Business

Here’s one thing that protects both buyers and sellers in home sales

DEAR MR. MYERS: We apparently live in one of the few parts of the country where home sales are slow. We are getting ready to put our own house up for sale, and our real estate agent says we should offer any buyer a one-year home warranty policy that would cover various items if they break down during the first year of their ownership. The agent says that offering such a warranty will help make the property sell faster, but it would cost us nearly $500 to purchase. What do you think we should do?

ANSWER: I think that offering to buy a one-year home-warranty policy for a prospective buyer is a good idea, especially for sellers in a local housing market that’s slow.

A typical warranty policy – sometimes called a “service contract” – provides for the repair or replacement of most appliances, the electrical and heating systems, the water heater and a handful of other items that might break down or wear out within a year after the new buyer moves in. Coverage for other items, such as a pool or spa, usually can be arranged for an additional charge.

Such policies not only give buyers an extra measure of confidence to make an offer and close a deal, but also can protect sellers if something goes wrong several months after they move out.

For example, if a built-in dishwasher breaks down a few months after the sale closes, the policy will reimburse the new owner for some or all of the cost of having the appliance fixed or replaced.

Without a warranty or service contract, the buyers might ask the sellers to pay for the repairs or even sue if they believe that the dishwasher had a defect that the sellers should have disclosed.

Spending $500 or so for all the coverage that a home-warranty policy provides would be a wise investment not only because it could help the property sell faster, but also because it would provide both you and the buyers another layer of protection if something goes wrong after the sale is completed.

REAL ESTATE TRIVIA: About 85 percent of all American households have an automatic dishwasher, the U.S. Census Bureau reports. Most homes also have three TVs.

DEAR MR. MYERS: I have lived in the same one-bedroom apartment for four years, and have been very happy here. Although I used to sign a one-year lease every year, the landlord switched me to a month-to-month tenancy in January. Now he has sent me a legal notice to move out within 60 days, but did not provide a reason why. I have always paid my monthly rent promptly and have never done anything out of line, like throwing wild parties or playing my stereo too loud. Can the landlord kick me out without giving me an explanation for the eviction?

ANSWER: It depends on the rental laws in your city or community. But sadly, I’m afraid that the answer to your question is (probably) “yes.”

If you were still on a one-year lease, the landlord couldn’t force you to move out prematurely unless he could prove that you had violated one or more terms of the rental contract. But in most parts of the nation, tenants who instead rent on a month-to-month basis can be evicted without cause, usually after being issued a 30- or 60-day written notice.

There are some exceptions. For example, some cities and counties have “no-cause” rules that require a landlord to provide a tenant with a specific reason to terminate a tenancy, even if there’s no long-term rental contract in place.

Special rules also may apply if, say, the landlord wants to convert the apartment building into a for-sale condominium complex, the community is covered by tough rent-control laws or the tenant receives government housing subsidies.

Contact your local rent board or similar agency for more information. Also call your nearest federal Fair Housing office, which you can locate by calling the U.S. Housing and Urban Development (800-669-9777) or by visiting hud.gov. Good luck!

DEAR MR. MYERS: What does it mean when a house that’s for sale is advertised as “FSBO”? Does that mean that the property is in foreclosure?

ANSWER: No. “FSBO” is a realty abbreviation of “for sale by owner.” It means that the seller is marketing the home without the help of a real estate agent, usually to avoid paying the agent a sales commission that typically ranges between 5-7 percent of the purchase price of the property.

Personally, I would never try to sell or buy a home today without the help of a licensed sales agent or broker. Real estate laws have become so complex over the past several years that it’s easy for buyers or sellers to get tripped up if they don’t have the help of a realty professional.

Home sellers usually pay for their agent’s entire sales commission, but it’s a cost that often is easily offset by the higher price that a home that’s marketed by a realty pro can fetch. Because buyers typically don’t pay for any part of the seller’s commission, there’s no reason for them to eschew the help of a good agent or broker.

David W. Myers’ column is distributed by Cowles Syndicate Inc.

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