Ask George & Chuck

Question (TX): Should appraisers take "Non-Realty Items" listed on that addendum into consideration when completing the appraiser's estimate of the selling price?

Answer: This is a big issue. What if the seller "leaves" the pool table, big screen TV, and surround sound system? The buyer requires that he agree to it in writing. Does the appraiser ignore $25,000 worth of personalty that's included?

            We asked a trusted and knowledgeable mortgage broker your question and Tom Wilson, President of Optima Mortgage, stated:          

“Any personal property cannot be included with the sales price of the realty. Either the appraiser removes some value from the sales price or the personal property is removed from the contract. In practice, the lender usually makes us remove it from the contract, so the appraiser never has to make the adjustment. However, appraisers always get a copy of the contract with the order from the AMC (Appraisal Management Company)."

Question (TX): Can a listing agent insist we use her as our representative in the purchase of a house? She is already representing the seller. Our Realtor found the house and showed the house. But the listing agent is not letting her show us the house again. We told the listing agent that we had a Realtor already, but she is telling us that we cannot rent or buy the house unless we use her exclusively. Can she do that?

Answer: An agent can't force his or her services on anyone. She is walking a very slippery slope by insisting as she has. It would be better if the Realtor who located the property and showed it to you had signed you up on a Buyer/Tenant Representation Agreement. A listing brokerage can choose to not allow subagency for a listing. If that is the case, you need to either sign the Buyer/Tenant Representation Agreement, or work with the Listing Agent either as a customer of the Listing Agent or with the Listing Agent representing you in an Intermediary relationship.

            This gets complicated real fast, though, because your original Realtor was clearly the procuring cause and has a claim to a portion of the real estate commission. We suggest that you contact the listing agent's broker to set the listing agent straight. If the results are not satisfactory, then hire your own attorney, experienced in these matters, to intercede on your behalf.

Reprinted from the Ask George & Chuck website at www.AskGeorge.net.

Question (TX): A Real Estate Broker sued another Broker. The Plaintiff alleged the Defendant committed acts of misrepresentation, negligence and fraud in a real estate transaction. The Plaintiff won the lawsuit. Can the Plaintiff now obtain funds from the Real Estate Recovery Trust Account if the Defendant cannot pay?

Answer: Any aggrieved person who has suffered actual damages is entitled to reimbursement under the License Act. However, there is an exclusion for another licensee seeking compensation in a real estate transaction that is the subject of the application for payment (see Sec. 1101.607 (2)(B) of the Texas Real Estate License Act).

There are several ways a reader can make a comment regarding this blog.

     The first is to simply add the comment to this blog posting that you are reading. I monitor this blog at least once daily and will respond to any comment or suggestion that I approve for posting on this blog.

     The second is to access my web site at www.AskGeorge.net, select the "Ask A Question" tab, read the disclaimer that is displayed, and then enter your question or comment. I read all questions and comments but not all questions are answered due to time constraints. Only the questions I select are sent to Chuck Jacobus to obtain his review of my answer. However, I do try to reply to all comments, although the comments are also first sent to Chuck Jacobus.

    The third way is to concentrate and think really hard about your comment and wait for me to read your mind. I've discovered that this method is the least reliable.

George C. Stephens

My agent will not allow me to terminate my contract but will allow me to withdraw my listing until the contract expires. Does this mean that if I withdraw my listing, I will not owe the agency any commission or penalties? The contract I signed did not spell out any penalties for withdrawing the listing.

Answer: Yes, provided the Listing Agreement you signed does not have any penalties or charges associated with it for the withdrawal. I would ask your agent to send you an email or other written communication that states you will not be charged any fees, commissions, or other amounts for withdrawing your listing until it expires.

However, there might be another choice for you. The agency relationship is a highly personal relationship. It requires continuing consent of the principal and the agent. Agency may be terminated at any time by either party; however, an early termination without cause may expose the terminating party to liability under the agency agreement. The key to this is "early termination without cause" We don't know what caused your desire to terminate the listing agreement, or how much time remains until the listing agreement expires. However, there are certain justifiable causes so the statement that an early termination (of your listing agreement) without cause may not apply to you.

The home smelled like Glade or Febreeze when we first were shown the home by our real estate agent, so we did not suspect any pet stains at that time. After we moved in, we found out that there are multiple pet urine stains on the flooring throughout the home. We also noticed the house smells terrible especially when it rains or is humid. Stains on the carpet were invisible to the naked eye but a black light inspection performed on May 1, 2009 revealed that there are multiple urine stains in every bedroom and in both hallways. Some stains appeared to have had attempts at cleaning and some did not. I have taken pictures of these stains under black light. There are at least five stains in every room.

Even after a professional carpet cleaning, the house still smells like urine. The carpet cleaner stated that the urine soaked through to the slab and the smell cannot be further addressed through chemical cleaning.

Living in a home that stinks is not an option for us. In order to get rid of the smell of urine, we have to replace all the carpeting, clean the stained slab with an enzyme cleaner followed by bleach, and treat it with Red-X sealant, for a total cost of $7400.

My question is: Do sellers have to disclose pet stains on the floor? Are they liable for the cost of new flooring?

Answer: Sections 2 and 4 of the Seller’s Disclosure Notice, (TAR-1406) and Sections 3 and 5 of the Texas Real Estate Commission form OP-H, both provide the opportunity for a seller to disclose problems with floors (and our interpretation of that includes floor coverings such as carpet), as well as both forms also provide the opportunity for a seller to disclose any item, system, or equipment on or in the Property that is in need of repair that has not been previously disclosed in this notice.

Thus, in our opinion, a seller is required to disclose serious urine stains such as you describe. Our recommendation to you, however, is to document in writing (invoices, etc, as well as the photos that you have already done), the extent of the damage and what it costs to remediate it. Your first obligation is to yourself and your family and to make the home as pleasant to live in as possible. That does not mean that you should not hire an attorney, successfully experienced in this type of litigation, to represent your interests. Just because you may have a legitimate claim against the seller, however, does not mean that the seller has the financial ability to pay should you win in court. It is usually a good idea to remediate an unpleasant condition first while you are seeking settlement costs.

Dear George: Who is required to be at the closing when I sign for my home? Does the seller have to be there?

Answer: A closing needs to involve a buyer or his representative, a seller or his representative, and someone who "opens escrow" in the real estate transaction. The escrow opening is typically accomplished by the buyer giving his deposit and his instructions regarding the real estate transaction to an impartial third party; that third party is usually a title company, but it could also be an escrow company, an abstract company, an abstract attorney, or a real estate attorney. The buyer and seller don't have to close at the same time. The title company or whoever is performing the closing may schedule separate closings for the buyer and seller or their representatives.

Dear George: My wife and I used a REALTOR® to lease a house that we own. The tenants are nearing the end of the lease and want to purchase the house. Are we obligated to use our REALTOR® to sell the house to the tenants?

Answer: It depends. Your REALTOR® likely required you to sign a Texas Association of REALTORS® Residential Real Estate Listing Agreement, Exclusive Right To Lease form. If he did, look at Section 5, Broker’s Fee. Under that heading, look for D. Other Fees, and (2) Fee for a Sale. How that section is filled out determines how much you are obligated to pay your REALTOR® should you decide to sell to your tenants. If your REALTOR® used a different contract, read it thoroughly or contact him and ask.

Dear George: My husband and I are working with a REALTOR® to find a home. We made an offer on one that was in foreclosure and, after a few counters on both sides, we reached an agreement. After submitting our signed paperwork and earnest-money deposit, we were told the sale would not happen because the house had been sold to a mortgage insurance company. We've been told that we'll get our earnest money back, but how could this happen?

Answer: Your agent should have told you that your offer isn't accepted until the seller signs it, initialing any changes, and the seller's agent tells you or your agent of your offer's acceptance. Too many buyers mistakenly think that their offer is accepted when a seller or his agent says so. You were told your offer was accepted before it had been signed by the seller, or the seller did not have the authority to accept your offer since a mortgage insurance firm ended up with your property.

Dear George: If I make a $60,000 downpayment when I buy a house, does that mean I have $60,000 in equity when I sell it?

Answer: Yes, but only if the house holds its value or appreciates.

Dear George: I'm single and have worked at the same job for the past six years. I don't earn much, and my credit score is in the low 500s. What are the chance that I can get approval for a mortgage as a first-time buyer? Should I get a co-signer?

Answer: Working for the same employer for six years shows consistency, which is in your favor. However, most lenders will balk at a credit score in the low 500s. Here's a rough outline of what FICO credit scores mean to lenders:

• 700+: Excellent.
• 680-699: Good.
• 620-679: OK. You likely won't be denied a loan, but the terms may not be generous.
• 580-619: Banks and lenders are probably able to get you a loan, but it will be very expensive for you.
• 500-580: You're in trouble. You'll need some credit repair before you get a loan.
• Below 500: You need to repair your credit now.

You should enroll in a credit-repair class with an organization that belongs to the Better Business Bureau. Try this before you enlist help from the co-signer. Raise your credit score before taking on more debt.

Dear George: I'm in the process of buying a house. Who pays for the survey? The contract is confusing to me.

Answer: Let's assume the contract you refer to is the Texas Real Estate Commission One To Four Family Residential Contract (Resale), which is the contract most people use when buying and selling existing residential property. The party responsible for paying for the survey depends on which of three boxes is checked in Section 6C, Survey. The first selection indicates the seller will provide an existing survey or the buyer will obtain a new one at the seller's expense, given certain conditions. The second one says that the buyer will obtain and pay for a new survey. The third choice indicates that the seller will obtain and pay for a new survey. One of those boxes should be checked, depending on what you and the seller agreed upon.

Dear George: I heard that some property owners are exempt from providing a seller's disclosure to potential buyers. Is this true?

Answer: Yes, there are exceptions. A seller of a single residential property is not required to provide a purchaser with a disclosure notice when the transfer is:

• pursuant to a court order or foreclosure sale
• by a trustee in bankruptcy
• to a mortgagee by a mortgagor or successor in interest, or to a beneficiary of a deed of trust by a trustor or successor in interest
• by a mortgagee or a beneficiary under a deed of trust who has acquired the real property at a sale conducted pursuant to a power of sale under a deed of trust or a sale pursuant to a court ordered foreclosure or has acquired the real property by a deed in lieu of foreclosure
• by a fiduciary in the course of the administration of a decedent's estate, guardianship, conservatorship, or trust
• from one co-owner to one or more other co-owners
• made to a spouse or to a person or people in the line of consanguinity of one or more of the transferors
• between spouses resulting from a decree of dissolution of marriage or a decree of legal separation or from a property settlement agreement incidental to such a decree
• to or from any governmental entity
• of a new residence of not more than one dwelling unit which has not previously been occupied for residential purposes
• of real property where the value of any dwelling does not exceed 5% of the value of the property

Dear George: Our house has been listed with a REALTOR® for 150 days, and we're just discovered that she has been displaying false information about our home. She put "has known defects" in the MLS for the duration of the listing, and there are no defects with the house. Can I terminate the agreement based on this information?

Answer: When you signed the listing agreement, did you review what the agent stated in the MLS listing about your home? If you weren't given a chance to review and authorize the information the listing agent put in the MLS, that could be cause for terminating the listing agreement. It could also be the basis for a complaint to the Texas Real Estate Commission. Talk to the broker of your agent's firm and ask him to what he will do to fix the problem.