“Hi Gary. I own a University City home that I need to sell because I’m moving to L.A. I listed with my sister’s friend who I don’t know at all. It’s been on the market over 3 months and she keeps telling me to reduce the price. I don’t want to go any lower because I need the money. What do you suggest? Help!”

Answer:
I have two very different suggestions, depending on the circumstances.

If you suspect the agent pumped up the price to entice you to list with him/her, ask to cancel the listing. Inflating the price estimate in order to get a listing is the dirtiest and oldest real estate trick in the book. It happens every day. That agent is obviously looking out for herself and not you, so don’t trust her to represent you.

On the other hand, if you insisted on this price or the values in your complex have dropped, don’t shoot the messenger.

Don’t be like the patient who dumps his doctor because he tells him he’s sick. If you expect to sell your home, cooperate and lower the price. The cruel reality is that buyers out there don’t give a darn if you need the money. They’ll only pay what they think it’s worth.

“Hi Gary. Question about credit scores. I thought the max was 850, but I just bought a car and they said my score was 870. How is that possible? I asked the guy at the dealership and he didn’t know.”

Answer:
Congratulations for having great credit. But don’t worry, your 870 score hasn’t broken the credit scoring software.

There are actually three different types of credit scores:

300-850: “Classic” FICO model used by the mortgage industry
250-900: “Auto,” used by (you guessed it) the auto industry
250-900: “Bank Card,” used by the bank card industry

Other than confusing the consumer, there must be a good reason there are three different credit scoring models. But no one has shared that with me…

“There are so many costs to sell a home. Why am I supposed to pay for title insurance? I know there are no liens against my home. I’m sure a simple title search would show this.”

Answer:
Great question. Several clients have asked me this over the years…

Title insurance covers more than just recorded liens, so a title search isn’t sufficient. Nor, obviously, is your statement that the title is clear.

But the most correct way to answer your question is that indeed you do not legally have to provide title insurance. However it’s the expectation of every buyer and their agent that you will.

If you were to refuse to pay it, the best case is that the buyer would subtract that from the price they’re willing to pay. And the worst case is they don’t buy your San Diego home because they feel you’re unreasonable or (incorrectly) suspect that you have title issues you’re not disclosing.

So, to put it bluntly, just bite the bullet and pay it like every other homeseller does.

“Hi Gary, I’ll be buying a San Diego home within the next few months. I’ve never bought a house before, so please excuse me if this is a dumb question. If I make an offer and it gets accepted, but I end up not buying the house, do I lose my deposit?”

Answer:
As you’ve heard before, the only dumb question is the one you don’t ask. And yours is a good question anyway.

Basically, if you cancel using your rights in the contract, you’ll get your deposit back. But if you cancel without the right to do so, you are at risk to lose your deposit.

Let me explain…

Real estate contracts have contingencies, where one party (usually the buyer) has the right to end the agreement without penalty within a set number of days under certain circumstances.

A common contingency is the right to inspect and investigate the property and object to the findings, typically for 7 to 17 days after the offer is accepted. So if on day #6 you decide you don’t want the house, you can cancel and get your deposit back. But if you decide this on day #18, it’s too late.

Here’s how deposits are handled and how you get yours back…

When your offer is accepted, your agent is required to send your deposit check to the escrow company immediately. Escrow cashes it and holds the funds. If the sale cancels, escrow can only give you or the seller the money with mutual instructions from both buyer and seller, or with a court or arbitration order.

So you and the seller must both agree on what happens to the deposit. If not, then you or the seller must go to court or arbitration to determine its fate.

99% of the time, if you cancel consistent with your rights in the contract, the seller will agree to release your deposit. For the rare 1%, it takes court or arbitration.

“I’ve been told that banks prefer to sell their foreclosures to owner occupant buyers. Is that true and why? I’m strictly an investor, so what’s the downside of just saying I’m going to live in the property?”

Answer:
That’s a lot of questions. I’ll answer them one at a time:

1. Do banks prefer to sell their foreclosures to owner-occupants?
A few do, but most don’t seem to have a preference. However, Fannie Mae and Freddie Mac have a stated policy that they prefer to sell to owner-occupants.

2. Why do some prefer to sell to owner-occupants?
Some banks feel owner-occupant buyers are more likely to stick with a home during escrow and actually close. For Fannie and Freddie, it’s more of a “public policy” goal to promote neighborhood stability by having owner-occupants over renters. I’ve actually seen them sell for LESS money to an owner-occupant.

3. Why shouldn’t an investor just say they’re going to owner-occupy when the make an offer?
First, obviously it’s lying. Second, it may be fraud. Third, Fannie and Freddie make buyers sign a form certifying that they intend to live in the property and spelling out dollar penalties if they’re caught lying and not living there for a minimum period.