With home sales slow, it's no time for sellers to get greedy

Like a bird in the hand, a full-price offer in today's tepid housing market is better than two in the bush.

Q. We made a full-price offer on a home that was listed for $179,950. The seller then made a written counteroffer to sell it to us if we agreed to pay $5,000 more. Isn't the seller obligated to sell at the lower price, considering our offer matched his original asking price?

A. Though you agreed to meet the man's first asking price, he is not legally obligated to sell it to you unless he signed a sales contract and it doesn't sound like he did. Perhaps he didn't realize it, but real estate law in all 50 states says that he legally rejected your original offer, making it null and void when he presented his written counteroffer.

You certainly could agree to pay the man the $5,000 more that he wants, but be a bit wary. Sellers who offer a property at one price and then try to raise it when their initial target is met are often very difficult to deal with when the closing process begins. There's a chance that he'll try to nickel-and-dime you death by, say, refusing to make any needed repairs or by insisting that you pay an inordinate portion of the closing costs.

Frankly, greed may have gotten the better of the man. Most sellers today are reducing their asking prices, not raising them, and you can expect the price-cutting to continue as the housing market enters the traditionally slow winter sales season.

The man may have shot himself in not one foot, but two. Not only is he risking the loss of a buyer who is willing to meet his first asking price, but he may also owe his agent a commission even if the property isn't sold because the agent was able to find someone willing to make a full-price offer.

At the standard 6 percent commission rate, that works out to $10,797. That's more than twice the extra $5,000 that the seller is trying to squeeze out of you.

Q. I sold my condominium in August and moved into an apartment in another state to take a new job. Last week, the accountant for the homeowners association that ran my old condo development sent me a letter stating that he had miscalculated my closing statement and that I still owe the HOA $495 for a special assessment that was levied earlier in the year to repave the development's community sidewalks. Do I have to pay this bill?

A. Probably not. When a home sale is closed and everyone involved signs off on the deal, that's it: There aren't any “do-overs” like we had on our elementary-school playground.

You might want to voluntarily pay the bill if you agree with the accountant's letter and would sleep better at night knowing that you hadn't “cheated” the association out of $495. But legally, it was the accountant's or closing agent's responsibility not yours to ensure that the HOA was fully paid for any outstanding expenses you may have owed when title to the condo was transferred to the buyer.

The homeowners association could technically sue for the $495 in small-claims court, but it probably won't bother. The time and expense of filing such a lawsuit likely would outweigh the money a judge might award, and the fact that you now live out of state and rent instead of own could make a judgment nearly impossible to collect.

Q. We recently received the renewal letter for our homeowners insurance, and our broker is pushing us to add a “law and order endorsement” to our policy. We trust our broker, but it seems like the endorsement would simply duplicate the coverage we already have. Would adding the endorsement be a good idea, or would it just be a waste of money?

A. Generally speaking, the older a home is, the more sense it makes to have a law and order endorsement. Adding such an endorsement to your existing policy would allow you to be reimbursed if your home is damaged or destroyed and extra costs are incurred because the repairs must meet higher construction standards than your property does today.

Let's say you live in an older home that has a wood-shake roof, but you're in one of the many communities that have recently changed their building codes to require more expensive, fire-resistant tile roofs in all future new-construction and repair jobs.

If you have a standard homeowners policy and your roof was damaged or destroyed, the insurer would be required only to reimburse you for the cost of a new wood roof. The cost of upgrading to the more expensive tile roof in order to meet the new building code would have to come out of your own pocket.

However, if you had added a law and order endorsement to your policy, the insurer would have to pay for the upgrade instead of you.

The endorsements are relatively inexpensive and are certainly worth considering, especially if you live in an older home that may not meet today's stricter building requirements. But if your house is relatively new, you probably could skip such an add-on at least for now if the home was built using the latest construction materials and techniques.

• For the booklet “Straight Talk About Living Trusts,” send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960

© 2010, Cowles Syndicate Inc.