Question: I negotiated the purchase of an Arizona condo recently and closed a about a month ago. Most of the units in the complex are unsold. I happened to be on the Internet the other day and saw that the builder has now reduced the asking price of similar units in the complex by $35,000.

I did not pay full price -- they met my offer by reducing the price about halfway and made up the rest with seller's credits which I took at closing in various ways. Their rationale for this approach was to "keep the comps up" (my official purchase price was just under that of the last buyer -- so there was a pattern of keeping the comps up).

I know this is a silly question -- but I have to ask: Do I have any recourse against them for dealing with me in bad faith? They had to have been planning this huge reduction for a while.

Answer: A builder is simply a seller. Like any seller the builder wants as much as possible from every sale. You bargained with the builder and obtained a number of concessions. These concessions must have been attractive, otherwise you would never have purchased the unit.

But, markets change. A good deal today may not be so good tomorrow.

To see if you were treated unfairly, let's try the "good for the goose, good for the gander" test. Imagine that the value of the unit soared $50,000 within a month after buying. Would you have gone back to the builder and said, "help me out, I should be paying you more for this unit so let's renegotiate so I can give you more money." Just a guess, but I don't think so.

As to maintaining comps, the builder is right. The builder has multiple units to sell. He or she wants to maintain prices to maximize future sale values and to keep recent buyers happy with their purchase. If roles were reversed you would have the same strategy.

Question: My husband and I bought our first home in 1999. The home was in both of our names. We then took a loan from that first house to buy another property, but my husband did not put my name on it. He then took another loan from the second house to buy a third house. He sold our first house and the second house and made a lot of money from it and did not give me a single dollar.

I am thinking of filing a divorce and was just wondering if I can ask for my share for all the profits he made from those properties.

Answer: You can certainly ask. Given that profits were generated during the term of your marriage, and given that the purchase of the first home made possible a chain of other purchases and sales, you may well have a good claim.

State laws vary extensively so you'll need to sit down with a divorce attorney in your community for specific advice.

Question: My husband and I have been asked to buy his mother's home as a lease purchase for $200,000. The lease amount will be $700 a month, all going toward the deduction of the mortgage for about 15 years. The house is in need of repair, so she upped the price by $25,000 and told us that's what she would have charged anyone else. She then reduced the price by $25,000 (to cover repairs) to arrive back at the figure of $200,000. We will have to pay $3000 a year in taxes.

My mother-in-law made up a will where my husband will be an heir to 25% of the property (he has 3 other siblings). This will reduce his mortgage amount to $150,000 if he inherits. If I survive my husband I will still pay the full mortgage amount because she excluded the spouses and children from inheriting anything. Question is, if I outlive my husband won't I lose everything we paid into the mortgage.

Answer: It doesn't matter what price is arranged between your husband and his mother, a lender will make a loan on the sale value or the appraised value, whichever is less.

Second, $700 a month will not come close to covering monthly mortgage payments for principal and interest -- at 6.5% for a fixed-rate loan amortized over 15 years the fee would be $1,742.21. If the loan was for 30 years the monthly payment for principal and interest would be $1,264. However, after 15 years on the 30-year mortgage the remaining debt would be $144,640. In addition there would be costs for taxes and insurance. In effect, monthly costs above $700 would be a subsidy for your mother-in-law.

As to the inheritance, there would be no house to inherit -- if you have a lease-purchase you are buying the property with installment payments. If you are financing your mother-in-law's purchase of the property then any mortgage debt remaining at the time of your her passing would be a claim against the estate. If there was no mortgage, there would be no outstanding debt for the estate to pay.

The inheritance plan does not seem to take into account any money paid by you to reduce the mortgage debt or any money used to subsidize your mother-in-law. In effect, the home would be divided among four heirs -- but only one heir would pay the costs of keeping the property in the family.

You and your husband need to determine what's best for the two of you and not anyone else. For instance, if there are four heirs perhaps all four could help support your mother-in-law by sharing the cost of a mortgage.

This is a matter to first be worked out with your husband. Any agreement within the family should be written with the help of an attorney who specializes in elder law. The need for a written agreement is overwhelming because few matters are as contentious, more damaging or longer lasting than family battles.

The fact that you are a spouse should not mean you have no claim in this matter. If the cash to finance the mortgage is "household" money and not just your husband's, then those dollars should be seen as "your" money as well as your husband's.

If your husband was to die before your mother-in-law would that mean you would get nothing, or does the will leave his interest in the estate to you? This is a key question to ask.

Question: Can you tell me some of the common types of mortgage fraud to watch out for?

Answer: Mortgage fraud is nothing more than steps deliberately taken to deceive a lender, usually through unjustified income and employment claims. The catch is that such claims are sometimes made without the knowledge of the borrower.

The best way to avoid mortgage fraud is to take four steps.

First, speak with local real estate brokers and ask them to recommend lenders who keep their promises regarding rates and terms -- and who deliver promised funding by closing.

Second, finance with an FHA- or VA-backed loan. They have tough underwriting standards that discourage funny business.

Third, always make sure that the person selling the property is actually the owner. Ownership can be demonstrated by looking at tax records, doing a title search or checking the latest tax bill.

Fourth, use your own experts. Have a buyer broker, get a professional home inspection and do not allow the seller to select the lender or settlement provider. Instead, find your own lenders and settlement provider before you enter the marketplace and get pre-approved for financing before making an offer.

Question: Does a real estate agent have to be affiliated with a brokerage, or work for a broker?

Answer: The common arrangement is that real estate salespeople must work under the authority of a broker. The reason for this relationship is that salespeople do not have the right to enter into contracts with members of the public, thus they cannot list property, represent buyers or sue for a commission on their own. Real estate brokers have such rights, which is why salespeople must work under their authority.

Question: Why is California seeing such a down market? It can't be all related to subprime lending.

Answer: The mortgage meltdown is not and has never been about subprime lending by itself, the problem has been the widespread use of toxic mortgages and stated-income loan applications.

Subprime borrowers have gotten a lot of attention merely because they have limited incomes and credit, thus they are the most likely to fail when monthly mortgage bills increase -- but they are not the only borrowers who are failing. And monthly mortgage bills, of course, are bound to increase because exploding ARMs are designed to assure exactly that result.

California now ranks second among all states in terms of foreclosures according to RealtyTrac.com. Foreclosures in the state were up more than 100 percent in March when compared with a year earlier. (Nevada was the leading foreclosure state in March.)

California has had steep price increases in recent years, in part because buyers were able to get big loans -- in some cases by inflating income claims which lenders then did not check. Borrowers who did not inflate incomes were at a bidding disadvantage in this process, and now they are being hurt by the borrowers and lenders who abused the system because home values have fallen in many markets.

Question: All of my friends tell me its a bad idea to buy an investment house with a friend. Is this true?

Answer: Yes and no. Yes, you can reasonably buy investment property with a friend, relative, co-worker or anyone you choose. No, it's not a good idea if done incorrectly.

The problem is not in the joint buying, it's usually in the lack of a written agreement between the investors. Without a proper agreement put together by an experienced attorney in advance of any purchases, it's inevitable that what started as a good relationship will run into problems when one investor wants to sell and the other doesn't, finances change or the property has losses. So, if you want to buy with someone, that's fine -- just have a proper agreement in place before the first check is written.

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Published: May 9, 2008

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Have a real estate question for Realty Times? Wondering about buying, selling, financing, refinancing or renting? Here's where you can send your question to Peter G. Miller, OurBroker®, a nationally-known columnist, author and reporter. Peter G. Miller has written six books -- including The Common-Sense Mortgage -- a guide with hundreds of thousands of copies in print. Miller was the original creator and host of America Online's Real Estate Center and joined Realty Times in 1998. Send your questions to . Because of the volume of mail received, individual questions cannot be answered privately and not all questions can be used. Published letters may be edited for space and style and all letters become the property of Realty Times upon receipt.