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Home buyers shouldn't waste time on stubborn sellers

"You gotta know when to hold 'em, and know when to fold 'em" is practical advice for poker players - and also for homebuyers who run into an obstinate seller.

Q. We have been trying to buy the same house for the past 45 days, but the seller has been a very stubborn negotiator. She will not agree to make several repairs that are obviously needed, and she still wants about $5,000 more than our real estate agent thinks the property is worth. The agent says we should just give up and look for another house, but my husband and I feel like we've spent too much time negotiating to just walk away now. What are your thoughts?

A. Follow your agent's advice and look for a different property to buy. There are too many other homes on the market today that are offered by more reasonable sellers to justify spending more than a week or two negotiating with one particular homeowner.

My advice might be different if you were close to making a deal after spending the past 45 days in negotiations. But your letter states the woman still wants much more than the property is worth, and that she refuses to make needed repairs.

It's hard to turn your back on a deal that you have spent weeks trying to assemble. But it doesn't sound as if you're much closer to reaching a compromise than you were when you made your initial offer 45 days ago, so continuing to bargain probably would mean wasting more of your valuable time.

Even if you were able to reach an agreement with the seller soon, my guess is she would become an even bigger pain to deal with once you opened escrow. So, cut your losses now and start looking for a different home, offered by a seller who's more reasonable.

Real estate trivia: Pet and cooking smells are the two biggest odors that turn off buyers and can send them running for the front door, say professionals who "stage" homes for sale.

Q. You recently wrote that a buyer who backed out of a sale and lost his $1,250 good-faith deposit to the seller could not deduct that $1,250 loss on his income-tax return. We tried to buy a house earlier this year, and paid a lender $350 for an appraisal and credit report, but our loan application was later denied. Although we got our deposit back, can we deduct the $350 that we paid to the bank that rejected our application?

A. Sorry, but the answer is no. You could deduct the $350 you spent as a "business expense" if you had planned to purchase the property and then rent it to tenants. But since you were planning to use the house as your personal residence, the $350 you paid to the bank cannot be deducted on your next tax return.

Q. My wife and I bought our home two years ago, and now we have taken out a second mortgage for $31,000 from a bank to completely remodel it. The bank charged us about $1,200 in points for the loan. Can we deduct the cost of these points on our next tax return, just like we deducted our points when we bought our house two years ago?

A. Yes, you can deduct the points you paid on your home-improvement loan, as long as you meet the handful of simple tests that the Internal Revenue Service applies to such deductions. They're the same tests that the IRS uses to determine whether a taxpayer can immediately deduct all the points paid when the house was first purchased.

First, the loan must be secured by your personal residence - you can't deduct the points you paid if the money you borrowed is considered a personal loan, or if you pledged something other than your home as collateral. Second, charging such fees must be an established business practice in your community (which I am sure that it is), and the charges you paid must not exceed local standards.

In order to be fully deductible on your next return, the IRS will require that the points you paid are specifically labeled as a loan-origination charge on your closing statement, and that you paid the fees directly to the lender. If you need more details or still aren't sure whether you can deduct all your points on your upcoming return, contact an accountant or similar expert for details.

• 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.

© 2015, Cowles Syndicate Inc.

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