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View Full Version : I'm fuming right now, supposed to buy a house tomorrow



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Cupid
10-13-2011, 02:59 AM
And I just find out, on the eve of the closing, that the house was a non-homestead which means I am responsible for considerably higher property taxes for the following year! This, after the house was advertised as a homestead and assurances from the realtors that it was!

So I said the deal is off, then! Why should I have to spend an additional one thousand dollars when somebody must have known this! I could have asked for more in closing costs or a reduced price on the house.

Am also having second thoughts about the house anyways. I think I am paying too much. It's a flip house and while it's all nice and pretty inside, the neighborhood isn't all that (tiny ranches all across the street) and duplexes with questionable tenants a few blocks over.

If I don't go through with this,the seller could come after my $2 thousand deposit. Supposedly my realtor (my former SIL) said she and the seller would make up the difference in the taxes.

Very upset:mad:

sk8er1964
10-13-2011, 03:07 AM
Are you in Michigan?

Matryeshka
10-13-2011, 03:09 AM
If they try to come after your 2K deposit, couldn't you counter that you don't owe them anything since they're guilty of false advertising?

Cupid
10-13-2011, 03:12 AM
Are you in Michigan?

Yes

Cupid
10-13-2011, 03:13 AM
If they try to come after your 2K deposit, couldn't you counter that you don't owe them anything since they're guilty of false advertising?

Supposedly something is in fine print on the 20+ Purchase Agreement that th tax information might be inaccurate, but I specifically asked my realtor if she was sure it was a homestead, and she said yes.

sk8er1964
10-13-2011, 03:19 AM
OK. Don't know if it is a city or a township. I am going to assume a township or village. Do you know when the community collects the 18 mills school tax? Winter? If so, I'd make it a requirement that the seller pay or pro-rate that tax from the December 31st tax date - or at least the May deadline for filing. Depending on the price of the house, that could be several thousand dollars. If you are able to work it out, then the non-homested would only be there for the 2011 tax year (summer/winter) because the deadline for filing homested is May 1st. You would be homested for the 2012 tax year (starts July 2012). PM me if you want more info in the morning. I am a treasurer in Michigan. Don't know if I can help you with the negotiations, but I can help you understand the law.

Louis
10-13-2011, 03:41 AM
I don't know Michigan law, but the $2,000 deposit could be the least of your problems. Say your offer was $150,000. You back out. The seller puts the house back on the market. It takes three months more months to sell and the seller can only get $100,000 for it. You may get sued for $50,000 in damages plus the carrying costs of those three months if your contract does not permit you to back out at this juncture. (And I suspect it doesn't.)

If you are taking out a mortgage on this property, you probably will also have to pay various loan fees since much of the work has already been done. That could be another $1,000 down the drain, plus probably another $1,000 you've already paid in inspection and appraisal fees.

Unfortunately, an oral statement from your real estate agent is not binding. Real estate listings usually have disclaimers up the wazoo. Real estate agents have no fiduciary duty to you. Too late now, but IMO you should've hired a real estate lawyer if you had any uncertainties about what you were signing and what you were buying.

You are probably better off closing on this house, unless you can get the other party to sign a legal document releasing you from the contract. So, IMO, your focus should be on getting the biggest credit possible.

Will this $1,000 property tax increase continue in perpetuity? If not, and you can file for homestead next year, I think you should let the agents pay the difference and be done with it. If it will continue in perpetuity, I think their offer of paying one year is too low. $2,500 would be more reasonable, but I'd start in the neighborhood of $5,000 or maybe $10,000. You have the perpetuity argument and also the argument of the house being less valuable without the exemption.

I'd also stop dealing with real estate agents right now. I'd call up their managing brokers and/or the managing director of the office. Have a time-stamped PDF of the inaccurate listing, if it's still available online, and/or a flyer that shows the false advertising. If they're not receptive to your offer to compromise, threaten to file a complaint with the local real estate board (find out the name of your local board - it will make you look more prepared) and/or get an attorney. Litigation is expensive for you, but it's also expensive for them. And no real estate brokerage or agent wants the real estate board to come asking questions - especially when they've clearly done something unethical, even if not illegal.

Good luck.

julieann
10-13-2011, 04:27 AM
Wasn't that disclosed in the abstract or RPC? I would make the title company pay if the seller won't, it's not the sellers problem.

If they disclosed the taxes as being a few hundred dollars, chances are there was a problem and the title company should have asked.

barbk
10-13-2011, 04:29 AM
And no real estate brokerage or agent wants the real estate board to come asking questions - especially when they've clearly done something unethical, even if not illegal.
Good luck.

Very frustrating to have this come up at the last minute, and it certainly sounds like the RE agent should eat the difference. I would remain open to the idea that they made an honest mistake, however. I've seen houses on our street mistakenly listed as being districted to the wrong school -- our little street was added long after the boundary lines were drawn, and we fall just outside the closer school's boundaries and are instead districted to a school quite a bit distant. People think that the Creek is the dividing line, but the school district wrote the legal description as being all homes bounded by the North side of X street, and when our little street was added between X and the Creek that rather broke the map.

Maybe yours is one of those situations where the RE agent relied on someone's mistaken representation. Still wrong, but not intentional.

God luck!

snoopy
10-13-2011, 04:59 PM
Maybe yours is one of those situations where the RE agent relied on someone's mistaken representation. Still wrong, but not intentional.


Maybe but then Real Estate agents are of little use if they don't check the key criteria for accuracy. They are just window dressing and a waste of money.

MacMadame
10-13-2011, 06:44 PM
You're going to completely walk on a deal over $1000? What percentage of the purchase price is that? I'm guessing less than 1%.

agalisgv
10-13-2011, 07:24 PM
You're going to completely walk on a deal over $1000? What percentage of the purchase price is that? I'm guessing less than 1%. I suspect this is a major reason why:

Am also having second thoughts about the house anyways. I think I am paying too much. My guess is it's the second thoughts on the house rather than the homestead issue which is fueling the desire to pull out of the deal at this point. The money difference from the homestead exemption is pretty piddly in the big picture of things.
Maybe but then Real Estate agents are of little use if they don't check the key criteria for accuracy. They are just window dressing and a waste of money. RE agents are there to primarily negotiate the deal, and make sure the proper paperwork is completed to close the deal. They basically allow you to avoid paying for an attorney to close the transaction, and if you're the buyer, that means you're paying nothing out of pocket to get all the legal work done.

Personally I think people tend to put too much on RE agents. If *anything* isn't 100% perfect in their deal, they blame the agent. But ultimately it's the buyer's responsibility to check these things out.

As anecdote, one house we bought had some land near it that wasn't yet developed. So I wanted to know what was planned for that area. I asked our agent, and she told us she thought it was a continuation of the residential area. But I wanted to be sure so checked the master plan with the city, and while part of it was scheduled to be residential, another part was planned for an upscale planned community complete with golf course and lake. But I could tell from the years spent in planning this thing, it wasn't going to happen anytime soon if at all. Should the RE know that? To me, that was my responsibility to find that out if it mattered enough that I might not buy the house otherwise.

At some point, buyers have to take some responsibility in their home purchasing.

jmho

snoopy
10-13-2011, 07:44 PM
Since RE agents get a percent of the house sale price, depending on the value of the home, it might be a better deal just to hire the attorney.

Louis
10-13-2011, 07:52 PM
[RE agents] basically allow you to avoid paying for an attorney to close the transaction, and if you're the buyer, that means you're paying nothing out of pocket to get all the legal work done.

:eek:

I think you're speaking theoretically rather than factually, which is fine, but I just want to point out:
1) Real estate agents have no legal training
2) They have no fiduciary responsibility toward you
3) They are forbidden from telling client that they don't need an attorney or insinuating that their services replace the need for a lawyer

And, in some states, like NY, you almost always need an attorney in addition to a real estate agent. I felt sorry for our attorney, who has two Ivy League degrees. He got paid $2,000 and the real estate agent, who flunked out of art school, walked away with $50,000 for doing almost nothing. Seriously, we were unrepresented buyers who walked in the door and then did everything on our own (mostly because we don't trust real estate agents due to points #1 - 3 above). The listing agent hit the jackpot with us, though of course the seller paid.


Personally I think people tend to put too much on RE agents.

I actually disagree. Real estate commissions are still very attractive when compared to other sales jobs. Expecting a commensurate level of service and project management is only reasonable. As with many sales jobs, there is a "service" component that's built in to the commisison structure.

Tesla
10-13-2011, 08:24 PM
My guess is it's the second thoughts on the house rather than the homestead issue which is fueling the desire to pull out of the deal at this point.

At this point, I think it's too late to back out. Should've thought of that before getting to this point.


I think you're speaking theoretically rather than factually, which is fine, but I just want to point out:
1) Real estate agents have no legal training
2) They have no fiduciary responsibility toward you
3) They are forbidden from telling client that they don't need an attorney or insinuating that their services replace the need for a lawyer

Still doesn't stop people from going in without a lawyer (which is their fault).