Jewish World Review May 15, 2000 /10 Iyar, 5760
House is 'worth' what's offered
DEAR BRUCE: We are being transferred and are having a difficult time selling our house. While we have had offers, they are not as high as I would like them to be. We have considered renting the house until the market firms up, but my wife constantly says that you think that under most circumstances this is not a sound idea. Our house is "worth" just over $100,000, but we have only been offered $85,000. We can get $700 a month rent, and the parties that wish to rent it are close friends who we know will not stiff us or destroy our property. -- B.W. Clinton, New Jersey
DEAR B.W.: First of all your house is not worth $100,000. It's worth only $85,000. A property is worth only that amount of money that a willing and able buyer is prepared to pay and a willing and able seller can deliver. While you may feel it's worth $100,000, it's worth $100,000 only when someone offers you that amount.
On an $85,000 home, $700 a month is nowhere near ample. A minimum of $850 a month is where you should start, and I would be more comfortable with $900 to $1,000. While I recognize that you do have an edge with someone that you trust renting your house, long-range property rental is not for amateurs. Further, at the end of the lease period, these renters may wish to move elsewhere, leaving you stuck with long-range ownership.
If it were me, I would take the highest offer and get on with my life.
DEAR READERS: A short time ago I responded to a woman who had inherited $50,000. Her husband wanted her to combine the money with their collective funds, and she wanted to keep it in her own name. I suggested that the money would become joint property.
I am complimented that so many attorneys read the column. I received a deluge of letters from attorneys, the thrust of which was that in most states if the woman were to keep the money completely separate and never commingled, then the law, even in the event of a divorce, would recognize it as her money.
I continue to believe that since her husband's paycheck was "their money," her money should be commingled. However, the advice I gave her was totally inappropriate, and I hope that she is reading this response. Many of you suggested that the correspondent consult with a family lawyer or an estate planning expert. That is very good advice.
My thanks to all of you attorneys as well as lay people who took the time to respond. That's what this is all about. If I make a mistake, I am perfectly agreeable to correcting it. Thank you for correcting me.
DEAR BRUCE: You are against EE Bonds. Please suggest alternatives other than mutual funds. With the current status of the market, we do not want to invest in retirement funds and mutual funds, and certificates of deposit and money market funds are income tax problems. -- W.D South Lake Tahoe, California
DEAR W.D.: You mentioned that the CD's and money market funds are tax problems. I am sure that you recognize that EE Bonds only postpone but do not obviate the payment of taxes.
I am not "against" these bonds; I feel that the amount of interest that is currently being paid does not justify the long-term investment. If you are absolutely opposed to investing in the market, you could do slightly better in Government Bonds, which as of this writing are earning about 6 percent and are exempt from local taxes.
I still believe that a little bit of a risk is justifiable, given the three or four percentage points one can earn over and above bank
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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05/04/00: Lawyer are good for something
05/03/00: The binding nature of contracts
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03/30/00: The road back to good credit
03/29/00: Pre-tax dollars in IRA taxed later
03/27/00: Gambling on business ventures
03/22/00: Old cars as hobby, not investment
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03/16/00: How to buy government bonds
03/13/00: Buying treasury instruments
03/09/00: Subcontractors must pay S.S.
03/08/00: Real-estate lawyers are essential
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01/26/00: Everyone needs a will
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01/24/00: Should early retirees contribute to SEP?
01/21/00: Strategies for paying off debt
01/20/00: Is 15-percent growth achievable?
01/19/00: Selling a second home
01/18/00: Running from a time-share
01/14/00: Don't be a spendthrift!
01/13/00: Who gets the house?
01/11/00: It all depends on size of estate
01/06/00: Check references before hiring an advisor
01/04/00: Savings bonds a bad investment
12/31/99: Out of state ain't that great
12/29/99: Warranty rip-offs
12/27/99: Checking up on investment handlers
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12/13/99: Termite company not liable for termites?
12/10/99: Services provided must be paid for
12/06/99: How do we minimize house-sale gain?
12/06/99: Maximize your tax shelter!
12/02/99: My neighbor won't maintain even a modicum of civility
12/01/99: Long-distance rentals a bad idea
11/29/99: Mortgage strategy A-OK
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11/11/99: Y2K: No big deal for real estate
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09/27/99: Adult children should help out
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09/21/99: Use the rule of 72s!
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09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
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08/30/99: Beware of shady viatical investments
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08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
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08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
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08/09/99: 'Pre-approved' doesn't mean a thing
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08/04/99: Bank IRA the lowest-risk option
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08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...