QDEAR BOB: Looking back, my wife and I realize we sold our home much too cheaply. We're not blaming our listing agent -- the price we set was $30,000 higher than his recommended price. But we suspect he already had a prospect for our desirable home. The buyer agreed to our asking price and included a $5,000 deposit check to seal the deal, which recently closed. But now we wonder. Suppose we had decided not to sell, sent the buyer's check back, and took our house off the market. Would we still have owed our listing agent a 6 percent sales commission, even without a sale, because he brought us a qualified buyer? -- Walker P.

ADEAR WALKER: If your listing agent brought you a full-price, all-cash, no-contingency purchase offer, which exactly met the listing terms that you refused to accept, your agent did his job of obtaining a "ready, willing and able buyer."

He would have been entitled to his full listing commission even if you rejected that purchase offer and no sale took place.

It sounds as if you and your wife contracted a serious case of seller's remorse. It often strikes home sellers who receive a full-price purchase offer shortly after listing their home for sale.

To prevent seller's remorse from striking, before listing with an agent you should have interviewed at least three successful realty agents who sell homes in the vicinity of your home.

Each agent would be glad to give you his/her listing presentation, including a recommended asking price based on a competitive market analysis. Each analysis includes recent sales prices of similar homes, asking prices of neighborhood homes listed for sale (your competition), and asking prices of recently expired comparable listings, which are often overpriced.

Talking with at least three local agents, and reviewing their proposals, would help you feel confident you set the correct asking price.

DEAR BOB: I recently saw a legal newspaper ad for a foreclosure sale. The mortgage company minimum bid seems reasonable, but I don't have that much cash without getting a mortgage. Is cash required to bid at a foreclosure sale? -- Cheryl L.

DEAR CHERYL: In most states, bidders at foreclosure sales must have cash, usually in cashier's checks. A few states allow the successful bidder to produce the cash within 24 hours to 30 days, depending on state law. A phone call to the foreclosing lender will produce an exact answer. However, bidding at foreclosure sales can be tricky. For example, that legal notice you read might be a foreclosure sale on a second or even a third mortgage. If you are the successful high bidder, you purchase title "subject to" any senior mortgages and unpaid property taxes.

DEAR BOB: I am buying a house in a state that uses title abstracts. Title insurance is offered, but it is quite expensive. Should I feel safe with a title abstract? -- Bertha B.

DEAR BERTHA: A title abstract is a summary or history of the title status for the property you are buying. Title abstracts can be fascinating reading, especially if you are buying a historical property. But there is no guaranty of accuracy.

Without an owner's title insurance policy, if the abstractor made a mistake, you might face a substantial title loss. Your best assurance of receiving marketable title is to obtain an owner's title insurance policy, which protects you and even your heirs.

DEAR BOB: I greatly enjoy your articles, especially the recent one about stepped-up basis for inherited property. But sometimes I don't understand all the details. Will I have to sell my home in the year of my wife's death? We paid $75,000 for it and it is now worth $400,000. I know my exemption is $250,000. But what is my new stepped-up basis? -- Emil S.

DEAR EMIL: There's no reason for you to rush to sell your home in 2004 if that is the year of your wife's death.

However, if you sell in the year of her death, you will be entitled to a tax exemption up to $500,000 under Internal Revenue Code 121. That's presuming both of you occupied it as your principal residence at least two of the last five years before its sale.

Presuming you inherited your wife's half of the house, your new stepped-up basis on that half will be $200,000. Add your $37,500 half of the original basis so your new total stepped-up basis is $237,500. If the house sells for around $400,000 net, your $250,000 exemption means you will owe no capital gain tax.

If a home is in a community property state of Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, the surviving spouse's new basis is usually stepped up to 100 percent of market value on the date of the deceased spouse's death. Consult a tax adviser for details.

DEAR BOB: My wife and I are having a new home built, which will be ready for move-in about Sept. 1. We have received a lot of good-faith estimates of closing costs from different mortgage companies over the Internet. Which ones can we trust? -- Clint B.

DEAR CLINT: A mortgage lender's "good-faith estimate" isn't worth the paper it's written on. There is no enforcement penalty even for blatant lies. Dishonest mortgage lenders know this, so they often lie to get your business.

For example, a few weeks ago I was interviewed by a San Francisco radio station. A caller from Sacramento received a mortgage broker's good-faith estimate of $4,000 closing costs. But at the actual closing, he was confronted with more than $10,000 of mortgage fees and closing expenses. The borrower then had no viable choice but to take the mortgage with its inflated costs or lose the property.

Personal recommendations of friends and business associates are best for finding honest mortgage lenders. Be wary of Internet-based lenders, especially if they are not in your state.

DEAR BOB: One of the older homes in my neighborhood is on three lots. A developer recently bought that property. He plans to tear down the house and build three new homes, which will substantially block my view. What can I do? -- Linda J.

DEAR LINDA: Unless you have bought a view easement, often called a light and air easement, over that property, your view is not protected. The developer can build the new houses as tall as allowed by local zoning even if they block your view. Consult a lawyer for details.

DEAR BOB: I am a member of a sportsman's club. For more than 50 years, we have been using about 80 feet of an old abandoned streetcar line to get to our property. The property is now owned by a major railroad. Can we claim this access to our property by a prescriptive easement, which you often discuss? -- Bobby B.

DEAR BOBBY: No. Obtaining a prescriptive easement or title by adverse possession is generally not available against government agencies, public utilities and railroads.

However, your letter says this is an abandoned streetcar right of way, now owned by a railroad. There are special federal and state laws affecting abandoned railroad rights of way which, in some situations, revert to the adjoining landowners. Or your club might be entitled to an easement by necessity if its property is landlocked.

I suggest your club contact the railroad to see if the parcel can be purchased at a fair price. A good friend of mine has acquired substantial abandoned railroad land at nominal cost. Your group might be able to do the same.

DEAR BOB: When a person loses his home at a foreclosure sale by the lender, what happens to the profit if a property sells for several times more than is owed? Does the excess money go to the lender or the borrower? In my situation, the mortgage company received approximately $240,000 net when it put the house on the market for sale. -- Cathy L.

DEAR CATHY: At the lender's foreclosure sale, any bid amount exceeding the balance due on the mortgage or deed of trust being foreclosed goes first to junior lienholders, such as a second mortgage lender, and then to the property owner who lost the property.

However, if no bidders showed up at the foreclosure sale, the foreclosing lender acquired the title. Most mortgage lenders usually then sell the property for close to fair market value and are entitled to keep the entire net proceeds.

DEAR BOB: I, along with a large number of fellow senior citizens, live in a condo complex of 192 units. Our problem is that due to the high number of rentals, 98 to be exact, we seniors are unable to obtain reverse mortgages, which many of us had counted on to help with our finances. Most of us have no mortgages. What can we do? -- Carolyn B.

DEAR CAROLYN: Most mortgage lenders refuse to make loans in condo complexes with more than 20 percent to 30 percent rentals. The primary reason is the foreclosure rate is much higher in condo complexes with a large number of absentee owners.

I am shocked that you and your fellow condo owners allowed the situation to get out of control, with more than 50 percent rentals. Don't owner-occupants want to live in your condo complex? What is so wrong that it doesn't appeal to owner-occupants?

If you wanted to sell your condo, you would have great difficulty unless you could find a cash buyer. Although some mortgage lenders will still make loans in your complex, they will charge more due to their high risk.

Don't blame the reverse mortgage lenders for not approving reverse mortgages in your high-risk complex. They are just being prudent.

You and your fellow owner-occupants should meet with the condo board of directors to reduce the percentage of renters to no more than 20 percent. You'll probably need to consult a lawyer familiar with condo law to determine what can be done to restrict future rentals.

DEAR BOB: Last year I sold my strip-mall plaza, which was on two lots. I never spoke to the buyer, who had a buyer's broker, nor to the lawyer who was handling the sale for him. After the sale, the buyer's real estate broker contacted me about selling my vacant lot next to the shopping center. I was planning to put a storage business there, but when the buyer saw the broker's for-sale sign on the lot, he contacted the broker and lawyer. He told them he thought he also bought the vacant lot. The buyer's agent and his lawyer showed him that none of the closing papers included the vacant lot. Then he sued his lawyer and his realty broker. He also named me as a defendant. I sent the summons and complaint to my insurance company, as well as the buyer's insurance company, which also insures me because I carried back a mortgage for the buyer. They refused to defend me. Who is responsible to defend me? Can I counter-claim for damages for this frivolous lawsuit? -- Lawrence S.

DEAR LAWRENCE: Neither your former insurance company nor the buyer's insurance company has a duty to defend you. You should hire your own lawyer. After you win the lawsuit, or are dismissed by the court as a defendant, then you can sue that nasty buyer for malicious prosecution damages. But you first must win the case.

DEAR BOB: About 10 years ago, my husband and I took out a living trust before we moved to Chicago. Now we have moved to California. I worry that we never had anyone check our living trust for the last 10 years. My daughter, who is our successor trustee, has had health problems. I am 95 years old and need help to do the correct things legally. What should we do?

-- Lorel B.

DEAR LOREL: You need to consult an estate-planning lawyer to update your living trust and be certain all your major assets are included so probate costs and delays can be avoided.

A major mistake many living trust owners make is they fail to transfer title to their real estate into their living trusts. For example, the title to your house or condo should be held in your living trust. If it isn't, it will be subject to probate costs and delays, unless exempt.

DEAR BOB: What recourse do I have against my new mortgage loan servicer who failed to pay my homeowner's insurance on time from my escrow account funds? When my loan servicing was transferred, I contacted the new loan servicer to be certain my insurance would be paid on time out of my escrow account. After numerous requests by my insurance agent and myself, the new loan servicer eventually paid, but only after my insurance was canceled and had to be reinstated. I am furious. As a homeowner, what recourse do I have against my new loan servicer? -- Roseanne S.

DEAR ROSEANNE: I don't blame you for being upset. There is no valid excuse for a mortgage loan servicer ever failing to pay property taxes or insurance premiums on time from the borrower's escrow account.

Unfortunately, there is no practical recourse against the loan servicer. You didn't suffer any monetary damages, so taking the loan servicer to small-claims court isn't an option.

However, keep a sharp eye on your wayward loan servicer. Some loan servicers fail to pay the property taxes on time and then have the nerve to charge the borrower's escrow account for the late fee imposed by the local tax collector.

DEAR BOB: What is the truth about the high costs of selling one's property? As I see it, here are some of the costs I will encounter: 6 percent realty agent sales commission, 15 percent federal capital gains tax, 9 percent state income tax, county transfer fee, fire inspection fee, structural inspection fee and title insurance costs. I figure it will cost me about 40 percent to sell my property. -- Paul R.

DEAR PAUL: If the property you are selling is your principal residence, and if you owned and lived in it an aggregate two of the five years before its sale, you are entitled to a tax exemption on up to $250,000 of the capital gains. If you're married filing jointly, you can qualify for up to $500,000 tax-free home-sale profits by using Internal Revenue Code 121.

The other costs you list are usually quite minimal. Some of the costs you listed can be shifted to the buyer. For cost of selling details, consult a real estate agent, who will calculate an exact "net funds to seller" statement for you.

DEAR BOB: I read your item about biweekly mortgage payments. You said a $300 biweekly mortgage setup fee is a scam. My husband and I set up our biweekly mortgage through our lender. We have been paying for about two years now. Is it too late to back out of this? Or should we continue? -- Sheila C.

DEAR SHEILA: I'm sorry you paid your mortgage lender $300 to set up a biweekly mortgage when you could have achieved your objective yourself at no cost. Worse, I'll bet you are wasting $5 or $6 per month service fees for the privilege of having biweekly mortgage payments electronically deducted from your checking or savings account.

A biweekly mortgage, with half of your regular monthly mortgage payment taken electronically from your checking or savings account every two weeks, should pay off your home loan in about 22 years. The result will be saving thousands of interest dollars.

But any homeowner can achieve the same result without extra cost. A biweekly mortgage is the equivalent of 13 monthly mortgage payments every 12 months.

Just divide your monthly mortgage principal and interest payment by 12. Then add that amount to each monthly payment, clearly marked as extra principal payment.

At this point, if you want to save the $5 or $6 monthly service fee, you can cancel your biweekly mortgage plan.

DEAR BOB: We want to sell our rental house and build a house at the back of our adult children's property. This would not be a lot split, so the ground will remain in their names. However, the house will be ours to rent out until such time as we want to move into it ourselves. Will this qualify for an Internal Revenue Code 1031 tax-deferred exchange?

-- Rachel H.

DEAR RACHEL: The situation you describe will not qualify for an Internal Revenue Code 1031 tax-deferred exchange.

The reason it is not eligible is that you won't be purchasing a qualifying property of equal or greater cost and equity held for investment or use in a trade or business with the sales proceeds from the rental house.

Building a rental house on non-owned property just won't qualify.

DEAR BOB: I've been told that some property liens "evaporate" over time. Is this true? -- Albert B.

DEAR ALBERT: The answer depends on the type of lien. For example, in California a recorded judgment lien expires after 10 years if it is not renewed by the judgment creditor for an additional 10 years. Then, it expires.

But most liens affecting real property never go away. Property taxes always affect a property until either paid or the tax collector holds a tax sale for the unpaid property taxes.

DEAR BOB: Our elderly parents own their home free and clear. They do not have it in a trust, but they seem to think having their home mentioned in their wills is enough to avoid probate costs and delays. Is this correct? -- Merle D.

DEAR MERLE: Unless your parents leave a small estate that is exempt from probate proceedings, their assets, which are subject to their wills, are usually subject to probate court costs and delays. Some estates linger for years in probate court. Even simple probates can take six months to a year, often longer.

The best alternative is for your parents to create a revocable living trust and then deed the title to their home and other major assets into their living trust, which will avoid probate.

Also, if one or both parents become incapacitated, such as with a severe stroke or Alzheimer's disease, the other co-trustee or an alternate trustee can manage the trust assets.

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

{copy} 2004, Inman News Service