What About “As Is”? by Edith Lank on Creators.com

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Using Stepped-Up Basis Dear Edith: My deceased mother's house has an offer that my siblings and I have accepted. We believe we each will receive about $20,000 after the realty fees. My question is, do I have to pay income tax on the money, since it is my inheritance? …Read more. How to be a Flipper Hi Edith. I'm intrigued by the idea of flipping a house — buying, fixing up and re-selling at a profit. But I have exactly zero experience and no cash. Not exactly a recipe for success. What's the best way to go about finding a flip-worthy …Read more. Holding a Mortgage Dear Edith: I have someone who has asked me to be their mortgagor, and I was wondering, how does one go about the paperwork? Are there standard forms to be used? How does one file the mortgage lien? Would a real estate attorney be advisable or …Read more. Some Estate Planning Dear Edith: Our parents are in their late 80s. Three years ago, they moved from their home to a rental apartment. I moved in to their house and have been renting it from them. My sister and I will inherit it when our parents pass away, but we are …Read more.

What About “As Is”?

Edith: I have a modest home. Similar houses in my neighborhood in much better condition are selling for twice what I paid for mine in 1980.

I want to sell the house, but it has numerous problems. Disclosing them to a buyer would greatly lower the home's value — or scare the buyers off completely. I'd be happy just to recover the original cost.

As I understand it, if I sold the house at auction or if I sold through a Realtor but "as is," I would not legally have to disclose anything about its condition. Is my understanding correct, and if so, which method would give me the best price for my house? — C.

Answer: "As is" doesn't mean the seller needn't disclose the property's condition. Quite the opposite. It means the buyer agrees to take the known problems along with the property and won't come back at you about conditions you've disclosed. An as-is sale wouldn't protect you against later claims about a deliberately concealed defect.

You'll be happy to learn that some buyers are looking for bargain properties that need work. Your broker could even advertise your place with those words.

DIFFERENT INFORMATION

Dear Ms. Lank: I am a tax preparer and Enrolled Agent with 10 years of experience, and I believe you made a mistake in your advice in a recent column to the woman who was buying a house for her son. You said that even if the son paid the property taxes, he wouldn't be able to claim them as a deduction on his income tax because he wasn't legally liable for them.

The son might have what is known as equitable ownership of the house and would be able to deduct the property taxes he pays and any mortgage interest (subject to the usual limitations) he pays. The son has equitable ownership if he "assumes the benefits and burdens of ownership," such as: occupying the house (where the mother does not); making any mortgage payments; paying for all repairs, improvements and insurance; and paying the taxes.

Answer: Thanks for taking the time and trouble to send the information.

WHERE TO BUILD

Dear Edith: I'm interested in building a new home.

My question is this: How do I find out if a town has vacant land that might be open to development and/or if anyone will be building anywhere soon? — email

Answer: Read the builder ads in today's paper. Also, take the question to real estate brokers in the town that interests you. They'll know what's available.

BUYERS COULDN'T PERFORM

Mrs. Lank: My house was listed several months ago, and I received a non-contingent offer within six days. The buyer had a home inspection done, and I had all items fixed. As we approached the closing, my attorney was unable to get updates on the status. Then I was informed that the buyer needed an additional 10 days and was having difficulty getting mortgage approval. I've since been told the deal has fallen through.

My agent says I'm unable to keep the buyer's deposit, as the contract was contingent upon mortgage approval. Do I have any recourse? I don't want to go to small claims court, but I have not lived in this house for months and still have to pay mortgage, taxes, utilities and upkeep. — email

Answer: You're working with a lawyer, so why not seek an opinion from him or her? Or perhaps you already have and are just hoping I'll say something different. At any rate ...

You say you received a non-contingent offer, but it sounds as if it was indeed contingent — on the buyers obtaining the necessary financing. If that's true, and if they made a good-faith attempt to secure a loan, then you probably have no recourse.

Next time, investigate the buyers' financial situation before you accept an offer. Better yet, hold out for buyers who are pre-approved (not just pre-qualified) for a loan. And if it appears that the deal is shaky, start showing the property again right away. You can always accept a backup offer from another buyer, which would take effect only in the event of "non-performance" of the existing contract.

REVERSE MORTGAGES

Dear Edith: In response to D.S.'s question about reverse mortgages, I found a lot more information on the AARP website. They have a booklet about 40 pages long detailing the pros and cons of the reverse mortgage. Please bring this to the attention of D.S. to help her make a more qualified decision. — J.A.

Answer: Thanks for the information

Edith Lank will respond personally to any question sent to www.askedith.com.