Settling Probate

Of course, home sellers should remove their valuables from the premises before an open house. If the home has valuable antiques or artwork, that residence is not a good candidate for an open house.

DEAR BOB: What is a customary deposit for a home purchase? There will be 90 days between our offer and the closing on a house worth about $280,000. -- Lee S.

DEAR LEE: There is no right or wrong answer. As a buyer, you want to make a large enough good-faith deposit to convince the seller you are a serious buyer, but you don't want to tie up more cash in the deposit than necessary.

There is no "customary deposit." Real estate agents try to get as large a deposit as possible. The theory is the larger the deposit, the lower the probability the buyer will try to cancel the purchase.

Personally, I've bought property with as low as a $100 deposit (suggested by the listing agent, by the way). Looking back, I am surprised the seller accepted my offer with such a low deposit.

At the least, $1,000 is a good start for a deposit, especially in a slow buyer's market where the seller will be thrilled to receive any purchase offer. Of course, in a competitive seller's market a higher deposit of $5,000, $10,000 or more might be necessary to convince the seller to accept your offer.

A good procedure is to make a modest deposit, but agree in the sales contract to increase it to 5 percent of the sales price upon release of the contingencies, such as the mortgage lender's appraisal and the buyer's approval of a professional inspection report.

DEAR BOB: I recently sold my house for $375,000 and paid off the $28,000 mortgage balance. The rest was mine. How much tax should I expect to pay on my profit? I originally paid $195,000 for the house and sold it after six years.

-- Gloria G.

DEAR GLORIA: The mortgage balance is irrelevant. If you owned and occupied the house as your principal residence at least 24 of the last 60 months before its sale, Internal Revenue Code 121 provides up to $250,000 tax-free profits (up to $500,000 for a qualified married couple filing a joint tax return in the year of home sale).

The $375,000 adjusted sales price, minus your $195,000 adjusted cost basis, is $180,000. That profit is well below the IRC 121 tax exemption, so it appears you will owe no capital gains tax.

DEAR BOB: Can a home builder force us to buy the home? We have reached our boiling point with our builder. The mortgage monthly payments are too high, and we decided not to purchase the home. -- Chandra K.