QDEAR BOB: Suppose a prospective home buyer makes a full-price, all-cash purchase offer. Does the seller have to accept? I ask because a friend recently made such an offer and was told by the listing agent the seller wants more than the asking price. Is this legal? -- Chuck D.

ADEAR CHUCK: Unfortunately for your friend, a home seller does not have to accept a full-price, all-cash, no-contingency purchase offer even at the full asking price specified in the local multiple listing service.

The reason is that the listing is a contract between the home seller and the listing real estate agent. A prospective buyer is not a party to that contract and cannot enforce it.

However, if a buyer makes a full-price, all-cash, no-contingency purchase offer that the seller rejects, the listing agent is then usually entitled to a full sales commission although no sale takes place. Most listing agents won't sue a seller, however, because word spreads fast in the realty agent community and goodwill is very important.

When a home seller rejects a full-price purchase offer, the asking price might have been intentionally set low by the seller and agent to create a "buyer frenzy" and obtain a sales price above the asking price. In a hot seller's market, it is not unusual for a home to sell well above its low asking price.

Although I think it is dishonest to mislead prospective buyers by setting a low asking price, it is legal to do so and it does not violate the ethical code of the National Association of Realtors. Listing agents who use this sales technique say they are just trying to get their home sellers the highest sales price.

DEAR BOB: What is the difference between a real estate agent's "market analysis" and an "appraisal"? Which is more accurate? Which should I use when selling my two-family rental property? I have no idea of its market value? -- Allison M.

DEAR ALLISON: A real estate agent's comparative market analysis is the agent's opinion of a property's market value based on recent sales prices of comparable nearby properties. The analysis shows recent sales prices of similar properties, asking prices of nearby properties currently listed for sale (the competition), and recently expired comparable listings.

An appraisal is a formal detailed document prepared by a state-licensed appraiser, showing the estimated current market value of a property based on recently closed sales, usually within the last six months.

An agent's analysis and an appraisal both adjust for the pros and cons of the subject property, compared with the recent comparable sales prices.

Which is better? A savvy local realty agent knows market sales price trends, up or down, whereas an appraiser provides an expert market-value opinion based on recent closed sales.

I suggest interviewing at least three successful local realty agents who are interested in listing your two-family rental property for sale. Compare their analysis reports. Ask lots of questions. Before listing (for not more than 90 days), check each agent's references with recent sellers. Then list your property for sale with the best agent.

DEAR BOB: In a few years, my husband and I will retire, sell our primary residence and claim that $500,000 principal residence capital gains tax exemption you often discuss. Then we plan to move full time to a rental property we now own in Florida. Next, we hope to do a lot of traveling, primarily in Europe. After using the Florida home as our primary residence for 24 months, we intend to sell it. How much of the time during the 24 months must we be present in the Florida house to again use the $500,000 principal residence tax break? Suppose we spend two months at a time traveling; will that be deducted from the 24-month period? -- Jane W.

DEAR JANE: It sounds as if you have a good plan. Vacation time is not deducted from the required 24 out of the last 60 months before principal residence sale requirement of Internal Revenue Code 121.

However, if you rent your home while you are on "vacation" for two months, you can't count that rental period as principal-residence occupancy time. Or if you live in Europe for a year, that won't count toward the 24-month principal-residence test either. Keep careful records, especially Florida utility bills, voting registration, auto licenses, bank records and other residency indications.

DEAR BOB: A little more than a year ago we bought a golf rental condo, which we recently sold at a profit exceeding $100,000. What is the best way to avoid paying tax on our sale profit? I thought of buying a motor home and renting it until I retire next year. Will this reduce our tax? -- Allan S.

DEAR ALLAN: Dream on! You already sold the rental condo. The only way to defer tax on the sale of a rental property is to make a tax-deferred Internal Revenue Code 1031 exchange for another rental property of equal or greater cost and equity.

It's too late for you to avoid tax on your handsome $100,000 condo sale profit in just 12 months. Be happy the federal capital gain maximum capital gain tax rate is only 15 percent, plus any state tax.

DEAR BOB: A friend of mine is preparing to sell a house that belonged to his late mother. From reading your column, I know he benefits from the stepped-up basis to market value on the date of her death. However, there is a relative who lives in the basement of the house without paying any rent. Until that resident moves out, my friend won't be able to sell the inherited house. How much time must he give the resident to move? Is there any concern about his obtaining title by adverse possession? -- Jason S.

DEAR JASON: There is no need to worry about the guest resident gaining title by adverse possession because the occupancy was permissive, not hostile. Also, the resident didn't pay the property taxes.

Your friend should have a polite conversation with the resident to give him time to find another place to live. Just to make things official, a written notice to move in 60 (or even 90) days should be handed to the resident. A local real estate lawyer can provide further details.

DEAR BOB: Our listing agent allowed us to hold an open house last Sunday. We printed fliers and showed the home all day. We received a purchase offer and negotiated the price with the buyer. The offer is good, and we accepted. I asked my listing agent for a "finder's fee" for obtaining the purchase offer. He refused. Was I operating as a surrogate agent on my agent's behalf, and am I entitled to a reduced commission or a finder's fee? -- Mike B.

DEAR MIKE: If you have a listing contract with your agent -- presumably a discount agent if you had to hold your own open house -- that agent is entitled to the full sales commission specified in the listing contract.

Unless you hold a real estate license, you were not a "surrogate agent" (called a "sub-agent" in real estate talk).

Because you did all the work of holding the open house and negotiating the sales contract, it's up to you to negotiate any reduction off the listing agent's sales commission. No, you cannot claim a finder's fee for locating a buyer on your listed property.

DEAR BOB: About a year ago, we refinanced with an adjustable-rate mortgage. We have been enjoying a very low interest rate, around 4.5 percent. But our mortgage broker phoned last week to tell us she thinks it's time we refinance into a fixed rate mortgage at 5.5 percent interest with no fees. Our current mortgage has no prepayment penalty. Do you think we should do so? -- Patricia Y.

DEAR PATRICIA: Yes. You have a very good mortgage broker who is looking out for you. Also, she will earn a nice fee for refinancing your mortgage.

Although mortgage interest rates have been rising very slowly, the interest rate trend is definitely not down. If you plan to stay in your home at least five years, refinancing now to a fixed-rate mortgage appears to be a very smart decision.

DEAR BOB: I have an adjustable-rate mortgage. The payment is due on the 15th day of each month. If I make my payment by the fifth of the month, will I be saving money because the interest calculation for the following month will be at a lower principal amount? Does it make a difference or should I let my money sit in my bank and earn whatever interest they pay? -- Diego M.

DEAR DIEGO: If you have an amortized mortgage with the monthly payment due on the first day of each month, but with a 15-day grace period, there is no advantage paying before the 15th of each month. But never be late.

If your payment is received on the 16th day of the month, the late charge applies. At today's ultra-low bank interest rates, it makes no sense to wait until the 15th day to make your mortgage payment.

However, if you have a "simple interest mortgage" where interest is computed on a daily basis, then it pays to make your payment on or before the due date, such as the first day of the month.

The reason is a simple-interest mortgage lender charges interest on a daily basis, so the earlier you pay, the more interest you save. Simple-interest loans are usually home equity loans, mobile home loans and auto loans.

DEAR BOB: I just got divorced. My ex-husband got the house. He wants me to remove my name from the deed. I agreed, as soon as he removes my name from the mortgage. He says he can remove my name from the title without my signing anything. Can he? I don't want to be responsible for the mortgage if my name is not on the title. We are not on good terms. He will try anything to spite me. The divorce decree did not say he has to refinance to get my name off the mortgage. -- Cheryl S.

DEAR CHERYL: Your ex-husband cannot remove your name from the home's title. Only you can do that by signing and recording a quit claim deed to your ex-husband.

However, only the mortgage lender can remove your name from the mortgage obligation that you signed. Most mortgage lenders refuse to do so. If your ex-husband doesn't pay the mortgage on time, your credit will be hurt.

The only practical way to get your name off the mortgage is for your divorce lawyer to insist, as part of the divorce settlement, that your ex-husband refinance the mortgage in his name alone.

DEAR BOB: I inherited a house worth $200,000. Then I rented it to tenants. It is now worth around $500,000. I want to sell it, spend about $300,000 from the sales proceeds to acquire another rental property, and pocket the remaining $200,000 cash. How much will be tax-free? -- Byron A.

DEAR BYRON: You can make an Internal Revenue Code 1031 tax-deferred exchange using the $300,000 you wish to reinvest in another rental or investment property. However, you will owe capital gain tax on the $200,000 cash you plan to take out of the exchange.

DEAR BOB: My mother, 86, owns a large home. When she passes on, her living trust specifies that the house is to go to my two sisters and me. My wife and I would like to then buy it from my sisters. What would be the best way to finance this type of purchase? Also, will we receive a stepped-up basis although our mother holds title in her living trust? Finally, will the property tax be reassessed? -- Jerry VonB.

DEAR JERRY: I'm glad to learn your wise mother holds title to her home in her living trust. When she passes on, probate court costs and delays will be avoided.

Although title is held in a living trust, the heirs will still be entitled to a new stepped-up basis of market value on the date of your mother's death. A living trust is just a title-holding method. It has no effect on tax status.

After you and your sisters receive title under the terms of the living trust, then it is up to you to negotiate with your sisters to buy out their two-thirds interest in the house. The easiest way for you to finance this purchase would be to obtain a new mortgage for 66 percent of the home's market value.

As for your property-tax reassessment question, please consult your local tax assessor for full details.

DEAR BOB: We are considering buying a new house that a developer plans to build. There will be two-family duplexes on both sides, and across the street. How will the market value of our single-family house be affected by these duplexes? -- Pam H.

DEAR PAM: There is no advantage to owning a single-family house surrounded by two-family duplexes, which will probably be occupied by lots of renters.

Nobody can predict if such a single-family house will appreciate at the same rate as houses located in single-family neighborhoods. Being located next to renters is never an advantage.

Incidentally, I recently had lunch with a real estate broker who told me he and his wife recently bought a "two-family villa" in Florida. When I inquired further, he said it looks just like a two-family duplex. But those savvy Florida marketers call them "villas."

DEAR BOB: Please help with my sticky situation. When my husband died, I received a life estate in his house. After I die or permanently move out, his 28-year-old, unemployed, playboy son (from my late husband's first marriage) gets the house. I would like to fix up the house, but I am reluctant to do so because the son will benefit more than I will. The son and I get along, but we're not close. A friend told me I should offer him cash for a quit claim deed to the house. Would this be wise? -- Joyce V.

DEAR JOYCE: Yes. The remainderman can give up his interest to you by means of a quit claim deed. After you record that deed, then you will own the entire fee simple absolute. Only at that time would it make financial sense for you to fix up the house. Be sure you obtain an owner's title insurance policy so there are no surprises.

DEAR BOB: I am a five-year resident of my condo complex. My father-in-law holds the title to my condo. I have been attending the board meetings, questioning the budget and working to reduce expenses. To become a member of the board, I collected a majority of signatures for an amendment allowing resident non-owners with approval of the owners to serve on the board. The board unanimously appointed me the secretary. But when I reviewed our documents and budget, I found gross negligence, illegal dues increases (30 percent last year), theft by the management company and more. After I pointed out these errors and questioned expenses, the board president kicked me off the board. Our complex is in need of major repairs, which are ignored. I believe the board president and the management company are profiting from our dues. I really love my condo home and don't want it to deteriorate further. What should I do? -- Tabatha W.

DEAR TABATHA: As a non-owner, you are not legally secure trying to challenge the entrenched condo president and the management company.

Although you collected a majority of owner signatures to be elected to the condo board of directors, I question if that entitled you to be elected as a non-owner. It would be much better if a condo owner on the board of directors raises the objections you listed.

I understand your frustration with the bad management but, as a non-owner, I doubt you have legal standing to complain. Please consult a local lawyer experienced in condo law for full details.

DEAR BOB: We recently sold our rental property and are in the process of doing an Internal Revenue Code 1031 tax-deferred Starker exchange. We eventually plan to move into the rental condo we are acquiring to complete the exchange. How long must we rent out the condo before we can move in? In a recent article, you recommended six to 12 months. What does the law require? -- Anna and Vladimir G.

DEAR ANNA AND VLADIMIR: Not even the IRS knows the exact answer to your question, which I am asked frequently. Every time I talk with the IRS, I ask if there has been any ruling on this important issue. The answer is always no.

To prove investment intent at the time of your tax-deferred IRC 1031 exchange, the property you acquire must be held as a rental or business investment property. Most accountants advise renting for at least six to 12 months to show rental intent at the time of the exchange.

I am not aware of any tax court decisions or IRS rulings on this issue. To be safe, you should probably rent the acquired condo for at least 12 months before converting it to your personal residence.

DEAR BOB: We live in a neighborhood of homes that are 20 to 30 years old. Recently, an out-of-town person purchased one of the houses, which he rents to weekenders and short-time vacationers who enjoy the nearby lake. If we decide to sell our home, must we disclose to the buyer that the rental house is used for business purposes? -- Dr. A.W.

DEAR DR. A.W.: Living near a rental house is not considered a nuisance. There are millions of rental houses and condos throughout the nation.

If the rental house is adjacent to your home, and if the renters often cause disturbances, you and your neighbors should contact the police.

Should a prospective buyer of your home ask if there are any nearby rental houses, then you must disclose. But unless the rental house is a nuisance, there is no need to disclose unless asked. For more details, please consult a local real estate lawyer.

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.

(c) 2005, Inman News Service