Q. We live in a very desirable neighborhood where homes rarely come on the market for sale. About the only time a home is sold occurs when the owner dies. Last week a local real-estate agent knocked on our door. She claimed to have buyers interested in purchasing a home in our neighborhood and asked if we might like to sell ``if the price is right.'' The agent asked how much we wanted to net for our home. When my husband named a price, the agent said if we would give her a listing at this price she could sell our home within a week. Nothing was mentioned about a sales commission. When the agent pushed us to sign a listing, I said, ``We would like to think it over.'' Is this type of net sales price for homes now customary?
A. No. The type of listing the real-estate agent suggested is called a ``net listing.'' It is illegal in some states and very dangerous in every state. I'm glad you didn't sign that listing, because your net price might have been too low.
Because the agent would receive any amount the buyer pays above your net price, the agent might obtain a higher-than-normal sales commission. Perhaps the reason the agent was so eager was because your net price was too low.
Before any home seller signs a listing, the real-estate agent should show the seller, in writing, a comparative market analysis. This form shows recent sales prices of similar nearby homes, as well as the asking prices of comparable neighborhood houses now on the market for sale. Only after you have this information are you in a position to determine the proper asking price for your home.
Realty agents hate me for suggesting this, but I must advise you to interview at least three agents before selecting the best one. Competition for your listing prevents one agent from getting you to list at too low or too high a price. Also, insist each agent provide you with references of previous sellers. Phone those clients to ask: ``Were you in any way unhappy with your agent and would you list your home for sale again with the same agent?''
In addition, a reader recently suggested asking each agent you interview: ``With which insurance company do you have E&O (errors and omissions) insurance and has your firm been sued within the last three years?'' Beware of any agent who does not have E&O insurance. You will soon know which agent should receive your exclusive (not net) listing.
Q. A few weeks ago you opened a can of worms when you ran that letter from an unhappy home seller who phoned the local board of realtors to get the names of the top agents to interview for listing her home for sale. I am executive officer of a Board of Realtors where we used to give out the names of the top sales agents to callers. You would be surprised how many phone calls our office receives asking for the names of the best sales agents and the best brokerage offices. But a few years ago our board of directors voted to stop giving out this information, because they felt it wasn't fair to the majority of agents who are not the top producers. That is the reason why most boards of realtors do not give out names of their best sales agents.
A. I can understand why the poor performers think it is unfair to give out the names of the most successful members of your board of realtors. However, most local boards of realtors acknowledge their top performers, so there is no valid reason to keep this information a secret. Because virtually every other industry publicizes its top performers, the realtors should be proud of theirs, too. Instead of creating bad public relations when a caller asks for recommendations of your top agents, why not mail inquirers a list of your top 50 sales agents? Surely, nobody would object to that.
Q. I am having difficulty making a tax-deferred exchange of my six-unit apartment building, in which I have about $100,000 equity, for a larger building. Every time I make a written exchange offer, the seller of the larger building I want to acquire rejects it and doesn't even make a counteroffer. Any ideas?
A. I encountered the same problem when I tried to do my first tax-deferred exchange of trading my triplex for a larger apartment building. Then I met a sharp real-estate agent who told me the key to exchange success is to first find a cash buyer for my triplex.
Once a buyer was found, it was easy to trade my small property for a larger apartment building, but subject to its cash-out sale, immediately after my tax-deferred trade up was completed. The same formula will probably work for you, too.
Q. We are considering buying a brand-new home. It was built by a new builder who told us this is only the third home he has constructed. We noticed several defects the builder promises to correct if we buy. But I am concerned there may be more serious defects that will appear after the purchase.
The builder says he will give us a 10-year warranty, but I am concerned as to what recourse we have if the builder goes broke.
A. You raise an excellent question, to which there is no satisfactory answer. Even many experienced builders form separate corporations for each subdivision, and then they fold that corporation when the project is completed.
The result is if construction defects develop, there is no builder to sue unless you can ``pierce the corporate veil'' and sue the individual contractor, if you can find him.
The best home builders provide 10-year warranty policies from independent third-party warranty companies, such as the well-known HOW (Home Owner's Warranty) Corp. If the builder can't correct any home defects, then HOW steps in to make the necessary repairs.
This is your best protection, but not all builders qualify for such policies. Ask your real-estate attorney to explain further.
(Copyright 1990, Tribune Media Services Inc.)
Bob Bruss' column appears Sundays in the Home/Real Estate section of The Times. Letters and comments should be sent to Bob Bruss, Seattle Times Newsroom, P.O. Box 70, Seattle, WA 98111.