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Ask Our Broker

Issues Arose, and Now We

Don’t Want to Sell. Will There
Be Penalties for Backing Out?
Q: We recently decided to sell our
home. We accepted an offer that includ-
ed a $10,000 deposit from the buyer.
We’re set to close in about six weeks.
Since we accepted the buyer’s offer, cir-
cumstances have changed, and we no
longer want to sell our home. Can we
back out at this point? If so, will there be a penalty?

A: You have a contract with the buyer to sell your

home.The idea of a contract is to assure that both parties
perform as promised in the agreement. For you as the sell-
er, that means delivering title to the property as of closing.
Imagine if you do not
close.The buyers may
have ended a lease or Maximum exposure: Open houses may be a chance for neighbors to get a peek inside your home, but in competitive markets they can turn into a battlefield for
sold their current resi- If you do not bidding wars between homebuyers looking to grab the best property possible.
dence.Where are they
supposed to live? What sell, you may
about their costs for
inspections, closing serv-
ices and other expenses?
If you do not go
be forced to
pay damages
Open the door to selling
through with the agree-
ment, you may be forced
Giving homebuyers a quick stroll through your home may be all it takes
to pay damages.You also may be forced to sell the property BY BARBARA BALLINGER some who didn’t live here also came by,” she property is located in a busy area with a lot of
under the concept of “specific performance.” CTW Features says.When no bids materialized,Tibbet low- street traffic, and he also says an open house
There are several steps you can take. First, show the sale ered the price and eventually switched to a can be a way to gain new buyers who haven’t

agreement to an attorney and see if it provides any
grounds for you to terminate the contract without penalty.
Second, ask the buyers if they would like to end the trans-
action. It may be that they too have changed their minds.
Third, if the buyers still want to go ahead with the pur-
chase, ask if they would accept a cash payment from you
to end the agreement.
Be aware that even if the purchasers agree to end the
transaction, you still may owe a fee to the brokers.They,
after all, did their job, a job usually defined as finding a
“ready, willing and able” buyer who wants to purchase the
property on terms satisfactory to you. Speak with your
attorney for specifics.
Q: Within the last 10 years, my neighbor and his
wife bought more than 15 acres adjoining their lot.
They split up last year and subdivided the acres
between them. The ex-wife is looking to sell her
acres, and I’m interested in buying. Who’s responsi-
ble for surveying the property?
See ASK OUR BROKER, Page 2
I
t used to be an open house was the first salesperson from a larger organization that yet selected a real estate practitioner.“It gets
step to expose a new listing – and give reaches a broader audience. Her new salesper- you in front of people. I’ve gotten multiple
nosey neighbors a peak into someone son also holds open houses less frequently. clients that way. If they can see and talk to
else’s home. But as houses stay on the market Her unit hasn’t sold, says Tibbet, but she’s you, they begin to trust you and might want
longer, open houses are getting a different heartened that more traffic has materialized. to work with you,” he says. Still other practi-
glance. Practitioner Aric Shlifka, with @properties tioners hold them because their clients insist
Lisa Tibbet felt it was important for buyers in Chicago, also has seen found that open on doing so.
to see her large one-bedroom Mount Vernon, houses attract nonbuyers.“A lot of time it’s But then there are the great believers.
N.Y., co-op because of the amenities, landscap- tire-kickers seeing what’s in the neighbor- Michael Shapot, a broker and vice president
ing and the gated community’s proximity to a hood,” he says. with Coldwell Banker Hunt Kennedy, New
nearby train station. However, she felt her Yet agents, brokers and Realtors still hold York, says open houses provide a regular sta-
showing was more of a voyeuristic venture them for a variety of reasons. For Shlifka, it’s ble of buyers.“They should be called Mad
for her visitors. banking on the chance a seller might come
“All my neighbors came to be nosey, and through. He’s more inclined to hold one if the See SELLING Page 2
tle more ingenuity and a whole lot
Digging deep for a down payment more homework on your part.
Most lenders require anywhere
from 10 percent to as little as 3
Scraping up the BY CHARLES SCUTT draining out the last drop of laun- percent down on the purchase of
CTW Features dry detergent to finish a load or a new or existing home, says Carl
deposit for a new fishing around the center console Agard, a broker and author of
WHEN YOU WANT SOMETHING for the extra change needed to get “Getting the Real Out of Real
home is no easy task. badly enough, usually the proper through the toll. But when it Estate”(Adelphi Publishing and
Here’s how to not go discipline and determination can comes to finding the scratch to Media Group, 2006).“This
help you find a way to make it make the down payment on your
in over your head happen – whether that means dream home, it often requires a lit- See DOWN PAYMENT Page 2

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 DOWN PAYMENT
Find a way to pay
CONTINUED FROM PAGE 1
depends on the type of loan pro-
gram the buyer is getting. Credit
scores are a big factor in determin-
ing the required down payment
for the lender.The lower your
credit score, the more the down
payment can be.”
“The traditional method of
coming up with a down payment
– save, save, save – is tougher
today as prices of homes rise,” says
Alison Rogers, a licensed sales-
woman with DG Neary Realty,
Manhattan.“But young buyers are
finding a way. Now, buyers tend to
do a combination of saving and
borrowing.They dig into their
own resources, get a second loan
from a bank and often ask for gifts
from their families.”
Indeed, if you’re on a tight
budget, a popular way to come up
with a down payment is to accept
a monetary gift from a friend or
relative, says Agard. Gifts must be
disclosed to lenders, who also
require a signed gift letter from
the donor that states there is no
expectation of repayment.
Scott Yonehiro, senior board
member of First Security Lending,
Burbank, Calif., says that borrow-
SELLING
Showcase your home
CONTINUED FROM PAGE 1
Houses – you’d think owners
were giving away their apart-
ments for free,” he says.“Sunday-
afternoon open houses for prop-
erly priced properties are jammed
with buyers eager to outbid each
other.And they do just that.A
majority of listings that sell gener-
ate multiple bids and often sell
after bidding wars that resemble
auctions, at prices way above.”
Because of security, many build-
ings restrict the hours that they
can be held, how many people go
through the unit at a given time
and require attendees to be
escorted from the front door to
the unit.
Price often can factor into
whether an open house is worth-
while, others say. Some real estate
pros won’t hold them for upper-
bracket properties because they
believe they’ll get more casual
sightseers than serious lookers. In
his Washington, D.C., market, the
cutoff generally is at $2 million,
ers with limited finances also can
try to qualify for a silent home-
purchase loan provided by most
U.S. cities and counties.This type
of financing assistance from a
local government agency is
offered to ensure growth within
local communities. Silent loans
can be for as much as 15 percent
of the value of the purchased
property, with no repayments
form the borrower ever required,
as long as they do not sell or refi-
nance the property to pull out
equity for a set amount of years.
“However, the time frame for
this restriction can be as long as
20 years, and if broken, interest is
due back to the governing agency
and with a pretty stiff penalty,”
says Yonehiro, who adds that
down-payment assistance also is
commonly provided by nonprofit
501(c)(3) charitable organizations,
like PreferredProgram (www.pre-
ferredprogram.org). Other govern-
ment programs and resources can
be found at www.hud.gov/buy-
ing/localbuying.cfm.
Consumer banks and mortgage
lenders aren’t the only sources
borrowers turn to for extra green-
backs.“Some buyers also take a
loan out against their whole life
insurance policy if it has a large
face value to borrow against,” says
Agard.
If you’re getting married and
says Michael Rankin, a broker
with Tutt,Taylor & Rankin,
Sotheby’s International Realty.
Whether an open house will
be the magic bullet to produce a
contract is never for sure, but if
you’re selling and want to try it,
the following guidelines are more
apt to help beat the odds, experts
say.
• Announce it to the world.To
attract the largest number of visi-
tors, be sure you get out the word
through advertisements in local
newspapers and Web sites, post
flyers, and then post signs and
hang balloons as the day nears. Be
sure to have the open house right
after the listing agreement has
been signed to gain the greatest
exposure, says Jack Strama, a
Realtor with Jenny Pruitt &
Associates in Atlanta.You also can
then use professional photos to
showcase the house. Rankin often
takes a more personalized
approach and mails invitations to
everyone in the neighborhood,
just in case they want to change
homes or know someone who
wants to live in the area.
• Choose the right day and
time. Most real estate pros suggest
planning to buy a home together,
one creative down payment
fundraising tactic is to establish a
down-payment registry with your
bank, which essentially is a savings
account into which friends and
family members can deposit mon-
etary gifts.
Strategies to avoid when hunt-
ing for down-payment funds
include maxing out your credit
cards to obtain the necessary
cash, says Agard.“The 18 to 22 per-
cent finance charges will kill you.”
He also cautions against bor-
rowing from relatives or loved
ones who will make you repay
with interest.“If you aren’t able to
repay, you run the chances of ruin-
ing your relationships with these
people,” he says.
Yonehiro adds that it may not
be wise to liquidate any type of
retirement accounts, including
IRAs or 401(k) accounts, which
may incur steep penalties and
defeat the purpose of saving
money – and earning compound-
ed interest – for your future needs.
“Generally, it is not advisable,”
he says.“However, some 401(k)
accounts allow funds to be
removed without penalty as long
as they are applied to a down pay-
ment towards a home to be lived
in.” Agard recommends checking
with your accountant to see if any
excess fees or taxes are involved
a weekend day and a two-to-
three-hour window in the after-
noon. Rankin, however, often
prefers a Wednesday or Thursday
night after work, from 6 p.m. to 8
p.m., when people are less busy
and not preoccupied with week-
end events, he says.Also, be care-
ful not to plan the open house for
when there’s a major local sport-
ing activity because it may pare
attendance, says Linda Feinstein,
broker/owner, ERA Jensen &
Feinstein Realtors in Hinsdale, Ill.
• Food or no food? Some say
nibbles and beverages are critical
to lure – and keep – lookers; oth-
ers say it creates a mess with
crumbs. Rankin doesn’t serve
food, but for certain more expen-
sive listings offers sparkling water
and white wine. Shlifka brings in
coffee and snacks according to
listing price.“It can help to open
up conversations,” he says.
Jason McInerney, an agent with
RE/MAX Realty Plus of South
Boston, definitely believes, howev-
er, in the power of food and
drink. He’s even become known
as “Chef Jay” in his area.A former
chef, he started preparing food
for open houses when the Boston
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with dipping into a retirement
account.
Lastly, be careful you don’t mis-
represent your ability to have the
down payment, says Macon
McDavid, Realtor/broker with
Realty Executives Parrish Realty,
Knightdale, N.C.“You must have
these funds in an account, stock
or something which you can con-
vert to cash. If someone lends you
the money and you just put it into
your bank or savings account, the
bank can trace it and find out
where you got it.You need a paper
trail and you must be honest.”
Ultimately,“buying a house is a
huge commitment, and there will
be more financial obligations that
come up within the first couple of
months once you close,”Agard
says. If you do not have enough
money for the down payment, you
may have a lot of problems trying
to make ends meet once you have
to pay a mortgage, and soon
enough you may find your house
up for foreclosure, he says.“At least
be prepared to save up to 3 per-
cent of the sales price of the
house you want to buy, as well as
three months worth of mortgage
payments, just in case of any emer-
gencies.”
© CTW Features
market slowed.“The average num-
ber of days on the market has
grown from 70 to 150.We need a
way to keep sellers happy and
interest buyers,” he says.Among
his favorite offerings: baked brie
in puff pastry with strawberry-
champagne sauce and Sicilian
won tons stuffed with plum toma-
toes, basil, sour cream and
Chablis. He prepares most of the
recipes at home, then finishes
them at the house so pleasant
smells waft through. His listing
sheets provide recipes.
• Encores. Depending on avail-
ability, Strama says he likes to
hold an open house every month
and sometimes twice a month.
“The goal is to increase awareness
of homes that are available.
Somebody may say to someone in
their office, Hey, there’s an open
house in the neighborhood,
which spreads the word,” he says.
But the key, he adds, is to hold
them consistently rather than just
once.“Some people need to come
back two or three times and at
different times before they’re
ready to buy.”
© CTW Features
Ask Our Broker
CONTINUED FROM PAGE 1
A: It used to be that land sales could be fairly informal,
but those days are gone. In this case, the couple subdivided
their property, which means there should be a site plan
done by a licensed surveyor. If yes, perhaps the surveyor
can update the report at a discount.
If the sale is being financed, you can be certain that a
lender will want a survey – and so should you.Why? To
establish the location of the property, to define its borders
and to determine whether it has any easements or
encroachments.
As to who pays, that’s often negotiable and really
depends on local customs and who wants the deal more. If
land is tough to sell in your area, you could offer to buy the
property subject to a survey provided by the seller, which
must be satisfactory to you. If land is easy to sell, you pay.
Or, you might suggest dividing the cost.A local real estate
broker can provide specifics.
Q: My wife and I took out a 15-year fixed-rate loan
for 6.5 percent. The loan amount was roughly
$650,000. We refinanced after six months with our
original bank to get a 5.75-percent interest rate. The
cost to refinance was about $700, however, our
monthly payment has been reduced by about $750 a
month.
We’re making double the monthly payments to
knock down the principal as fast as we can. We plan
on refinancing after our loan balance drops below
$417,000, to get the lower rate associated with a con-
ventional loan.
Would you recommend going with a bigger lender
with higher rates – a lender with more stability who
is less likely to sell their loans? Should we refinance
if we can get a .5-percent rate reduction? Should we
switch to a 5-year adjustable-rate mortgage?
A: None of the above.You now have a 15-year loan at
5.75 percent being paid at an accelerated pace.As this is
written, rates for conventional 15-year loans are higher, so
stick with what you’ve got.
As to lenders selling loans, don’t worry about it.The new
loan owner cannot change your fixed rate or create new
terms.
Lastly, you have no reason to convert to an adjustable-rate
mortgage. Not only are ARM start rates not much lower
than your current interest level at this writing,ARM rates
always can rise higher.Why take the risk when you already
have a terrific loan, a great lender and a smart repayment
plan?
© CTW Features
Need real estate advice? Peter G. Miller, author of “The
Common-Sense Mortgage,” would love to hear from you. Send your
questions to peter@ctwfeatures.com