Sept. 29--Today, I've got answers to questions on buying a home from your landlord, retiree health insurance under Obamacare and charitable donations.
Q: Ann T. of Sausalito asks, "Our landlord has offered to sell us the condo we have been renting. Any advice what to think about?"
A: First ask yourself:
-- Is this a home you can afford? Get a ballpark estimate of the price and talk to a bank or mortgage broker.
-- Will the down payment deplete your emergency fund? What happens if you lose a job?
-- Will you have enough left over to save for retirement, college or other long-term needs?
-- Do you see yourself living in this home long enough to offset the costs of buying and selling it?
Jed Kolko, chief economist with real estate website Trulia, suggests using Trulia's rent-versus-buy calculator ( www.trulia.com/rent_vs_buy). "The reader could put in the rent they're paying now, the price the landlord is offering, and how long they plan to stay there -- and see which way the math favors."
Note: For monthly condo fees, click on advanced settings and add them to utilities.
If you decide to proceed, don't go it alone. In most cases, "a landlord is going to be more savvy about real estate than a tenant, who is likely to be a first-time buyer," says Janelle Boyenga, a broker with Intero Real Estate Services.
Find an attorney, real estate agent or friend who has experience buying and selling homes. An expert can help you value the condo, write an offer, understand the required disclosures and walk you through the mountains of paperwork.
Most important: Don't overpay. Visit nearby open houses and look at recent sales prices for comparable condos. This information is available on sites such as Zillow, Trulia, Redfin and Realtor.com. Include pending sales in your search and look at the most recent asking price.
An agent active in your area might have a better understanding of the market than an attorney, but an attorney can provide legal advice. Interview several and ask what services they will provide and at what price.
In a traditional sale, the seller signs an agreement with a listing agent who agrees to market the home in exchange for a percentage of the sales price. Commissions are negotiable but typically range from 4.5 to 6 percent. The listing agent usually gives part of this commission to the buyer's agent. The buyer does not does pay his or her agent directly.
A landlord who is not hiring an agent might accept a lower price, but then you probably will need to pay for help.
How much you will pay depends on how much hand-holding you need and how complicated the deal becomes. Fees are negotiable and you should interview several people.
Lawyers typically charge per hour, whether or not you buy the house. Ask for an estimate and see if they will agree to a flat fee or cap. Larry Scancarelli, a real estate lawyer in San Francisco, says that for a simple transaction in Sausalito, attorney fees for a buyer might range from $2,000 to $5,000.
Agents might want a flat fee or a percentage of the sales price. They might agree to get paid only if the deal closes.
Boyenga and her husband/business partner Eric Boyenga have been involved in several landlord-tenant transactions. In one case, "the buyer paid us a commission to represent them. The seller was unwilling to pay anything," Eric Boyenga says.
In another, the seller paid them a standard listing commission. "She felt she was still saving money (by not putting the house on the market) because she didn't have to paint it or have it vacant for two months," Janelle says.
Eric adds, "There have been cases where we have guided friends and not been paid a dime, but it was not run through our brokerage."
The Boyengas say they won't quote a fee until they have spoken with the tenant and landlord to gauge how much time it will take.