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Topic: Finding
a Good Rental
Question:
Dear Lester, My wife and I are thinking about buying
a home in Pelham. We want to rent in the area for a while before
we buy to see if we like it. What’s
the best way to find a good rental?
--- Robert in Manhattan
Answer:
Dear Robert in Manhattan,
Good rentals in Westchester are hard to come by. There are 3 ways we suggest to help you find the
best rental.
1. Visit a local Realtor. You should
know that the listing system for rentals is different than the
listing system for home sales. Generally, the Westchester Multiple
Listing Service only accepts rentals where the landlord has agreed
to pay the broker’s commission (usually 10% of the annual
rent or 1 month’s rent). So any MLS Participant can get
you a list of all of the rentals where the owner is paying the
rental fee. But often, landlords do not want to pay the rental
fee, so the rentals don’t get listed in the main MLS database.
These owners will phone or visit real estate offices in the area,
and tell the agents about what they have available. Most agencies
keep a card file of these type of rentals -- where the tenant
will pay the commission. But each agency will have its own set
of available rentals, since the owner most likely will not tell
every office in the area about the rental. So in this instance,
its a good idea to check with more than one agency to find out
about everything that is available. (This differs from the procedure
for finding a home to buy, since by contractual agreement, homes
listed with MLS Participants generally are shared by all other
participating MLS offices.)
2. There are a good deal of owners
who choose not to get a real estate agency involved with their
rentals. Nothing beats walking through
the neighborhood and checking bulletin boards at the supermarket,
railroad station, pizzeria, etc. Here you are likely to find
apartments not listed anywhere else.
3. The third way to find a good rental
is to use the local newspapers. In many towns, there are
weekly papers covering town news, which have classified ads.
Some owners will advertise here, hoping to find a tenant with
local roots. Also, the daily newspapers carry ads for local rentals.
A good strategy is to place an ad for “apartment wanted”
about a month before you want to move (and run the ad at least
5 times). State in the ad that you will furnish references. You
may be contacted by an owner with a gem of an apartment (the
kind that never get advertised because someone down the block
knew a friend who wanted the apartment and went to see the owner
before the apartment became vacant).
Good luck in your search for a rental. You should know that the
traditional lease in the area is for 1 year, and that the most
common security deposit requirement is 1 month’s rent for
an apartment rental and 2 months’ rent for a house rental.
Lester
Topic: Assuming
a Seller's Mortgage
Question:
Dear Lester,
We are planning to buy a house in Somers from a family we know
from the neighborhood. They refinanced their home about a year
ago, and have a 7 per cent mortgage. They
have offered to let us assume this mortgage. This sounds
pretty good to us, since my husband’s credit got toasted
by his ex-wife, and we might not qualify to get a new mortgage
at a decent rate. The sellers say we also will save a good deal
of money that otherwise would get spent for points, fees and
tax escrows. How does this sound to you? -- Marina and Tom in
Somers
Answer:
Dear Marina and Tom in Somers,
How does it sound to me? Too good to be true.
It would be great if you could just make payments on the sellers’
mortgage, but in the real world, it ain’t going to happen.
Keep in mind that mortgage lenders make a significant portion
of their income on loan origination -- they make money when they
lend you new money.
So even if the mortgage is “assumable,” most
of these mortgages require the new buyers to submit applications,
qualify and pay fees as part of the assumption process. And
assumption isn’t automatic -- the bank is not obligated
to have a lending relationship with whomever happens to come
along.
In going through the “assumption” process, the bank
will consider your request to assume the loan as a new application.
Will you get approved faster (or get a better rate) because you’ve
applied to the same bank that now has the loan? Most probably
not, since your paperwork still will have to go through the underwriting
department and formal approval, and the bank is obligated to
give you the same basic rate of interest that they make available
for similar customers with the same general creditworthiness.
By all means (and as your attorney will advise you), you can’t
just move in and keep paying the old loan. If the sellers give
you a deed for the property in exchange for a cash payment, they
will have violated the terms of the mortgage agreement contract
with their bank. The result of that violation is that the lender
could turn to you to immediately pay off the loan (which probably
would send you off to get your own new mortgage to pay off the
old loan).
Before you go any further, talk to a few lenders. I suggest that
you talk both to mortgage brokers and to mortgage bankers. Brokers
usually arrange loans from third-party sources. Brokers can get
loans from many different banks, whereas bankers usually only
can lend money from their own institution. And keep in mind that
the majority of available home mortgages fundamentally are identical
(but some banks do have innovative products) because today, mortgage
lending is a strictly regulated industry, and your loan essentially
is a government-designed product. That’s why almost all
the loan applications out there are identical. In fact, if you
look closely, you’ll probably notice that they are marked
as “Form 1003,” which is the Federal Home Loan Mortgage
(“Freddie Mac”) form which is most widely used in our
area.
Topic:
Home Warranties
Question:
Dear Lester,
I heard that when we purchase a home, we can get a warranty for
it. How do I get a warranty, and what does it cover? -- Susan
in White PlainsDear Susan in White Plains,
Answer:
Most people would insist on a warranty if they were buying
a car, or even a computer or a stereo. But when it comes to making
what is often their family's most important purchase, they usually
neglect to find out if they can get a warranty for their home.
Home warranties are readily available, and the first place to
find out about them is from your real estate agent. These warranties
are not simply for new construction. Resales of older homes routinely
are covered.
A good real estate company should have one or more warranty programs
available. If you're shopping for a home and your agent hasn't
told you about home warranties, I suggest you ask your agent
why she hasn't brought up the topic.
The programs basically work like this: When a home is listed,
the seller should have been offered the option to place a warranty
on the home which would cover the buyers for a year or more after
the closing. The seller usually agrees to pay the warranty premium
(a single payment of approximately $350 to 400 for an average
home) when the home is sold. The warranty will pay to repair
breakdowns of basic systems, such as heating, plumbing, electrical,
roof and major appliances, but only if they were in good working
order when the home was sold. Warranties typically will include
a deductible of approximately $50.
A good way to find out about warranties before you buy your home
is to directly contact companies that issue the policies. Two
companies offering policies in our area are Home Security of
America, www.hsaweb.com, 1-800-367-1448, and American Home Shield,
1-800-800-8880.
If the home you choose to purchase does not have a seller-provided
warranty, you probably should get and pay for one yourself. But
it's important to bring this up before your offer is finalized,
because the seller will need to complete and sign the application.
If you buy a house without a Realtor, you probably can't get
a warranty, so keep that in mind. Also, most attorneys know nothing
about these warranties, so do your homework! It doesn't hurt
to have your lawyer review the warranty contract to help you
understand exactly what's covered and what's not.
Regards, Lester
Topic: Selling
above list price
Question:
My real estate agent said that in Westchester, houses have
been selling for more than their asking price. Come on now, is
this true?
Answer:
Yes. According to Westchester-Putnam
Multiple Listing Service, Inc., in 1998, there have been several
homes that have sold for more than their listed price. Although
it is only a small minority of home sales that fall into this
category, your agent was correct. I suggest you ask her to show
you some recent sale statistics to help you get a feel for the
spread between sale prices and final listing prices.
Topic: Negotiating
Pitfalls
Question:
Two weeks ago, through a real estate agent, my husband
and I found a house we fell in love with in Scarsdale. The house
was listed for $699,000. We offered $660,000, and got a counter-offer
of $685,000. We made a final offer of $675,000, and the agent
called us back and told us that the owner had agreed to sell
us the house for the $675,000 we offered. The agent asked for
our attorney's name, address and phone number, which we provided.
During the next week, we called the agent several times before
she called us back. When she called, she told us that the owner
had decided to go with another buyer, and that we no longer could
have the house! The agent wouldn't tell us how much the other
buyer offered. We told her we were ready to offer the full $699,000
asking price, but the agent said it was too late -- the seller
already had agreed to the other buyer's deal. We feel that the
agent did not treat us properly. Now it will take up valuable
time to find another suitable house, which probably will cost
more when we eventually find it because prices are escalating.
What are our rights against the agent? What are our rights against
the owner?
Answer:
I am sorry to inform you that you have no legal rights
against the owner, unless you and the owner had a written and
signed agreement. In New York, agreements to buy real estate
(or to rent it for more than a year) are unenforceable unless
they are written and signed. This law, known as the Statute of
Frauds, was adopted to require formality in realty transactions
to prevent possible fraud. As far as the agent, it looks like
she wasn't working for you at all. Although she had no obligation
to tell you how much the other buyer offered, she was required
to advise the seller of your asking price offer, unless the seller
previously had given her written instructions not to bring in
any further offers. Because the agent immediately rejected your
final $699,000 offer without first discussing it with the seller,
not only did the agent fail to help you buy the house, she also
failed to help the seller, who was deprived of the opportunity
to consider, or possibly counter, your offer! I suggest you discuss
this situation with your attorney. But keep looking for another
house -- the right one is bound to come along :-)
Topic: Agency Disclosure Forms
Question:
I went to see a Realtor in Westchester,
but before she would show me any houses, she gave me a form to
sign. I did not want to sign anything for her, but I signed the
form anyway so I could see some homes. What kind of form did
I sign, and what are my obligations as a result of signing the
form?
Answer:
Most likely, the form you received
was a required New York agency disclosure form. About 5 years
ago, the agency regulating New York real estate brokers mandated
that every real estate agent explain to a customer exactly whom
she was working for. This was to let customers know that (1)
the broker most likely had been hired by the seller and was working
to get the seller the highest possible price, and (2) that as
a buyer, you had a right to hire a broker who would work for
you, protecting your interests and helping you pay as little
as possible to make the deal. The disclosure form you received
set down the above principles in writing, You were asked to sign
the form to show that you understood whom the agent would be
working for. This disclosure form was designed for consumer protection
to make buyers aware that agents in New York traditionally were
working for sellers. By the way, you should have received a copy
of the form you signed. An agent must give you a copy of every
paper you sign, without you needing to ask for it. Topic:
Tacking / Adverse Possesion
Four years ago I purchased a piece of property on Long Island,
Suffolk County, New York. The property has a number of improvements that were
made thirty years prior to my purchasing the property. These improvements were
made on the neighbor's property and consist of a retaining wall, electric
outlets and lights, and fences. I believe in my area in order to claim adverse
possession you have to use the property for ten years. Can I tack on the prior
owners thirty years use of the property, thereby giving me 30 + 4 yeas of use?
Answer:
Thanks for your question. You need to consult a lawyer because
certain facts will be needed for a final determination. For adverse possession
in New York, several basic elements need to be present. The adverse possession
must be open (rather than hidden). It must be continuous. It must be truly
adverse. (If the original use of the other party's land was with the permission
of the owner of the lot, there generally is no "adverse" possession.
The practicalities of the adverse possession issue come into play when you want
to sell, mortgage or subdivide the land. You will not get title insurance to
cover the "extra" land until and unless you get a Court determination
that the land is "yours" (generally). You cant sell or get a mortgage
on land unless you have clear title to it (generally). Tacking can occur in the
fashion you mentioned. Yes, you can tack on the prior owner's use of the
property. This is an evidentiary matter. Your lawyer may want to interview the
prior owner, if possible. Also, if there are independent witnesses to the use of
the land in the past, they may need to be interviewed.
Hope this is of value. Regards, Lester Kravitz
Lester |
