Always investigate before selling to companies that buy houses for cash

Q: We are looking to sell our house, but want/need out quickly due to some problems. At this point, we don't care to make any money, just want our current mortgage to be paid off. What do you think about those companies that buy houses for cash without having to go through Realtors and long, drawn-out closing process? -- J.A

A: Those companies buy at a wholesale price, hoping to re-sell at retail later. While they're holding the house, they have expenses for taxes, insurance, utilities, perhaps repairs, perhaps sales agent commissions, lost income from the money they paid you and the legal costs of buying and selling. If they don't add in something for risk and a margin for profit, why would they do it at all? So you can expect them to offer something substantially below true market value.

If that's enough to pay off your loan and you really want an immediate deal, no harm in it. But if you can afford to wait a bit, you'll come out much better by putting the place on the open market in the normal way. Your house is worth more to someone who's going to live in it. For a prompt sale, set a bargain price that will attract buyers.

Appraiser won't tell

Q: I am refinancing my conventional home loan to an Federal Housing Authority loan. The appraiser who came by to appraise the property told me she can't reveal the value of the property to me because the loan is an Federal Housing Association loan. Do you know if that is true? -- H.H.

A: You were misinformed, or perhaps you misunderstood. You are entitled to receive a written copy of any appraisal you pay for, no matter what kind of mortgage is involved. An appraiser wouldn't give you an oral opinion while doing the evaluation, though.

Is it truly sold?

Q: I thought I sold my home to a certain company but recently realized that all I did was transfer the deed to them. The mortgage is still in my name. How can I truly sell my home? -- Via e-mail

A: I'm afraid you did truly sell your home. What you didn't do was get rid of responsibility for the mortgage. That's a separate thing entirely. It's time to contact the state attorney general's office and file a complaint. I wouldn't be surprised if they've already heard about that company.

Foreclosure threatened

Q: My parents' neighbor is selling his house, but I found out through the Internet and the county clerk that CitiMortgage has filed a lis pendens beginning foreclosure proceedings. When I was seeing the property, he told me he has absolutely no money and recently filed for divorce. Right now we cannot afford his asking price, but by the time the property goes on the auction block, we will be able to bid on it as we have salary raises coming in the next three months. Should I approach him and see if he is willing to lower his asking price, or just wait it out and try to contact CitiMortgage later? Or wait for the auction and risk someone else getting the property in the meantime or bidding higher at auction time? I am a first-time buyer with two small boys in a cramped apartment so I need to be smart about this. -- Via e-mail

A: You don't mention one important factor -- how much is the present mortgage debt? At a foreclosure auction, that's what Citi will bid. You'd need to bid more than that and you couldn't go the normal route to apply for a mortgage. Local practices vary, but in most places, the winning bidder must pay immediately in cash. Bidding at foreclosure auctions is not a job for amateurs. Depending on the amount of the mortgage, your neighbor may not be able to sell for less than he's asking. And the foreclosure process may have gone too far to stop now. Find a broker, or better yet, a real estate lawyer, to contact the bank, find out just what dollar amounts are involved and see if the process can be put on hold while you try to negotiate a purchase.

Owning more than half

Q: My father-in-law owns 51 percent of his house and his deceased wife's family owns 49 percent. Who can make the decision to sell the house? -- K.W., Rochester

A: Percentages don't really matter. Any one of the owners can ask for a court-ordered auction sale, which is messy and expensive. They'll all come out better if they can work something out amicably. Failing that, it's time to bring in mediation, and, as a last resort, lawyers.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com.