Q: Can you tell me the proper way to set a selling price on our house? We have a builder's appraisal of $325,000 that was made in the summer of 1979. In July we had our house appraised by an independent appraiser. He valued it at $280,000.
We put the house on the market recently with a real estate broker at $310,000. This is just $7,500 over mid-way between the two appraisals. We thought this asking price would give us a little room to negotiate. Have we set an asking price in a reasonable way?
A: I think your asking price is reasonable. The rule of thumb suggests setting an asking price about 10 percent over what is considered fair market value. That gives negotiating room. Ten percent over the current appraised value of your house is $308,000. You're asking $310,000. Don't get discouraged if your house doesn't move quickly in today's tight market.
Q: I've lived at the same address for 20 years. The land behind me (about 100 feet x 100 feet) was a dump used by everyone around here. I got permission from the owner to have dirt hauled in and put up a fence to keep people out. For several years, I had a nice garden. Now the owner has given me a 15-day notice to remove the fence and get off the land. The owner won't sell to me. I would appreciate your advice.
A: You have had a license to use the land. The owner can revoke the license when he desires. Fifteen days notice of revocation is probably reasonable.
Q: I read recently in your column about investing in money-market funds on a short-term basis. I would appreciate any information you can give me on this, including the addresses of the two money-market funds you mentioned -- Rowe Price Prime Reserve Fund and Fidelity Cash Reserve Fund.
A: Money-market funds (mutual funds investing primarily in bank and other certificates of deposit -- both domestic and foreign -- and other money market instruments) are primarily useful as a temporary place to put funds while you're looking for a good longer-term investment. At this writing, they are yielding 8 or 9 percent with little risk of principal. (At the time you saw my previous column, they were yielding 13 to 14 percent.)
For more information on them write The Investment Company Institute, 1775 K St. NW, Washington 20006. For information on no-load mutual funds in general, write: No-Load Mutual Fund Association, Valley Forge, Penn. 19481.
Information you get from these two trade associations should answer most or all of the questions you may have. The address of the funds I mentioned are: Rowe Price Prime Reserve Fund, 100 East Pratt St., Baltimore 21202, and Fidelity Cash Reserves Fund, c/o FMR Service Company, P.O. Box 193, Boston 02101.