Log In   ·   Become A Member

Shedding A Light On Some Common Myths When Selling And Buying A Real Property

John A. Viteritti

These ten issues by no means constitute all of the myths and pitfalls with respect to selling and buying real property. (Photo: iStockphoto.com)

The process of buying and selling real property can be a very emotional experience. It may also be a very costly, time consuming, and disruptive of the goals you are attempting to achieve, if not done properly. My first piece of advice would be to engage the services of professionals, real estate brokers, attorneys, and home inspectors among them. To illustrate the point, let's examine some common myths.

Myth #1: If I list my property with a broker for a certain price, financing terms, etc., and he shows the property to a buyer who is prepared to go to contract and meet these terms, I can still change my mind and not owe the broker a commission. False: The listing agreement is an employment contract between the seller and broker, and courts have awarded commissions to brokers where the seller has backed out of the deal. This is why I recommend that a seller solicit legal advice before entering into a listing agreement with a broker.

Myth #2: I do not have to pay the broker's commission unless the title passes. False: Unless the listing agreement states that, courts have awarded broker's commissions when title didn't pass. To avoid this, an attorney would insert a clause in the listing agreement stating that a commission is not due unless title passes, except for willful default by the seller.

Myth #3: Once I have accepted an offer from a buyer and we are prepared to go to contract, the broker should stop showing the property. False: An offer by the buyer and an acceptance by the seller are not binding until a written contract has been signed by both parties. Even then, there are likely to be conditions that will have to be met such as financing, home inspection, title reports, before the parties are obligated to perform. The best one to determine when the broker should stop showing the house is the seller's attorney.

Myth #4: If I have a title search done before I buy the property and everything is alright I don't need title insurance. False: Title insurance insures the buyer against any ownership claims that may arise after the buyer has taken title. If a lender is involved they will insist that the buyer purchases title insurance protecting the lender equal to the amount of the loan. The policy that protects the buyer is equal to the purchase price. Both are paid for by the buyer.

Myth #5: If I tell the broker that I am selling the house "as is", those words mean what they say. False: In a sense, they might mean what they say but the buyer's attorney is going to insert into the contract conditions regarding marketable title, free of all liens and encumbrances as well as evidence that the property complies with local zoning and has certificates of occupancy required by the local Buildings Department. Other conditions regarding the property are likely to be inserted.

Myth #6: It is automatic for the seller to pay the broker's commission. False: While it may be the common practice, either or both seller and buyer may pay the broker's commission. It's a matter of agreement between the broker and the seller and buyer. By anti-trust law, there is no such thing as a "standard" commission, which is not to say that there isn't a typical commission.

Myth #7: The broker's commission is earned when title passes. False: While it is typically paid at the closing when the title passes, it is earned when the broker has performed his responsibility. Commission disputes have often taken years to resolve in the courts, and when finding in favor of the broker, they have been awarded the commission plus interest.

Myth #8: If the light fixture, or washer or dryer that was supposed to go with the property has been removed, I don't have to close. False: Like with any contract breach, you must allow the breach to be remedied, for example, a reasonable substitute if possible or a credit equal to the approximate value of the item.

Myth #9: If I list my property with a broker, I can refuse to allow buyer's brokers to show the property to their buyer clients. False: The seller represented by a broker cannot refuse to cooperate with a buyer represented by a broker. However, the seller is not obligated to pay the buyer broker's commission. That's a business decision that should be discussed with the seller's broker and attorney.

Myth #10: I can refuse to sell my house to whomever I want for any reason I want. False: Federal, State, and Local Fair Housing Laws apply in the sale and renting of real property.

These ten issues by no means constitute all of the myths and pitfalls with respect to selling and buying real property.

Caution should be exercised. Never assume. As stated earlier, look to the professionals for guidance.


John is a St. John's University graduate, licensed Real Estate broker, lecturer, teaches real estate license classes at LIU, NYU, and Cook Maran Real Estate School, and is a well-respected consultant to the real estate industry. www.johnaviteritti.com


Be the first to comment on this article. (Just fill out the form below)
 

Submit Your Comment

Please note, you are not currently logged in. Your comment will be submitted as a guest.
To submit your comment as a member, please click here.
Your Name:
Location:*
Comments:*
* Comments will be reviewed and posted in a timely fashion
* All fields are required
Question:*
What color is a banana?
(For spam prevention, thanks)
 
 
 
http://www.hamptons.com/gallery/ads/2125.gif
http://www.hamptons.com/gallery/ads/1824.gif
Gary R. DePersia, Corcoran Real Estate
With over $2 billion in transactions on the East End and since 1995, Gary DePersia is consistently ranked among the top producers in the Hamptons. A year-on-year member of The Corcoran Group President’s Council, he has qualified as a national list maker since 2007. In 2008 he was Corcoran's top broker on the East End by sales volume and rental units; and ranked as the nation’s 4th top broker. In the 2017 REAL Trends & The Wall Street Journal list of America’s top real estate professionals, he was designated #26 nationally, #4 in the Hamptons and #3 at Corcoran overall by volume with nearly $200 million of transactions for the past year. His office operates with four licensed assistants allowing him to build a business stretching from Southampton to Montauk and Sagaponack to Shelter Island. gdp@corcoran.com

Bridgehampton National Bank
For over 100 years Bridgehampton National Bank has been the East End's hometown bank. Many success stories...one bank, BNB!

Advertise on Hamptons.com - Have your business be seen by over 2 million viewers including NEW searches
Hamptons.com- Our exclusive online magazine has 2.6 million Page Views YTD for 2015. Contact us to join our elite group of clients that benefit from having a presence on the Hamptons award winning publication www.Hamptons.com

Hamptons Carpet One Floor & Home
We pay less,and so do you.With over 1,000 stores in our buying group, we can get the lowest prices from the best flooring manufacturers — and pass the savings on to you.Visit our other locations: Hamptons Carpet One Floor & Home, 675 North Sea Road,Southampton, NY 11968

Southampton Masonry-Visiting the Southampton or the Wainscott locations is an exciting experience.
Southampton Masonry has been serving Long Island's masonry and tile needs since 1975. Delivering quality products from Manhattan to Montauk for over three decades. The company's continued success is due primarily to their number one priority: customer satisfaction, with a promise of prompt and courteous service from the professional, knowledgeable staff. Southampton Masonry has the largest inventory on the east end. As direct importers they can offer a large variety of the finest quality products at the most competitive pricing for both your interior and exterior projects.

CP Complete- Landscape Design & Construction
Paul Guillo And Chris Hall Two Of The Most Respected Names In The Community Together, they are partners in CP Complete. They bring their years of experience and integrity to creating and renovating luxury backyards.

CP Complete- Landscape Design & Construction
Paul Guillo And Chris Hall Two Of The Most Respected Names In The Community Together, they are partners in CP Complete. They bring their years of experience and integrity to creating and renovating luxury backyards.