Question: I'm a broker and was asked the following question by a home owner and potential listing client:

"We have a friend who is a broker. This person asked us some specifics about our house, which I gave. I never signed anything with this person, then got a real estate photo magazine with my house listed for a price I never set. Does this mean I have to use this person? Does this mean I have to pay them anything? Just curious. Not sure how this selling house thing works."

As a broker, if I list and sell the house do you think the agent will claim a commission? :)

Answer: If it is true that the property owner did not sign a listing agreement, then check your state rules: Most jurisdictions, if not all, require that a residential listing must be in writing; that the broker is only authorized to offer the property at the listing price agreed to in writing by the owners; that the listing has a termination date; that the listing shows the commission arrangement and that the property cannot be advertised without the written permission of the owners.

Is there any possibility that the broker has a different listing and accidentally used the wrong photo?

You are, of course, joking about a commission claim by the other broker if a required written listing does not exist. If there is no written listing and your jurisdiction requires one, then the property owner should file a complaint with appropriate real estate regulators. A list of regulators can be found at ARELLO.com.

Question: How can I find the lien holder of an empty house?

Answer: Check with your local public records office. An expansive list of online assessment records by jurisdiction which can help you find owners is located at The Property Assessment Directory.

Question: I've been recently informed that all lenders must start reporting mortgages to the appropriate credit bureaus in Canada by the end of 2007. Can you confirm or deny the validity of this information?

Answer: We asked one of our Canadian correspondents, Jim Adair, to check into this. He spoke with RBC's Senior Manager - Home Equity Financing, Janet Booth, and she says, "I've looked into this, and in fact there is no requirement for Banks to begin reporting mortgages to the credit bureaus. That said, some of Canada's financial institutions have elected to begin reporting their mortgages under a new trade line on the bureau. To date, the adoption has been limited."

We thank Jim and Ms. Booth for checking this out.

Question: Long story short, I came home from vacation to major water damage in my home. It seems that my second-floor toilet tank cracked and water ran for almost a week.

When the demolition crew was taking out walls they discovered that there was a fire in our home, at one time. We have lived in our home since 1992 and during the selling process there was no mention of there being a fire in the house. There needs to be some insulation and drywall work that is not covered under the water damage.

The previous owner of this house was the real estate agent. Do we have any recourse in this situation?

Answer: The first questions an attorney for the former owners would probably ask go like this: You have lived in this house for 15 years. How does anyone know that you did not have a fire at some point in your residency and that in making repairs you did not include insulation?

How do you know the agent-owner was responsible? Did anyone else own the property? Could the fire have occurred while the home was under construction? Do you know for a fact that there was insulation in place when the property was originally built? What if the broker hired a contractor to do repair work after the fire and the contractor -- without the owner's knowledge -- did not install the insulation? How many of us, after all, break down walls to look for insulation?

What, exactly, are the damages here? Were your heating and air conditioning bills higher than they should have been? How much higher?

What were the disclosure requirements in your state 15 years ago?

Given the time, cost and irritation of a lawsuit, why not just fix the damage and be grateful that much of the cost for a better wall is covered by insurance.

Question: I'm in the middle of buying my first home, or at least I still hope so. My pre-qual required the seller to pay 6 percent of closing costs and I managed to finally find a house acceptable to my mortgage representative. My broker submitted a purchase agreement and the seller agreed to all the terms stipulated by my mortgage rep. Three weeks later, my mortgage rep says I need to come up with a 5-percent downpayment even though they're working on a 100-percent, zero down loan. I'm terribly confused and angry about this. I was never told I'd need a downpayment until now. Should I take my business elsewhere?

Answer: Where is "elsewhere"?

What you're trying to do is purchase a home with 6-percent discount and no money down. You probably could have done such a transaction a year ago or perhaps even six months ago, but that window is largely if not entirely shut. Many of the lenders who made such loans are out-of-business, no longer offering such terms, or looking for interest rates normally associated with third-world economies.

I would expect that you have a conditional pre-approval and not an absolute financing guarantee. Speak with your broker about other lenders in your community to see if this purchase can be salvaged.

Question: I have a home that was built in the fifties and valued at $55,000. I have added a 650 square foot, two-story addition with new siding, roof, carpet and tile through-out the existing and new areas. What kind of value have we added? The roof is metal while the siding is top-of-the-line vinyl siding.

Answer: The answer depends on local values -- in Manhattan perhaps several million dollars while in the middle of Kansas a lot less.

You can ask a local real estate broker to give you an estimate of the property's current market value or you can get an appraisal. If you want to sell, then part of the answer will depend on whether your expansion is consistent with the neighborhood because the general rule is that buyers like to find the least expensive home in the most expensive neighborhood they can afford. Another issue is whether the expansion works with the present property -- going from a three-bedroom home to a six-bedroom home and not enlarging the kitchen or upgrading the heating and air conditioning is unlikely to work.

This column is designed to provide accurate and authoritative information in regard to the subject matter covered. It is made available with the understanding that neither the author nor the publisher is engaged in rendering legal, accounting, or other professional services. If legal services or other expert assistance is required, the services of a competent professional person should be sought.

Published: September 4, 2008

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