Investors mail offers for out-of-state property

Inspector needs longer

Q: I am a home inspector, and I’ve referred countless people to your column. Your advice is honest and straightforward.

However, in your column, I noticed a statement that said, in effect, that a buyer should be able to get an inspection report within a week of signing the contract. I suppose that may be true in some places, but that wouldn’t necessarily be true in our area.

There are many factors that delay an inspection. It’s not just that my schedule gets full; it’s also that sellers drag their feet, tenants refuse access to their home, agents create unrealistic deadlines, buyers go out of town — the list goes on. So, I just want to clarify that an inspection within a week is probably not the norm in many places. — askedith.com

A: Thanks for taking the time and going to the trouble to write me. You’d think that after 40 years I’d remember how things differ from one location to another. Thanks for setting me straight. I’d be interested to hear what time limit you’d like to see stipulated in your local purchase contracts.

Inherited a property

Q: Last year, I inherited my grandfather’s lake cottage, and I’ve been renting it out. A teacher might rent it for the winter. There’s no mortgage, so how do I figure the deduction for depreciation on my income tax? — G.

A: That so-called expense for depreciation has nothing to do with a mortgage. It’s figured from your cost basis, which is the cottage’s market value at the time you inherited it, or when you converted it to a rental property.

If you’re going to be a real estate investor — it sounds as if you already are — you should have professional help with bookkeeping and tax returns. Find yourself a certified public accountant.

Contact Edith Lank at www.askedith.com, or at 240 Hemingway Drive, Rochester NY 14620.

Q: Our deceased parents left us a home in a state in which we no longer live. We have no intention of returning there.

We renovated the house out of respect for our parents. The property is vacant. We have kept up on the taxes and the gas, electric and water bills. There are no debts on the home.

We constantly receive letters (like the ones enclosed) from people offering to buy the property. Is it good to do business long distance? How should we handle this?

We have decided on a price that we think is fair and are ready to proceed with the sale. We await word from you. — R. and M. T.

A: The letters and postcards you forwarded are fascinating. Some of your would-be buyers even use the same wording, which I assume they got from one of those “get rich quick” real-estate seminars. They, or their instructors, will have found your names in the county public records office.

First off, I don’t think they’re lying. They are, as they describe themselves, real estate investors. They really do want to buy your folks’ home. They all mention the home’s address. I expect any one of them would pay cash. They would close quickly. You would avoid — as several of them point out — stress and hassle by selling to one of them. And it’s true you wouldn’t owe any commission.

Look at this from the investors’ point of view.

They plan to buy your parents’ home at wholesale with the hope of selling it at retail (market value). Why else would they buy it? Until they sell it, they’ll carry the expenses you’ve been carrying: taxes, utilities, landscaping, insurance, etc.

In addition, they’ll have cash tied up in the house. Investors usually allow something for unexpected repairs, and then they’ll add in something for profit.

Otherwise, there would be no point in risking their money in the first place.

As you can see, their offers will be — have to be — substantially lower than market value. Sure, the house would be worth more to a buyer who would live in it. But in that case, you’d have to live through the uncertainty of a regular sale on the open market.

You’re going to end up doing business long-distance either way, so you need to decide: Do you want to continue carrying those expenses while you wait for a normal sale through a local broker (in that city)? Or is it worth taking less for the property in return for prompt cash?

You have a price in mind that you think is fair but remember: Market value is pretty well-determined by the buying public; and the investors who write you will be offering a wholesale discounted price from that.

Now, you asked how to handle this. You have no obligation to an investor until you sign something. You could ask several of them for written offers while at the same time asking a few local brokers what price they would suggest if you were to list the home on the open market.