Why don't you tell potential home buyers like ourselves how easy it is to buy a home if you find (1) an enthusiastic real-estate agent and (2) a cooperative seller who will help finance the sale?
A. Thank you for your wonderful letter because it will give hope to more home buyers, especially first-timers, than I ever can.
Shame on me for not emphasizing how easy it is to buy a home for around 5 percent cash down payment. Yes, you needed a cooperative seller, but there are plenty of sellers who will gladly carry back a second mortgage for 15 or 20 percent of the sales price. The bank, S&L or mortgage bank carrying your 75 percent first mortgage has an extremely safe loan.
Such a sale is risky for the seller. Yet the worst that can happen is the buyer will default and the seller will foreclose to either get the house back or be paid off in full by a bidder at the foreclosure sale.
Q. We live in a semi-rural area where the county is extending the water and sewer lines past our property. Whether we decide to connect or not, we will be assessed about $7,500. We think our property value will increase far more than this amount. But we will have a choice to (1) pay the $7,500 (which we don't have), (2) borrow the money, or (3) let the special improvement assessment "go to bond" and pay it off over 20 years. Do you think we should let the assessment go to bond?
A. Yes. Since you don't have the $7,500, your best alternative is to let the special assessment "go to bond," so you can pay it off as part of your annual property tax assessment over 20 years.
The county can borrow at a much lower interest rate than you can get at your bank or elsewhere. Spread out over 20 years, including interest, your annual payment will be so low you won't even notice it.
This situation is a good example of how necessary civic improvements can be financed at very low cost per property parcel.
Q. We bought our house a few months ago without getting a professional home inspection before purchase. The mortgage company sent out an inspector, who surely must have noticed the water stains on the ceilings in two bedrooms but failed to warn us. In the first heavy rain after we moved in, the roof leaked seriously. The seller, the estate of the previous deceased owner, denies any liability. Don't you think the mortgage company is liable for the $4,800 cost of a new roof?
A. No. Your mortgage lender doesn't guarantee the home's condition. The "inspector" sent by the lender was an appraiser who estimated the home's market value. He or she was not there to determine if the home had any material defects.
You, the real-estate agent, and/or a professional inspector were responsible for discovering any defects. In most states when the seller is the estate of the previous owner, properties are sold "as is" without any liability because the estate executor probably had no knowledge of any material defects. For further details, please consult your attorney.
Q. Last year, we bought our first home. We considered it to be a cute cottage. Little did we know its reputation in the community. We soon learned from our neighbors it was a house of prostitution until a few years ago. Also, we discovered it had been moved to the site about 10 years ago, so the structural integrity is questionable. Do you think we have grounds for a lawsuit against the seller and the real estate agent? Our family attorney says, "Forget it.
A. Real-estate agents are marketing professionals, not expert historians. Nor are they expected to research how and when a house was constructed. Unless the house has physical defects which the seller and/or real estate agent should have disclosed to you, I agree your attorney gave you sound advice.
Q. I own a beautiful view lot where I want to build my dream home. I work in construction but am not a licensed general contractor. When I applied at my bank for a construction loan, I was rejected because I don't have a general contractor building my home. Although my house plans were prepared by a licensed architect who will supervise construction, the banker said I must have a licensed contractor or I can't get a construction loan. Any suggestions?
A. The do-it-yourself home construction pitfall you describe is very common. Most banks and S&Ls will not make construction loans to unlicensed do-it-yourself home builders. The reason is these lenders have had bad experiences and they don't want to take unnecessary risks without a general contractor supervising the work.
