Seller can’t avoid commission by waiting for listing to expire
Some home sellers ponder nefarious plans to evade paying their agent after the salesperson finds a buyer. They rarely work.
Q. We are in the final week of a 90-day listing agreement with a real estate agent to sell our home, and the saleswoman yesterday finally produced a buyer who made a full-price offer that we find acceptable. If we delay accepting the offer until after the listing expires in a few days, could we avoid paying the agent our agreed-upon 6 percent sales commission?
A. No, delaying acceptance until after the listing expires wouldn’t free you of the legal obligation to pay the agent the sales commission. And frankly, it wouldn’t be fair or ethical, either.
As a general rule, real estate law in all 50 states requires that a seller who has a legally binding listing agreement with an agent must pay the agreed-upon commission if the salesperson produces a “ready, willing and able” buyer who makes an offer that the seller finds acceptable. Your agent garnered a full-price offer that you admit is acceptable, so you would still owe the commission even if you signed the sales contract long after the listing expired or even decided to nix the sale altogether.
Trying to cheat the agent out of her hard-earned pay by “timing” your acceptance date to occur after the listing expires would be morally and ethically wrong, too. Just think how you would feel if you spent several weeks on a job, only to find that your employer flatly refused to pay you without a good reason.
Finally, remember that most purchase offers are usually only valid for 48 or 72 hours. If you don’t respond within the allotted time frame, the offer will become null and void, and the buyer could cancel without penalty. That means that you’d lose out on the sale, but likely would still owe the agent a commission and could be sued if you didn’t pay it.
Q. Our son is 17 and would like to start building a credit history so he can eventually get a loan to buy a car and, later, a house. We think he’s still a little too young for us to cosign for a loan or credit card on his behalf. But would it help him start to build a credit history if we added his name as a joint holder on our checking account, even though he wouldn’t have access to our checkbook?
A. No. Credit bureaus don’t track balances in checking and other types of bank accounts, so adding his name wouldn’t help.
Other assets that aren’t included in a report include balances in individual retirement accounts and the value of stock or bond portfolios. Ditto for information about earnings from a job.
Q. My wife and I were interested in the list of the most “tax friendly” states for retiring homeowners that you published in early September. But is there a similar list of the “least friendly” states? We are both planning to retire at the end of this year, and we want to live in an area where we can stretch our Social Security checks and my small pension.
A. Yes, the comprehensive report that I wrote about — which appeared in its entirety in late August on the website operated by publishing giant Kiplinger’s Personal Finance (www.kiplinger.com) -- ranked all 50 states on their “tax friendliness” toward retirees based on a number of financially related factors, from income-tax rates to special breaks for older homeowners. Alaska, Florida, Louisiana, Arizona and Nevada were among the states that ranked in the top 10 for their superior financial treatment of the silver-haired set.
Retirees don’t fare nearly as well in other states. Rhode Island ranked dead-last in the study, in part because it’s among the minority of states that tax Social Security benefits (up to 85 percent!) and virtually all private pension payments and other retirement income. Average annual real estate taxes levied by local municipalities in the Ocean State are the fifth-highest in the nation, $3,618 on its median-priced home of $267,100. And estates valued at more than $910,725 are subject to a tax of up to 16 percent, though assets left to a surviving spouse are exempt.
The other four states with the most onerous tax policies toward retirees are, in order, Vermont, Connecticut, Minnesota and Montana. The list is rounded out by Oregon, Nebraska, California, New Jersey and New York.
Details for all 50 states are still on Kiplinger’s website, along with an online tool to help you compare one state’s tax-friendliness against another’s.
REAL ESTATE TRIVIA: With little more than a shoulder harness and some metal cable, the Reverend Kevin Fast of Canada set a world record by single-handedly pulling a 40-ton house that was mounted atop some rollers nearly 40 feet in a mere one minute, one second.
Ÿ For the booklet “Straight Talk About Living Trusts,” send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405.
© 2013, Cowles Syndicate Inc.