Dear Michael: I can’t sell my house. It’s been on the market for more than eight months. I don’t want to drop my price. I am thinking of renting it out. Do you think this is a good idea? I am not a landlord and have no experience with tenants.
Answer: Have you considered all other alternatives before making your decision? There are many factors to consider. Will the rent cover your expenses? You must calculate your monthly mortgage, your property taxes and your insurance. If your rent income is less than this amount, can you make up the monthly difference? If your unwillingness to reduce the sale price is due to a negative amount due at the close of escrow, have you considered a short sale? After taking all these factors into consideration, if dropping your sale price is still not an option, leasing your home would be your only solution.
Being a landlord is not a difficult task, but it can have its challenges. It is most important to choose the right tenants. Check their credit, call previous landlords and ask for pay stubs and tax returns. If it all checks out, interview your prospective tenants and get a sense for what kind of tenants you will have. Eliminate any and all doubt that can cause you to make the wrong decision.
Dear Michael: I am late paying my property taxes. Can I put my house up for sale if I owe back taxes on it, and once it sells pay the tax bill at time of settlement?
Answer: Yes. Let your local tax authority know that you are planning to sell your home, and have them give you a payoff figure for the amount due with all late penalties incurred. Make sure the assessor has not begun the process of a lien on title to the home or something similar (depending on how long the taxes have been overdue). Do the same with your mortgage lender, or lenders, if this applies. Make sure that the net profit after closing costs including commissions and your unpaid taxes owed is enough to pay all parties. If you are going to list your home through a brokerage firm, make sure you let your agent know of any and all deficiencies on your home, including your back taxes. If you are selling on your own, be up front with the buyer and the buyer’s escrow company so that everyone is aware of all closing costs that must be paid through escrow at settlement.
Dear Michael: What needs to be done to make sure title is clear on my home before I can sell it?
Answer: When a home is purchased, either existing or new, a title search must be completed on the property in order to protect the buyer and lender from problems that could affect ownership. Some of these problems may be property line disputes, utility or other easements, tax liens, materials, mechanic liens or HOA lien, to name a few. In order for your home to clear title, the buyer’s lender will order a Preliminary Title Report, or “Prelims,” to ensure that there are no issues that would keep them from lending money on the home. If there are, those items must be cleared and proof of that clearance provided before the lender will loan or the title company will insure.
If a property is a cash purchase and a lender isn’t involved, a title search should be done so the parties are protected and clear title can be guaranteed.
Michael Kayem is a Realtor with Re/max Execs, serving Culver City and the Westside since 2001. Contact Michael at (310) 390-3337 or homes@agentmichael.com.