DEAR BOB: With great interest I read your recent explanation of the 1980 Installment Sales Act. You said that the old 30 percent maximum down payment was abolished. But you didn't say what the minimum installment sale down payment is. Please explain further. Also, would this law apply to our home sale closed on Aug. 12, 1980, where we carried back a second mortgage? Mrs. T. P., Falls Church.
DEAR MRS. T. P.: There is now no minimum or maximum down payment required for installment sales tax deferral. All deferred payment sales closed after Jan. 1, 1980, can qualify regardless of the down payment amount.
Your tax adviser can explain further. Or send for my new report "How the New Installment Sales Law Can Increase Your Realty Profits." To obtain your copy send a $2 check payable to "Newspaperbooks" for Report 81101 to The Washington Post, P. O. Box 259, Norwood, N.J. 07648.
DEAR BOB: Our home has been listed for sale for more than two months. The agent suggests that we drop our asking price by $5,000. He says home prices aren't as high as they were. Does this mean that homes are losing value? I ask because I own other properties and wonder if I should sell them. Jane McG., Fairfax.
DEAR JANE: Your agent is misleading you. The market values of homes in most communities are not dropping. But asking prices are dropping because buyers won't pay outrageously high prices and high mortgage interest rates.
Homes realistically priced at their market value, with seller financing, are "affordable."
If a home doesn't sell today, it is usually because: (1) the asking price is far above market value or (2) the seller demands a big cash down payment and refuses to help finance the buyer's purchase.
Market values of homes are not dropping and are not expected to drop. There is a huge buyer demand for affordable houses in most communities. Sellers who satisfy this demand have no trouble selling. Don't be misled by statistics showing a declining median home-sales price; this simply means that the cheaper homes are selling and the overpriced ones aren't. s
DEAR BOB: Since January we have been trying to find a home to buy which we can afford. We have up to $9,000 for the down payment. Several realty agents say this is sufficient, but it's the monthly payments we can't afford. The high mortgage interest rates make home owning seem like a distant dream. Yet we can't stay in our apartment either because we're expecting our second child in June. Any ideas? Linda S., Arlington.
DEAR LINDA: You didn't give your family income or the price range of homes you're looking at, but let me show you how smart real estate investors buy today. Forget traditional home-buying methods. Think creatively.
First, work with a realty agent who understands innovative finance ideas. But be prepared to stretch your budget. You can probably afford to spend up to 33 percent of your monthly family income on housing expenses.
Second, limit your home search to homes for sale with reasonable interest rate assumable mortgages and seller financing. Forget about getting a new mortgage. Even wealthy people avoid new home loans at today's high interest rates.
Third, structure the terms of the seller financing, such as a second mortgage, to fit your budget.
To illustrate, suppose you buy a $90,000 home with $9,000 down payment. Perhaps it has an existing $50,000 assumable VA or FHA mortgage at 9 percent interest. The $31,000 finance gap can be filled with a five-year second mortgage to the seller at a reasonable interest rate.
If you can't afford the full payments on the second mortgage, provide in your offer for no or partial payments, the remainder to be added to the principal, all due in five years. Motivated sellers who don't need big monthly payments will accept such an offer. When the five-year balloon payment comes due, you then can probably either refinance or get a new second mortgage to pay off the old one.
DEAR BOB: We have decided to sell our home. A nearby realty agent wants the listing. Her firm has been business 15 years but I never see any newspaper advertising or for-sale signs of the firm around town. Do you think I should list with her? Robert C., Washington.
DEAR ROBERT: Today it is vital to select the right agent to get your home sold. This is a very slow, difficult buyer's market that requires the services of a top agent.
Invite at least three local realty agents to give you their listing presentation. It should include a written "competitive market analysis" showing your home's market value based on recent sales prices of similar nearby homes. Disregard any agent who doesn't prepare such an analysis.
Ask lots of questions. Inquire about each agent's commission rate, services offered and client references of previous sellers. If the agent hasn't sold any homes in the past few months, drop that agent from consideration. Before listing, phone the client references to see if those sellers would list with the same agent again. Then select the best agent to get your 90-day listing.