Ilyce Glink

Many real estate brokers also dabble in real estate investing. Investing in real estate themselves could help your broker understand the market and the real estate process. Some brokers that invest in real estate might take advantage of their clients, but not all.

Question: My real estate broker buys a lot of properties. My brother-in-law says that's a bad sign because he may be taking advantage of sellers.

I did become a little concerned last week when the broker recently suggested that I should lower my price if I want to sell. What do you think? Should I find another broker?

Answer: There are some unethical brokers who will try to make you think your property is worth less than it is, so they can purchase the property at a discount.

Not every broker who suggests you lower your price is looking to snap up your home and flip it for a profit. There are always a few bad apples in every business, and they, unfortunately, tend to give the whole industry an unpleasant smell. Your job is to know what your home is worth. If you know the market value of your home, no one will be able to take advantage of you.

As for your particular broker, it's tough to pass judgment from a distance. Just because he invests in real estate, that doesn't mean he's a bad broker. In fact, some of the best real estate brokers dabble in real estate investing. In some cases, it means they know the process better than peer brokers who never purchase or sell properties.

When you're buying a home with a partner but you're not married you may be concerned about protecting each of your interests in the property.

A partnership agreement drawn up by a knowledgeable estate planning attorney can help. The partnership agreement will spell out who gets what in terms of estate planning in case one partner dies before the other.

Question: My life partner and I are buying a house. He wants to put his daughter’s name on the deed instead of his own along with mine. If he predeceases me and I want to sell, could I sell without his daughter’s permission?

She might want to keep the house, but I doubt she’d be able to afford it and then I would be responsible for making the payments. Also, if I want to buy another property while this house is not sold yet, would my credit be damaged from the unsold property?

Answer: The problem with unmarried partners buying property is that there can be a lot of misunderstandings about who wants to do what with the house down the line.

You and your partner should have partnership agreement that spells out the terms of ownership with the property. If the two of you are putting in equal amount of cash for the down payment, and will split the expenses of the property, then you and he should own it.

If he wants to leave his share of the property to his daughter after his death, then you will have a new partner. Your partnership agreement could spell out whether you have the right to buy out the daughter's share, and for how much money and under what terms. But if he leaves her his share or if he puts her on the deed, she becomes an owner of the property and you will not be able to dispose of, or even refinance, the property without her agreement.

Talk to an estate attorney who is well versed in partnership agreements between unmarried partners before you sign on the dotted line.

When you're buying a home and attend the closing, you'll be given a set of documents that state how much your monthly mortgage payment will be as well as your property taxes and other home expenses.

What if the amount of property taxes due is higher than the amount of property taxes that was quoted to you at closing? The first thing you should do about your property taxes is to truly understand how much they are and who is responsible for them: you or the seller. After you've figured out how much in property taxes you owe, you can contact the mortgage lender to work out an amount, even if the property taxes you owe differs from what you saw at closing.

Question: What can I do if my property taxes were incorrectly reported on closing documents? I am now being assessed an additional $3,400 into my tax escrow in addition to a $300 per month increased mortgage payment.

Answer: When most people buy a home, they deposit money at the settlement or closing with their lender for the payment of future real estate taxes.

Lenders have a formula for determining how much money they need to hold in escrow to make sure that they have enough cash in the account for the payment of the next real estate tax bill.

Let's talk about the tax mistake first. If the property taxes were incorrectly reported at the closing of the purchase of your home, you need to make sure you received the right amount from your seller for the real estate taxes. Conversely, if you owed the seller money, you need to make sure you didn't overpay him.

Once you know whether the numbers between you and your seller are correct, you need to understand what your lender is doing.

If the mistake on the real estate taxes only affected your lender's computation of the real estate taxes, you need to understand the process the lender uses for the collection and payment of real estate taxes.

If you underpaid your real estate taxes at closing due to a mistake by the title company or the lender, you should know that the lender would have collected from you a significant amount of money at that time to fund the escrow. At that loan closing, you would have had to have come to the table with more money in order to put the necessary funds into the escrow account for the future real estate tax bill.

If the number used for the real estate taxes was $1,200 but should have been $4,800, your lender started out being short $3,600. In addition, when the lender used the $1,200 amount for the monthly payment calculation, your monthly mortgage payment would have been what you needed to pay your loan plus $100 for the real estate taxes.

But that number should have been $400 per month, or $4,800 per year. The net effect is that your lender needs the $4,800 for the real estate taxes and must collect more money each month from you to make sure the coming tax bill is covered.

You’re being asked to pay a lot of money, but the question you have to answer honestly is whether you knew what the real estate taxes were on the home when you bought it. If you knew that the taxes were $4,800, the amount the lender is requesting should not be a surprise to you. It's only a surprise that it took them this long to catch the mistake.

In some cases, when lenders make these mistakes, they may say they'll increase your payment by the additional $300 per month they need plus another $300 per month to fund the initial $3,600 required. In this manner, in about a year, you would have funded the escrow the way it should have been and your monthly payments to the lender would stabilize to a number that reflects the actual amounts that the lender needs for the payment of the real estate taxes.

Going back to your original question, if the lender's computation is correct, you'll need to pay the lender the money. Whether you and the lender decide it should be paid in a lump sum or over time, that will be up to you and the lender.

If the numbers were incorrect then and are incorrect now, you need to work with the lender to make sure the correct numbers are calculated for your real estate taxes and that you pay the right amount monthly to the lender to fund the real estate tax escrow account.