Dear Edith: One of my boyfriend's uncles is selling a house we're interested in buying. We're not planning to use a real estate agent. The house is in very bad condition. It needs new paint, new carpeting, the flooring needs to be finished, the bathroom and kitchen need to be redone, etc. We already did the appraisal and the seller dropped $15,000 off the appraisal value. How do we approach the seller into sharing the repair costs? — J.

Answer: Sorry, but I can't do your negotiating. Hire a real estate broker (perhaps by the hour) to advise and help you arrive at a binding written contract, or else have your own lawyer assist you.

If you will be applying for a mortgage loan from a regular lending institution, repairs may be required before the loan is granted. Among other things, your contract should state the amount the seller agrees to spend in that event.

The problems you mention are all cosmetic. You've had an appraisal, but what do you know about the electric service, roof, insulation, plumbing and furnace? Your contract should give you the right to hire a home inspector, and to cancel the agreement or renegotiate if you're not satisfied with the inspection report.

You need a written contract that protects your interests and is fair to both parties. It sounds as if you could use professional assistance.

What's a Soft Market?

Dear Edith: I was recently speaking with a national mortgage company concerning a property in Cape Canaveral. He referred to Florida as a "soft market." Can you please explain what a soft market means, and does it typically affect interest rates or mortgage points? — L.M.

Answer: In Florida, mortgage foreclosures are frequent and a great deal of property remains unsold. That's a soft market, and the result is that prices are dropping.

Mortgage money, on the other hand, is becoming harder to find, as credit tightens up and lenders become more cautious. While interest rates are still at relatively bargain levels, they are slowly rising.

Selling to Son

Dear Edith: Our son renting in Manhattan, N.Y. cannot buy property there due to the high cost. He needs a tax deduction; we own our home outright.

How can we sell it to him so that we receive monthly payments and he can claim part of those payments as interest? Also, must he take out a mortgage through a bank? — Via e-mail

Answer: If you lend your son the money to buy, he can take tax deductions not only for interest on the mortgage you hold, but also for property taxes, assuming he pays them. No bank need be involved.

The whole project, though, could involve unexpected consequences, both tax-wise and otherwise. I can't go into detail without knowing more about your and your son's circumstances. You might create more problems than you'd solve.

Start by talking with a lawyer who specializes in estate planning.

Cost Basis for Inheritance

Dear Edith: My father passed away early last year and I inherited his house. I plan on selling this year and would like to know what my cost basis will be. I did not have the house appraised after my father's death, so I don't know what the fair market value was at the time I inherited it. The county where the house is located uses "market value" to assess real estate property.

I think getting the house appraised now would not reflect the true value last year, so I was wondering if I should use the county's listed "market value" for 2007 as my cost basis. If not, then how do I determine my cost basis? — T.S.

Answer: Don't use the assessment figure. Ask a nearby real estate broker for a simple one-page opinion of the property's value at the time of death.

How to Own

Dear Mrs. Lank: I just purchased two lots with owner financing on a standard purchase agreement. How can I attach my name to the deed to avoid problems if the owner dies or attempts to resell without my knowledge? — Via e-mail

Answer: My guess is you haven't really bought those lots yet, but just signed an agreement to buy them.

The law provides standard procedure for avoiding the problems you worry about. At the closing, when you sign the documents and pay the rest of the purchase money, you will receive a new deed naming you as owner. A copy of that new deed will then be entered in the county's public records, where it will give notice to the world that you own the property.

If, on the other hand, you anticipate problems before the closing, consult a lawyer about possible steps you might take at this point.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.

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