On homes and real estate: Avoided a scam

Q. In response to your article about rental deposit scams, there are also some being done via Craigslist long distance. It could have happened to my daughter. She saw a listing for a townhouse for rent. The scammer had a good story as to why he was renting it and why he was from out of town. The price was too good to be true, so we decided to Google the address and found out it was “For Sale.”

We called the sales agent listed and, sure enough, he said this was a scam. The scammer had posted all the same pictures the agent was using. My daughter confronted the guy by phone. He hung up on her. So, renters beware! We wrote to Craigslist, but maybe the police should be called?

A. Thanks for another suggestion about how a would-be tenant can check a vacant “rental” before sending deposit money to a fake landlord.

Q. Recently, you told a woman that reverse mortgage was not a scam. I checked it out and found that they only lend half of the current value of the home, and if you already have a mortgage, that will be deducted. You must keep the house up and pay all taxes and insurance. You have sold your house for half the value. Buyback is full value plus total interest. Scam? Yes!

A. Perhaps you had the impression a reverse mortgage represented a gift, or free money, and were disappointed. You need to think of it as pretty much like any other mortgage, except for a couple of big differences. It’s those differences, of course, that make it valuable to cash-strapped seniors who want to remain in their homes.

With any kind of mortgage, you can’t expect to borrow the full value of your property. And if you already have a mortgage loan, then as with any refinance, you must use some of the new funds to pay off the old loan. I don’t see any scam about that.

As with any kind of mortgage, you remain the complete owner, responsible for the usual homeowner expenses. You don’t sell your house, so it’s not clear what you mean by a buyback. As with any mortgage, the amount you actually borrow (not “full value”) must eventually be paid back. And as with any mortgage, interest is due on the borrowed money. I don’t see any scam about that either.

The one big difference with a reverse mortgage is that you can let the loan ride, choose to receive a lump sum or monthly checks and let the debt build up without making any payments. It will all be repaid after you die or move out. And then, if a sale brings more than is owed, as with any mortgage, the remainder belongs to you or your heirs.

The second big difference is that because you needn’t make any payments, you don’t have to prove good credit or income. All that matters is the value of your house, the fact that you want to remain in it, and your age (at least 65). Because you can receive monthly income for life, the older you are, the higher those checks can be.

Q. We had a professional appraisal done on our house for the purpose of selling it. What should be a reasonable expectation of price? The same as the appraised value or a certain percentage more?

A. The appraisal was an expert estimate of market value, which is defined as the highest price your house is likely to bring in today’s market. But — it’s difficult to predict for sure exactly what the buying public will think. Many appraisers consider a five percent error (either way) as acceptable.

Look at the asking prices of nearby for-sale property, and compare yours from a buyer’s viewpoint. Then, if you want to build in something for bargaining, start a bit over appraised value. But if the house receives little attention from buyers, reduce the asking price promptly — within, say, one month.

Q. After your offer is accepted and you put the property under contract to close, do I have control of the property?

A. You wouldn’t own the place yet, you’d have no right to occupy it, and you would not be entitled to any rent it brought or be liable for any expenses. Your purchase contract could, I suppose, state something different, if you and the seller had both agreed and signed off on other provisions. Usually, though, what you have is just the right to buy the place, for the price and on the terms set out in your contract.

Ÿ Edith Lank will respond to questions sent to her at 240 Hemingway Drive, Rochester, N.Y. 14620 (include a stamped return envelope), or readers may email her through askedith.com.

© 2012, Creators Syndicate Inc.