DEAR BENNY: In a recent column you wrote about getting agents to lower their commission if the seller lowers the asking price. Isn’t it obvious that the commission is automatically reduced when the price goes down, as it is a percentage of the property price? There’s no reason why the agent should reduce the commission beyond that automatic adjustment. –Dianne
DEAN DIANNE: Yes, it should be obvious, but from my experience, I have encountered agents who insisted on getting the commission based on the listing price and not the selling price. The listing agreement entered into between the real estate broker and the homeowner should make this clear.
And there are reasons why agents would reduce the commission beyond that automatic adjustment. In today’s economy, many homeowners have very little equity in the house. In order to make a sale under these conditions, the agent may have to reduce the commission. After all, if the house is underwater, that’s what is usually required when a bank approves a short sale.
DEAR BENNY: I have owned a rental/personal residence for almost a year now. The neighboring duplex is heavily vegetated, and it is an uphill battle to keep my patios clear of leaves and other debris. Is there any way I can get the neighboring property owner to have his gardener come into my yard and clean up the substantial amount of matter that falls in my yard? I have cut back the overhanging branches at my own expense, but this is not doing much.
In a related issue, there is a tree on the neighboring property that is starting to knock down our common fence. I have the property manager’s contact info, but she has not been responsive to repeated e-mails or phone calls. What should I do? I do not want the fence to fall down and injure anyone, especially one of my tenants. –Louis
DEAR LOUIS: As for your first question, if your neighbor is not responsive, you may be able to get some relief from your local county officials. Many jurisdictions have regulations regarding trash and debris, and the county may be able to issue code violations against that neighbor. Otherwise, you should consider retaining local counsel to write a demand letter that threatens the neighbor with a lawsuit if they refuse to clean up your yard.
I must say, however, that falling leaves will generally not be considered a code violation. If there is other trash (such as tin cans, bottles or papers), that may fall within the county’s jurisdiction.
As to the tree, there are different approaches to tree law in the various states, so I can give you only a general response. Generally, you have the right to cut down any overhanging branches, or cut any tree roots that are growing on your property.
But if the tree presents a dangerous situation, your lawyer may be able to bring a lawsuit against the neighbor based on the law of private nuisance. But once again, you have to confer with a local attorney who understands and practices in this area.
DEAR BENNY: I own a home that is available for rent — via rental agency — on a daily, weekend or weekly basis during the entire year. I use the house for personal use when I know the house will not be rented, as people normally reserve well in advance. I understand that besides using the house for repairs and maintenance, I am entitled to only an additional 14 days of personal use. Is this correct? –Dennis
DEAR DENNIS: I think you are confusing the tax laws regarding vacation homes with your situation. If you have a vacation home, and rent it for fewer than 15 days in any one year, you are not entitled to take any deductions that are normally allowable for rental properties (such as depreciation), but any rental income you receive is not included in gross income for tax purposes.
However, from your description, you are clearly in the rental business, and I would think that you have to treat your property as rental property. The IRS has a helpful publication (Publication 527, entitled "Residential Rental Property," available online at www.irs.gov/publications. …CONTINUED
DEAR BENNY: I am involved in a divorce case. Can I use this information in regard to not dropping the price of our home? Is it something the divorce court would listen to? Our real estate agent wants us to reduce the price every three weeks until someone makes an offer. The price is just about down to what is owed on the mortgage loan and I would like to come out with a little profit. –Paul
DEAR PAUL: First, as a seller, you have the right to set a price — whether or not it is realistic in today’s market economy — and do not have to agree with the real estate agent.
However, are you being realistic? While real estate agents are not appraisers, they often know market conditions better than homeowners. You want to make a little profit; so do we all, but I just read that 22 percent of Americans are currently underwater. That means that their mortgage is higher than the price that the house can sell for.
And since you are currently in a divorce proceeding, assuming that your wife is on title with you, she has a say in this matter, which ultimately (if you can’t reach agreement) a judge will have to decide.
I don’t know what a judge would do in this case. While I am sure that you and your wife agree that you would like to get the best possible price, the judge may also want to get the case of his/her books, and will require that you periodically reduce the price so as to get a quick sale.
One or both of you are paying the mortgage, insurance and real estate taxes. How long do you think you can continue to do this? Maybe you should listen to your agent. Selling at no profit is clearly better than trying to sell for a loss, which would require you to do a short sale.
DEAR BENNY: My wife and I made an offer on a short-sale home. The listing agent told our agent that the seller’s bank required a home inspection as the next step forward. Then the listing agent would submit the inspection report, mortgage approval from our bank, and our offer to the bank involved in the short sale. I thought that was an odd requirement, as we were not getting the mortgage through them.
We had the inspection done two days later for $460 and there were no issues with the house. Three days later the listing agent told our agent they now had a higher offer and were going with another buyer. What recourse, if any, do I have? We are now out $460 plus the house we wanted. –Chris
DEAR CHRIS: I am afraid that you are out of luck but hopefully have learned a valuable lesson. In my opinion, potential homebuyers should enter into a binding real estate sales contract that contains such contingencies as (1) approval by the bank for the short sale, and (2) obtaining a satisfactory home inspection.
The short-sale phenomenon is, quite frankly, crazy. There are little if no guidelines to assist banks, real estate agents, or buyers and sellers. The process varies all over the place.
But even if you sign a contract first and then have the inspection contingency, you still may lose out if the bank does not approve. I don’t like this concept, but the bank does not want to be in the position of agreeing to a sale, taking the property off the market, and then learning that the potential buyer wants to back out of the contract based on the home inspection.
I don’t know a way out of this dilemma, but welcome suggestions and comments from readers on this issue.
Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column. Questions for this column can be submitted to benny@inman.com.
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