Dear Michael: Do I have to pay a commission agent fee if I sell my “FSBO” (for sale by owner) to a buyer who has an agent?
Answer: Sellers of FSBOs who sell to buyers with agents usually pay real estate agent commissions. Typically, it is half of what it would costs the seller if two agents are involved. When a buyer and seller have their own agents, it is usually 5% to 6% paid by the seller, as the buyer does not pay commission.
If you don’t plan on having an agent involved with your FSBO, you as a seller automatically assume all responsibilities and liabilities pertaining to the transfer of your property. Buying or selling a home can be done without using a real estate agent. However, more than 80% of home sellers use a licensed real estate agent, according to the National Association of Realtors. Traditionally, sellers who sign with an agent make more for their homes than FSBO sellers.
I advise you to hire a real estate agent or an attorney to take care of transferring your property during the escrow process.
Dear Michael: I am seriously contemplating buying a home. How much money do I need to put down to buy a home? And what is PMI?
Answer: During these difficult economic times, lenders typically require 20% down on the purchase price of a home. If less than 20% down is paid, borrowers must usually pay for and subscribe to private mortgage insurance (PMI).
PMI has been around a while but in the past it was reserved for people with less-than-stellar credit ratings. In its early days, PMI was something of a mark of shame. In recent years, PMI has become the norm rather than the exception. While PMI is often associated with first-time buyers, the reality is that even home buyers who are trading up into a larger or more expensive home are carrying PMI.
PMI is insurance for the lender, usually paid by the home buyer when the buyer has less than 20% equity in the home at the time of purchase. This is known as automatic termination and typically kicks in when you accrue 22% equity. If your loan amount is $400,000, your PMI is about $260 per month. But your lender is certainly not keeping track of your home’s natural appreciation. So if your home has seen appreciation over the past few years or if you have made improvements to your home, you might already be at or beyond the necessary threshold to cancel PMI. You will need to contact your lender and get your property appraised to start the process of removing your PMI.
Dear Michael: My home is listed at 1,500 square feet on the tax roll. I think it is about 1,700 square feet. How can I find out the exact square footage? I want to list my home and the last thing I want to disclose the wrong square footage.
Answer: Your first step is to go to city hall and ask to see the permits on your home. All records should be on file from the time your home was built. If any additions were made to your home and completed with permits, city hall should have them on record. If any additions to your home was done without permits, it is best to exclude this addition to the total square footage of your home. If you don’t, you may be held liable for misrepresentation.
A seller can define an unpermitted room as a bonus room or studio, but it must be listed as a separate room from the house and square footage must be excluded. It is also a good idea to disclose that this room was completed without city permits. If city hall does not have all the records on your home, as is sometimes the case with older homes, consider hiring an appraiser. It is crucial that you disclose the square footage of your home exactly as it is. The buyer’s appraiser will also measure your home when appraising for value.
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.