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Question: We are purchasing a home. An offer has been negotiated and accepted. Earnest money has been paid. Friday was the home inspection which passed except for the need to replace the roof.
Problem #1: Sign posted "Open House" on Sunday, no where did it say "Sale Pending."
Problem #2: Seller"s agent has Sunday"s paper advertising open house.
We are furious! We confronted the Seller"s Agent during the open house and she says her clients insisted they advertise and show the open house, and she was telling everyone that a sale was pending, she then agreed to close the open house. We specifically asked that there would be no open house when we saw the sign Friday and this was not honored. Where are the ethics in this situation? What are the ramifications to the sellers, the seller"s agent, and ourselves as the buyers?
Answer: You have made an offer on a home which has been accepted. If the transaction goes to closing you will be the new owners. Until closing, you are NOT the owners.
Prior to closing, the property does not belong to you and you have no right to discourage a barbecue in the backyard, a party in the basement -- or an open house.
The sellers remain the owners. It is possible that because of an unmet contingency (say interest below a given rate) your contract will fall through prior to closing -- it happens even when both parties act in good faith. Thus the sellers have a right to hold open houses and seek back-up agreements -- but the owner and broker are obligated to explain that there is an existing offer on the property and that only back-up offers can be accepted.
Question: We have listed our house with a local realty office for six months. It has only been about a month, but we have decided we don"t want to sell now. Can we just notify the agent we no longer want to sell? What are the consequences? Will we owe anything?
Answer: To start, you need to look at the precise terms of your listing agreement. Does it have an early termination provision? If yes, what are your obligations? Also, have you received any offers to this point which meet all terms of the listing agreement?
If there is no termination provision and no offer meeting all listing terms, then the right thing to do is to sit down with the salesperson and the broker and discuss your changes. It may be that money has been spent on advertising, entering the property into the MLS, the general use of the broker"s facilities and systems, etc. Thus the best approach is to ask for an estimate of such costs and then offer to cover them.
Real estate is a community-based business and word-of-mouth is an important marketing tool. For these reasons, most brokers would prefer to resolve matters such as you describe quickly, reasonably and fairly.
Question: My wife and I have accumulated a half dozen rental properties over the years. We exchanged into them with enough down (20% or more) and financed them with interest-only loans so that they produce positive cash flows. Price increases in our area have added to our equity position. We wonder if we should systematically replace these conventional loans with lines of credit. The idea being that even if we initially pay a higher interest rate for a LOC on an income property, we would increase our cash flow with each payment.
Answer: Rather than a "line of credit" -- something difficult to find for U.S. investment properties -- why not an ARM? There would be a low "start" rate and monthly amortization would mean less debt over time. The downside is that interest rates can rise with adjustable-rate mortgages, thus increasing monthly costs.
In particular, see if an ARM that uses the 11th District Cost of Fund Index is available. This index tends to lag behind other measures, meaning ups and downs usually take longer and are more moderate than other indexes.
Alternatively, fixed-rate loans would give you predictable payments and amortization -- not a bad choice if you anticipate rising rental rates and higher interest levels.
Question: I rent a mobile home and share with four children. My situation is a little cramped. My budget is no better. So just out of curiosity is there anything I can do to get started?
Answer: There will be about 2 million homes sold this year to first-time purchasers, so your situation in not unique. Your first step is to find a real estate broker you like and discuss which financing programs might best serve your needs. The broker can suggest local lenders who can review your income, debts, credit standing, etc. and suggest loan programs. Be sure to ask about FHA, VA, and state-backed financing programs as well as loans with private mortgage insurance (MI).
Have a real estate question? Send your inquiry to
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