DEAR BOB: We are buying a home and our walk-through
inspection is scheduled for the last day of the month. But the title transfer
won't occur until three days later on the date the seller is supposed to move
out. I thought the walk-through inspection and the seller's move-out should be
on the same date. Is it normal for the seller to occupy the home on the date of
the buyer's inspection? – Nancy P.
DEAR NANCY: You raise a very important issue for home
buyers, sellers and their real estate agents.
Purchase Bob Bruss reports online.
Smart buyers and their realty agents insist on a
walk-through inspection just to be sure the home is in the same condition as when
the buyer last saw it and to be certain the seller didn't remove any items that
are included in the sales price, such as light fixtures.
Whenever possible, the buyer's walk-through inspection
should be conducted after the seller has moved out. Only then can the buyer
thoroughly inspect the house, warts and all.
While the seller's furnishings are still in the house, it is
easy to cover up any defects. Also, the seller might later remove items that
are to remain as part of the sale price.
Most home buyer walk-through inspections are held either the
day before, or the morning of, the day the title transfer is to be recorded.
Holding a buyer inspection several days before the title transfer and the day
the seller moves out is very risky for the buyer. I suggest you reschedule your
inspection for the day of title transfer, after the seller has moved out.
HOME WARRANTY ITEM STIRRED UP A HORNET'S NEST
DEAR BOB: As a Realtor, I want you to know your recent item
about one-year home warranty policies stirred up a hornet's nest at our
office's Monday morning sales meeting. As she often does, our manager gets
things going by reading items in your articles. We don't always agree with your
answers, but you get us awake. However, that recent letter from a father whose daughter
bought a condo and the home warranty company refused to fix or replace the
heater/air conditioner really got our salespeople stirred up. Most of our
salespeople agreed with you that home warranty companies often deny valid
claims. But other sales agents named names of the "good guy" warranty
companies that pay legitimate claims. Please name names of the "bad
guy" home warranty companies. Keep your great articles coming, especially
the controversial letters – Ryan S.
DEAR RYAN: Weeks later, I'm still receiving letters and
e-mails about that item where I foolishly said, "Welcome to the corrupt
world of home warranties." Perhaps that word "corrupt" was too
harsh. Maybe I should have used a milder word, such as dishonest, unfair or misleading.
But I did receive several letters from Realtors recommending
specific home warranty companies that pay their homeowner claims without
hassles. Since I can't verify those statements, unfortunately I can't name
names of the "good guy" home warranty companies.
I wish I could recommend specific home warranty companies,
but it's like buying auto or homeowner insurance. You never know if you have a
good or bad insurer until you file a policy claim.
HOW TO SELL A HOME WITH A KNOWN DEFECT
DEAR BOB: We bought our home four years ago, contingent on a
professional home inspection. The inspector didn't mention any mold in the
wall. After about a year, I noticed a small mold spot starting to bulge out. It
has grown down one inner wall where the furnace pipe is located. We assume that
is where the moisture originates. If we decide to sell our home, I am concerned
about this possible mold problem, which we cannot afford to fix. Must we repair
this problem before we sell? – Lyn B.
DEAR LYN: No. Thousands of home sellers sell their residences
"as is." That means the seller must disclose known defects but
refuses to pay for any repairs.
Prospective buyers then have the choice of purchasing your
home "as is" or buying another home. Most buyers of "as is"
homes now elect to have a professional home inspection so there are no
surprises and no lawsuits after the sale closes.
RECOMMENDED BOOKS FOR NEW INVESTORS
DEAR BOB: What books do you recommend on how to invest in
and manage single-family rental houses? – Jay M.
DEAR JAY: Two excellent basic books are "Real Estate
Investing for Dummies" by Robert Griswold and Eric Tyson, and
"Property Management for Dummies" by Robert Griswold.
Another superb property management book is
"Landlording, 10th Edition" by Leigh Robinson. These books
are available in stock or by special order at local bookstores, public
libraries, and www.amazon.com.
ANOTHER TREE QUESTION
DEAR BOB: Can you stand another tree question? I notice you
have had quite a few lately. There is a big, old, dead tree on our neighbor's
lot that partially overhangs our lot. The house is rented. I wrote a polite
letter to the absentee landlord who lives out of state. No response. Whenever
we have a storm, I am worried the dead tree will blow over on our house or
garage. Do I have any recourse? – Dawn W.
DEAR DAWN: Yes. Exact procedures vary in each community for
obtaining assistance with a dangerous condition on a neighbor's property. That
dead tree probably violates a local ordinance in your community.
For example, a few years ago I had a similar situation with
a dead tree on my neighbor's property. It appeared to be a hazard. To my
surprise, when I visited city hall, I was referred to the Fire Prevention
Department. A few days later, I received a friendly visit from two firemen with
their fire truck. When my neighbors saw the fire truck, they became concerned.
The firemen agreed the dead tree was a hazard. Then they politely gave my
neighbor a warning citation, giving him 30 days to remove the dead tree, which
PROPERTY SELLER QUALIFIES FOR TWO $250,000 TAX EXEMPTIONS
DEAR BOB: We sold our rental property where we lived two
years during the last five years. It was rented to tenants for the last three
years. But now we want to sell our home where we currently live. We have lived
in it since Nov. 11, 2000. Do we have to pay capital gain tax on the sale of
our primary residence? During the last five years, we owned two homes and both
were our primary homes – Eva C.
DEAR EVA: If you lived in your current residence since
November 2000, I don't understand how you can say the rental property you
recently sold was occupied by you and your spouse for two of the last five
years before sale as your principal residence.
To qualify for the generous Internal Revenue Code 121
tax-free principal-residence-sale exemption up to $250,000 (up to $500,000 for
a married couple filing jointly), you must have owned and occupied the
principal residence 24 of the 60 months before sale.
It is possible to meet the two-out-of-last-five-years,
principal-residence ownership and occupancy tests for more than one home. Then
you must decide which property sale gives you the biggest tax savings. The
reason is you can only claim one IRC 121 exemption every 24 months. For full
details, please consult your tax adviser.
DOES LIVING TRUST AFFECT STEPPED-UP BASIS FOR HEIRS?
DEAR BOB: Thanks for your recent article explaining the big
living trust benefits to avoid probate costs and delays. I didn't know about
the benefits if my wife or I become incapacitated. My question is: When I die,
will my living trust beneficiaries obtain a new stepped-up basis to market
value, the same as if the property title is not in a living trust? – Jerry C.
DEAR JERRY: Yes. If the title to your real estate is held in
your revocable living trust, your beneficiaries will receive a new stepped-up
basis to market value as of the date of your death if you pass on before 2010.
Congress is currently working on details of what happens after that. For full
details please consult your tax adviser.
The new Robert Bruss special report, "The 10 Most
Important Questions Home Sellers Hope Their Buyers Don't Ask," is now
available for $4 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by
credit card at 1-800-736-1736 or instant Internet download at www.bobbruss.com. Questions for this column
are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).
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