Edith: The house across the street has had the same for-sale sign up for over two years. I would think that the Realtor would want the sign taken down, as it seems to imply that he can't sell houses. Isn't there a time limit of expectations for selling a house? — B. E.
Answer: Clearly, after two years on the market, the listing price is too high. Things might be different for a unique property, but an average home in a built-up area should have been sold by now if it's worth what's being asked.
It's the homeowners who are in control. You didn't say anything about them. They may be elderly with emotional ties that make it difficult to view the property impartially. In addition, they may be in no hurry to move, or even subconsciously reluctant, thinking, "If we don't get our price, we'll just stay here."
To a neighbor, that lawn sign represents an admission of failure on the agent's part. It's possible, though, that the realty firm looks on it as free advertising.
Monthly vs. Annual
Ms. Lank: I am letting you know that it's possible to make monthly payments on property taxes and homeowners insurance premiums. As a widow who lives below the poverty level, I use this option. They allow me to budget these costs and stay in my home. — M. R.
Answer: Congratulations on managing so efficiently. It's too bad choosing monthly payments is usually a bit more expensive in the end, compared with making a single annual payment.
Ms. Lank: We found a house we love, but the owners had already accepted a contingency offer. We made a non-contingent offer believing that it would force the first party to drop its contingency or walk away.
We were asked to have an inspection completed before the owners would consider our offer or even approach the first party about the contingency. I foresee spending $500 just to be told, "We're sticking with the first offer." Is it normal procedure to get an inspection before your offer is even considered? We don't want to be throwing money around just to get an answer on an offer. — A.S.
Answer: It's customary to wait until after your offer is accepted before going to the expense of an engineer home inspection. But the sellers are within their rights. Unless they're violating fair housing laws, they can call the shots on the sale of their property. They don't even have to accept the highest offer. Their agent is legally bound to present all written offers, but sellers have no obligation to consider them.
A contingency is an "only if" provision in a real estate contract. You may consider your offer non-contingent because it's not dependent on getting a mortgage loan. Or, perhaps you've promised to buy even if your present home hasn't been sold. But if you reserved the right to cancel your purchase contract unless a later home inspection report proves satisfactory, that's a contingency. If that's the case, you may want to consider dropping that provision.
Otherwise those sellers are afraid to upset their present contract only to end up with you still being free to drop out later. If you want them to risk losing that first buyer, you may have to assure them you'd be legally bound to go through with the purchase no matter what — no contingencies.
Ms. Lank: Can you explain something about mortgage points? We have been offered a choice of interest rates — a lower rate if we agree to points. Is this just when we get the loan, or would we earn more points over the years? — P. I.
Answer: I'm afraid you don't earn points. It's not like airline miles. They're one time only, and you pay them when you take out the loan.
Each point is 1 percent of the amount you're borrowing. It represents extra interest. Whether it's worth paying upfront depends on how long you expect to remain in the house. If you're going to be there a long time, it may be worth spending the extra money now to buy down your long-term interest rate. You'll only pay those points once, and you'd have a lower rate for the life of the mortgage loan.
Like all mortgage interest, the amount you pay in points is deductible on that year's tax return, assuming you itemize deductions.
Contact Edith Lank at www.askedith.com, at [email protected] or at 240 Hemingway Drive, Rochester NY 14620.