Over the past six years that I have been writing this column, I’ve received hundreds of letters from readers, many of whom ask the same questions. Here is an entire column of answers to common questions, problems and queries that homeowners ask frequently.
Q: Everyone and their sister seems to be a real estate agent. What’s involved with getting a real estate license?
A: Although the specific requirements differ from state to state, you must take an approved real estate license course (usually about 30 hours in length), pass an exam, and pay a license fee.
To become a real estate broker, you must first have some experience as an agent, usually a year, take additional classes, pass a different exam, and pay a fee. State agencies that license real estate agents and brokers typically require some sort of continuing education, perhaps 10 to 20 hours every year or two.
Start by signing up for an approved real estate agency course. If you can’t find a company that conducts these classes in the phone book, call your local or state Realtor Association. You can find out the phone number and address by calling the National Association of Realtors (800-874-6500) or going online at www.realtor.com.
Q: I’m a senior citizen and have heard that reverse mortgages are the answers to my prayers. Where can I find out more information?
A: Reverse mortgages are a method of creative financing that allow you to tap into the equity in your house and receive a monthly payment from a lender. (That’s why they call it reverse mortgages – because the monthly payment comes to you from the lender instead of from you to the lender.)
The ideal reverse mortgage candidate is at least 62 years of age, owns his or her home free and clear, and has trouble living on his or her monthly income. Reverse mortgages are expensive, and while you don’t have to pay back the money until you or your heirs sell the home, there may not be a lot left of the equity to pass along.
For more information on reverse mortgages, the best book out there is by Ken Scholen, executive director of the National Center for Home Equity Conversion (NCHEC). His excellent book is “Your New Retirement Nest Egg.” Find more information on the web at www.NCHEC.org.
Q: I want to buy a new house but am worried about selling my current house. Do you have any tips on how to sell my current home quickly?
A: According to recent data from the National Association of Realtors (NAR), 1999 will be the second-hottest year for home sales on record, projected to be just a nose behind last year’s record-breaking numbers. That means homes are selling well across the country.
But that’s not to say your neighborhood is keeping up with the national average.
The only way to make your home sell quickly is to price it right and make sure the condition is excellent. Pricing it right means pricing it where you want to sell it. A home in Dallas was recently listed for $325,000. There were no offers for 3 weeks. The owner dropped the price to $315,000 and the home sold in days for $309,000.
While it seems to me that if you’re prepared to pay $309,000, you’d make an offer at the original list price of $325,000, that’s not what’s happening.
As for condition, a few gallons of white paint (applied yourself), clean or new carpet, and thorough cleaning (that means no dust bunnies) will take you about 75 percent of the way there. Get rid of the clutter, overstuffed bookshelves, and excess furniture and you’ll have a house that’s ready to go.
Q: I think I have a bad real estate agent. The first agent listed my house and acreage for $165,000. When the house didn’t sell, I changed agents, who relisted it for $150,000 but didn’t mention the acreage.
The house still hasn’t sold, but I have 3 months left on the listing agreement. I want to go back to the first agent. What should I do.
A: Let’s cut to the chase. The problem probably isn’t the agent, but that your house is priced too high for the location and condition. You’ll need to have whichever agent you ultimately choose do a new comparative marketing analysis, looking at how much homes similar to yours have sold for in the past 90-180 days, and then choose a new list price.
As for the listing agreement, you should never sign on with a listing agent for more than 90 days, and preferably 60 days, especially since this is a hot market.
Finally, choosing a good agent is about researching their qualifications. But it also requires a commitment on the part of the seller to hang tough. If you were willing to drop your price by $15,000, why didn’t you do it with the first agent?
Q: Should I borrow money from my 401(k) plan to buy a home? What about using IRA money?
A: First-time buyers can tap into an IRA to purchase a home or pay for closing costs. You are, however, limited to $10,000.
Whether or not you can borrow from your 401(k) depends on the individual plan your company has set up. Check with your plan administrator for details.
The real question is should you borrow from your 401(k) to buy a house? If you need to borrow only a small percentage of what you have, and will pay it back within a few years (with interest) and will still be able to put away 401(k) money, then you probably won’t damage your long-term retirement prospects.
But if the house loan will empty the coffers, you might want to think again. Also, if you leave your job before the loan comes due, you may have to pay it all back within a couple of months, or risk paying a penalty to the IRS.
A better bet is to use a very low, or zero down payment option now available through conventional lenders and FHA.
Q: We’re saving for our down payment and have accumulated about $10,000. But we’re also paying 18 percent a month on our credit card debt of $5,000. Should we use the down payment money to pay off the debt?
A: Absolutely. You’re earning 3 percent on your money while paying 18 percent to borrow. That’s a sure-fire way to go broke.
Pay off your credit cards. Then, cut them up. Then start saving for your down payment. Without the credit card debt, you should be able to save faster and more easily.
Q: We bought a house last year and found out it has asbestos in the cottage cheese-like ceiling. The previous owners said they didn’t know about the asbestos and our inspector didn’t point it out.
Apparently, it’s a big deal to remove asbestos. What should we do – contact a real estate attorney, or the inspector, or both?
A: Asbestos is very expensive to remove. That’s because it’s a very dangerous compound – when it’s airborne. That means, when you tear it out and tiny microfibers float around in the air.
Asbestos, once a popular fire-retardant material, usually does not pose a health hazard if it is in good shape. The real question is, do you need to remove the material or can you simply wrap it or should you leave it alone? Removal will be costly. Wrapping is less so. And you may want to consult with an asbestos specialist to determine whether you want to do anything.
When it comes to seller disclosure, you will need to prove that the seller knew, or should have known, about the asbestos (or any other hidden material defect). If you can’t prove it in a court of law, there’s no point in contacting the sellers or their broker. When you signed on with your home inspector, you most likely waived your liability. The best you’ll probably get is a refund of your inspection fee.
My advice is to work on correcting the problem so that you enjoy living in your new home.
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