Seller should change price, not agents
Q. I have been using the same agent for more than a year to help sell my house, and the contract is up for renewal at the end of this month. I think he has been doing everything possible, including a couple of price reductions. We get lots of traffic but no offers. My question is, will changing agents really make a difference?
A. I'm pretty sure that if you change brokers, it'll still take another price drop to bring offers. Don't ditch the agent who has worked on your behalf for a year and managed to bring in lots of prospects.
It's clear you have a pricing problem, and you'll just have to bite the bullet, face facts, etc. Remember there's no use telling your agent that you'd take less if you had to. The fiduciary duty of confidentiality forbids your broker from relaying the news to prospective buyers (though I suspect that duty gets ignored now and then in actual practice).
Stick with your hardworking agent and keep experimenting with price until you find the level that brings results.
Q. If you have a reverse mortgage, do you have to still live in your house? Can you rent it out?
A. Reverse mortgages are intended to help seniors remain in their homes. When you move out or die, the whole loan, including accumulated interest, must be paid off.
Q. My mother wants to sell her home to my brother for $100,000. The tax assessment is $192,000. I don't think the house is worth more than $145,000. She also wants to owner finance.
I've read you can't sell to a relative for less than 70 percent of value. If she does, what are the complications and tax penalties? Is there a better way that will not cost her more?
A. No need to be concerned. It's simpler than you think, even if this answer seems complicated. Your mother is legally free to sell the house to your brother for any sum she chooses or even to give it to him. No tax penalties are involved.
If the sale price is a lot less than market value, she may be considered as having made him a gift of the remainder, but there wouldn't be any federal gift tax until she'd given away more than $1 million. The amount of the gift — let's say $45,000 — would just be deducted from what she can leave tax-free at her death. It wouldn't even be the whole $45,000 because of the annual tax-free exemption, but let's not get into any further complications when I'm trying to tell you it's simple.
The problem you may have heard of involves the interest rate a seller charges on a take-back mortgage. Even if your mother is charging little or no interest, she must declare interest income on her tax return as if she had received it at average current rates. Of course if she's charging more than that, she'll report her actual income. Your brother can take his interest paid as an income tax deduction.
Q. My mother-in-law left the house to her youngest son in her will. He found the deed and saw that his deceased father never put his mother on the deed. They divorced 40 years ago and the father remarried. The son wants me, the executor, to transfer the deed to him.
A. An old deed doesn't prove who owns the property. The father may have signed another deed after that, naming the mother or someone else. If so, any later deed (or deeds) should be on file in the county record office. Searching those records is the way to determine ownership. If it was still the father and he left a widow, she may have a claim.
When anyone dies, no matter how simple the estate, you need at least one session with a lawyer. That's the person to guide you.
Q. Since we bought our home I have replaced the furnace, finished the basement and installed a security system.
When we recently applied for a refinance mortgage, the house was appraised again, and this time the appraiser said it was worth $5,000 less than the original appraisal. I had enough equity to get the loan, but I would like to know what went wrong.
A. Even if it's done by a trained professional who uses good data, an appraisal is, in the end, simply an opinion. I'm glad you got the loan you needed, and if I were you I wouldn't worry about the matter at all. I believe appraisers aim for a margin of error within 5 percent, either high or low.
• 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.
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