Q. Enclosed please find a sales agreement that I composed forthe purpose of selling real estate for other people. I am not alicensed real estate agent, but I have bought and sold numerousproperties over the past eight years, so therefore I feel I have theknowledge to handle the sale of properties for others. What do youthink about this?
A. Not much.
State laws require study, examinations, and (in most states)experience under the supervision of a broker before anyone can chargesellers for assisting in real estate transactions.
If you go through with your plan, you'll be in plenty of hotwater. In addition to violating the license law, you are bound tomake ignorant mistakes and find yourself being sued for all sorts ofblunders.
For example, what you sent me isn't a "sales agreement" at all,but rather an attempt at a listing contract. It contains a jumble oflegalese and many "whereases," also many errors. It states, forexample, that you will have no liability on sales transactions - butit happens that such a statement, no matter who signed it, wouldn'trelieve you of liability at all.
Q. I've been getting prospective buyers who ask, "would you takea second mortgage on your home?" Exactly what does this mean? Whatwould my rights be?
If, for instance, I did "take" a $20,000 second mortgage, wouldthis mean that my rights are nil and I'd have a $20,000 loss?
A. Taking back a second mortgage means accepting a promissorynote from the buyers in return for taking $20,000 off the purchaseprice. The note (or bond) is backed up by a mortgage giving you afinancial claim against the property.
If the buyers have decent credit and sufficient income (check itout beforehand), they should pay you monthly until you've collectedthe whole $20,000 with interest.
To be on the safe side, don't accept any proposal unless thebuyers put some of their own money in the property in the form of acash down payment. If they have nothing invested, it might some daybe easy for them to walk away from the place.
If buyers are assuming your first mortgage, that's one thing.But if they're obtaining a new first mortgage, beware of anyagreement that involves lying to a lending institution about theadditional borrowing agreement they have with you.
Q. I am a registered nurse with a good income. I am planning tobuy a house between $100,000-$200,000. Many people tell me that Iwill not be granted a mortgage loan because I am 56. Is it true? Iam healthy and work easily as much as I want.
A. Lenders are not allowed to discriminate on the basis of age.You'll be judged exactly like any other applicant, on your credithistory, income, assets and debts.
Your only problem might arise if you are not on salary. In thatcase, you'll be asked to furnish past income-tax returns, to provethat you have enough dependable income.
Q. My husband and I assumed an FHA mortgage six years ago. Ourreal estate agent did not tell us that we would have to pay an FHAmonthly mortgage-insurance fee. What exactly is this fee and do wehave to pay it for the life of the loan, even though we also havehazard insurance that covers the full value of our home?
We have 19 years left on a 30-year mortgage. Someone told usthat we may get a lump-sum payment from the insurance when the loanis paid off.
A. Back in 1979 when that loan was made, FHA mortgages includedan extra charge of one-half percent a year for mortgage insurance.You just pay it on whatever debt remains, every year for the life ofthe loan. (FHA loans made since September, 1983, handle the insurancecharge with a different lump-sum premium.)
FHA rates during 1979 varied from 9 1/2 percent to 10 1/2percent. Assuming that your loan was the higher figure, the rateshould have been described to you as "10 1/2 plus a half", the "half"representing the insurance premium. Often, though, agents simplyquoted "11 percent" without explaining the distinction.
Your hazard (or homeowners) insurance protects you, andindirectly your lender, against loss because of fire or similarcauses. Mortgage insurance is a different matter; it protects thelender against loss if you default on the loan.
The FHA, or rather its parent agency HUD, placed your mortgagein a pool with many others. Over the years, lenders are reimbursedfor losses with money from the mortgage-insurance premiums in thepool. When you make your final payment, if there is money left inthat pool, you may indeed qualify for a refund of unused premiums.Readers have told me they received anywhere from $600 to $1,400.
Q. I am an old girl - 85 in November - and feel it is time tomove closer to my son and his family as he is urging me to do.
I have a house that is 29 years old, and frankly it has not beenkept up to the extent I would like it to be. Younger people wouldkeep the garden in better condition.
I am thinking of selling it as is - is this a possibility?
A. Of course your house can be sold "as is." If it isn't ingood enough shape to pass inspection for a regular bank mortgage, youmay have to discount the price to find a cash buyer. Or you mayagree to hold the mortgage yourself - receiving the purchase priceover a period of years (with interest).
Call three different real estate companies that are active inyour area, and ask each to send someone to look at your home and giveyou advice. Interview all three, then put your property in the handsof the one who inspires most confidence, with whom you feel mostcomfortable.
Q. We need information on income averaging when we sell our homebecause we are not buying another and are not yet 55. We expect alarge profit.
A. Forget income averaging.
It went out with the last round of tax reform and is no longeravailable as a federal income-tax technique.
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