Cutting Back on Home Sales Commissions

DEAR KELLIE: To get your ex-husband's name off the title to real estate, he must sign a quitclaim deed to you. If he refuses to do so, his name remains on the title.

The title company can't do anything without his properly notarized quitclaim deed. Your divorce attorney should have insisted on receiving this important document as part of the divorce proceedings.

DEAR BOB: I live in an 80-year-old house that I have owned for 11 years. While trying to determine why a patch of my lawn was dying, I discovered the home's original underground heating-oil tank. This was not disclosed to me when I bought the house. As best I can determine, the tank has not been used for 35 years. It is empty. I estimate it to be 700 gallons. Should this have been disclosed to me? -- Gary J.

DEAR GARY: If your seller knew of the underground oil storage tank, he or she should have disclosed it to you. However, because you have owned the house 11 years, the statute of limitations expired long ago.

But I doubt that is the cause of the brown patch in your lawn. If there were any oil in the leaking tank, it would seep downward, not upward. Perhaps the soil above the tank was contaminated when the tank was being filled. Maybe simply replacing the soil above the tank will solve the lawn problem.

DEAR BOB: Is it true that when someone inherits real estate -- and it was the deceased's primary residence -- the mortgage will be wiped out at the time of death and the property title passes free and clear of all liens? I heard that if the property was not the deceased's principal residence, then the heir has to pay the debts. -- Rick S.

DEAR RICK: Dream on, my friend! When you inherit real estate, you receive title subject to all existing recorded liens and encumbrances against the property.

That means if you inherit a house that has a first mortgage, a home-equity loan, a mechanics' lien and unpaid property taxes, you must pay all those obligations according to their terms or lose the property by foreclosure or forfeiture.

Real estate inheritances can be wonderful if there is plenty of equity (the difference between the total amount owed and the fair market value of the property). However, if there is little or no equity in the inherited property, you might want to decline that inheritance.

DEAR BOB: We live in a historic set of eight rowhouses next to each other. The rowhouse next door was purchased by a real estate agent who told the seller and the neighbors that he planned to live in the house and rent the back unit (as the previous owner did). Instead, he did not move in. He put seven college students in the house, let the property deteriorate, allowed the gutters to fall off and created an eyesore. He refuses to respond to our phone calls, nor will his real estate brokerage manager reply. What can we do? -- Barrett B.

DEAR BARRETT: The situation you describe is legally a "private nuisance" because it affects a small number of adjoining property owners. If necessary, you and your neighbors can bring a legal action to abate the nuisance.

However, since you've tried being nice, it's time to contact the city code enforcement officer to learn if any ordinances are being violated. Often, a city warning letter will accomplish amazing results. For more details, consult a local real estate lawyer.

DEAR BOB: I need to get an appraisal to prove that my loan-to-value ratio is less than 80 percent so my private mortgage insurance premium can be canceled. I called my mortgage lender, who is affiliated with an appraiser who charges $300. I phoned an appraiser in the yellow pages who wants $325. But I heard that some real estate agents, who are also certified licensed appraisers, would charge less because this is a one-bedroom condominium unit. I don't think I need to spend $300 to remove an expense my lender has been taking from me for the past five years. I have never been late with payments. Is there a less expensive alternative? -- John M.

DEAR JOHN: Don't be a cheapskate. You didn't say how much your monthly PMI premium is, but let's say it is $50. If you pay $300 for a professional appraisal to prove to the lender that you have at least 20 percent equity, you will earn back that $300 from just six months of PMI premium savings.

DEAR BOB: I recently applied online for a home-equity loan, and I realized I was about to become a victim of the lender. The lender wants to charge me a loan origination fee, an appraisal fee, a credit report fee, a processing fee, an underwriting fee, flood certification, a funding fee, $100 escrow settlement fee, $150 title fee, $15 courier fee, $15 wire fee, $75 recording fee, $80 intangible tax, and $235 mortgage tax. What is your evaluation of these charges for a home-equity loan? -- Marydelle P.

DEAR MARYDELLE: Most of those are unnecessary junk fees you should not pay. Virtually every local bank and credit union will eagerly make you a home-equity loan or extend a home-equity credit line without any junk fees if you have a FICO score of 700 or higher. I have obtained many home-equity credit lines over the years from major lenders, such as Chase and Wells Fargo, without paying upfront junk fees such as those you list. The only legitimate home-equity-loan fees on your list are the local mortgage tax, the intangible tax (whatever that is) and the recording fee. The other charges you list should be absorbed or paid by the home-equity lender if it wants your business.

DEAR BOB: I have been an independent mortgage broker for more than 20 years. My business comes from satisfied former borrowers and real estate agents who know I will treat their home buyers right. If I can't arrange a mortgage, I tell the prospect quickly and we part as friends. Often, I know of "secret lenders" who will make mortgage loans not available elsewhere. However, I always reveal the borrower's costs upfront, never imposing any last-minute junk or garbage fees, as some of my dishonest competitors do. Congratulations for exposing those fees, which few others write about. -- Jonathan C.

DEAR JONATHAN: I wish your mortgage brokerage services were available in every city. Why don't you open a nationwide franchise chain, Honest Mortgage Brokerage? It is refreshing to hear from a broker who doesn't trick borrowers at the last minute, when they are most vulnerable.

I frequently recommend experienced mortgage brokers like you who can often arrange "impossible" mortgages for home buyers with unique situations. As long as the fees are disclosed upfront, borrowers can decide whether they want to pay the expenses. What especially irritates borrowers is when their loan charges are far higher than were disclosed on their so-called good faith estimate, which we both know is a joke because there is no enforcement.

DEAR BOB: Thank you for your article some time ago about real estate sales commissions. The home sales market in our town has been slow since January. Our listing agent, a trusted family friend, warned us that sales were slow, so we listed with an asking price about $5,000 below market value. That didn't work.

After two months, she suggested raising our sales commission to 7 percent, with 4 percent going to the selling agent. It worked! Within a week, we had two purchase offers. We accepted the best one and took the other as a backup offer. Our home sale recently closed. Although we paid a higher-than-normal commission, we got an all-cash sale for almost our full asking price. Thanks for that great advice to raise the sales commission. -- Durk H.

DEAR DURK: In your situation, it was more important to get your home sold than to net the highest possible price. Not all home sellers are so motivated. Some home sellers prefer to cut the sales commission by 1 or 2 percent and wait to get their homes sold. Obviously, selling your home was more important than squeezing the last dollar from the sale.

Readers with questions should write Robert J. Bruss at 251 Park Rd., Burlingame, Calif. 94010, or contact him via his Web page, http://www.bobbruss.com.

Copyright 2007, Inman News Service