Need innovative ideas

Q. I own a home that has been on the market since February. I have invested $175,000 to improve this home, but I bought it for $600,000 six years ago. I originally went out at $699,000, reduced the price to $649,000 two months later and then went down to my current price of $599,000 two months ago.

I would like to know if I am getting the best possible service from my real estate agent. Their only suggestion has been to reduce the price of my home. I have done that, but it still hasn't sold.

What are some innovative ideas that agents are using to sell homes? I am listed with a well-known real estate company and an agent who has 35 years of experience.

A. No use telling me how much you have invested in your home because buyers don't care about that. They're only interested in whether they can buy a similar property for less, and evidently that's what they've been doing.

If your house has been listed multiple times, it's been widely circulated to potential buyers. If you haven't had any offers, your price is still too high to attract them.

The “suggestion to reduce the price” shows that your agent is indeed experienced and giving you the best possible service. Fancy broker innovations would not do the trick. No broker can drag buyers by the hair into an overpriced house. Sorry, I know that's not what you wanted to hear.

Q. I recently sold my home and would like to know if I have to pay taxes on the profit. The original cost was $75,000, while the sale price was $125,000.

A. If the place was your main home for at least two of the five years before you sold, you can take up to five times that much profit with no federal capital gains due. If you're married, the two of you could even have 10 times as much profit tax-free.

Feels like old times hearing someone worried about profit on a home sale. That used to be the most frequent concern in my reader mail, but I haven't had a question about it for a couple of years now.

Q. Situation: My fiancee owns a condo (purchased for $150,999, owes $80,000, and approximate current price is $110,999). In January, she moved into my house and we put the condo on the market to rent (monthly mortgage cost is $900, asking a rent cost of $1,000). It has been seven months with a few interested, but still no takers.

Do we continue trying to rent and write off mortgage costs for the time it takes to rent? We are not looking forward to being landlords, but my fiancee doesn't want to sell her condo unless she can sell it at least for the purchase price. Or should we sell it, take the loss and move on?

A. Your fiancee is in a common frame of mind: “I'm not going to sell this stock until it gets back to where I bought it, no matter how long it takes.” Many people say that because if they sold at a loss, it would make them feel like losers.

Meanwhile, as they wait for an arbitrary figure that may never arrive, their money is tied up and they may miss out on other opportunities. Or where real estate is involved, it may be costing them another $900 every month.

I once heard a speaker say (about stocks): “Would you buy it today? No? Well, think of it this way every day you don't sell it, you're buying it.”

It looks as if you set the rent figure by what you'd like to receive, an amateur landlord's mistake. No wonder it's still vacant. The only thing prospective tenants ask is: could they rent something similar for less? Evidently they can. Your fiancee has to set the rent by how much nearby condos are bringing. And she'd still end up losing money every month.

I'd get out now. I know it's hard to do something that makes you feel like a failure. Perhaps, she can think of it as cleverly cutting her losses and resolving to stop throwing good money away.

Q. I am selling my house to my daughter, and the bank says there is a minimum 15 percent down payment required. Is this true?

A. The kind of mortgage your daughter is looking for as well as her credit score, income and other debts all can make a difference.

Varying mortgage plans are offered because borrowers' needs differ, and down payment requirements are all over the place. VA mortgages, for example, are available with nothing down. And with an FHA loan, a down payment as low as 3.5 percent is possible. At the other end, with what lenders consider a good down payment (20 percent), particularly favorable terms might be available.

Your daughter may want to see what a couple of different lenders say.

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

2010, Creators Syndicate Inc.