should she be paid? Can the purchase be structured so the sale price is discounted by a given amount and your friend is paid nothing?
However, there's another issue here: Is the friend a broker or a salesperson? If a broker she can make whatever deal she wants. If a salesperson she works under the authority of a broker and the broker must determine how the fee is to be handled.
Have a real estate question? Send your inquiry to Ask Realty Times. Because of the volume of mail received, Mr. Miller cannot respond to questions individually or privately. Published letters may be edited for space and style. For comments regarding other Realty Times articles, please contact individual authors by pressing here. For past columns, please press Ask Realty Times.
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.
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