Q-Last January, I stupidly signed a six-month listing for the sale of my home. I knew I would be starting a new out-of-town job in March when I moved out of the house.
But the Realtor didn’t produce any offers, even though she said the listing price was close to market value. By May I couldn’t afford to both keep up the mortgage payments on my old house and pay the lease-option rent on my new residence, so on June 1 I leased my old home for a year.
When I put the house up for lease, I took down the Realtor’s “For Sale” sign and told her I had to rent the house so I could keep up my mortgage payments. She said that my leasing the house made it impossible to sell and that she is entitled to a full sales commission. Is this true?
A-Yes. Please re-read your listing contract. Most listings say if the owner does anything to make the property unsaleable, the listing agent is entitled to the full sales commission. Your leasing the house for a year makes a sale extremely difficult, if not impossible.
I agree with the Realtor that she is entitled to the full sales commission. However, you can probably negotiate a settlement for a lesser amount. The Realtor doesn’t want to sue you for the commission. If you offer her 50 percent of the full commission, she probably will accept it in full settlement because that’s all she would have received if another agent produced an acceptable buyer for the house. Please consult a local real estate attorney for further details.
Burned by bankruptcy
Q-About a year ago, my husband and I encountered financial difficulty due to unemployment and family illness. We foolishly listened to the advice of one of those TV lawyers who advertised bankruptcy filings for just $500. Little did we know our mortgage lender could get our home released from the bankruptcy and continue with the foreclosure.
Filing bankruptcy delayed the foreclosure sale about six months, but we still lost the house. We also ruined our credit.
After the foreclosure sale, we learned from the lender’s representative who came to throw us out of the house that we could have saved our home by working with our lender. She said they could have offered us all sorts of plans, such as interest reduction, payment moratoriums and even refinancing. But once we filed for bankruptcy, the lender couldn’t be flexible, she said.
I just thought you could pass this information along to your readers who might be in similar situations. Now my husband has found a better job and we could easily afford our old mortgage payments. But we’re living in a cramped little two-bedroom apartment with two kids and no prospect of getting a home and it isn’t fun.
A-Thank you for sharing your valuable experience. Bankruptcy should be filed only as a last resort. As you learned too late, filing bankruptcy only delays foreclosure, but it ruins your credit for many years, because bankruptcy filings remain on your credit report for 10 years.
You would have been much better off working with your mortgage lender to restructure your mortgage to save your home. Most lenders do not want to foreclose and would prefer to keep borrowers in their homes making at least partial mortgage payments.
Some lenders are tough and uncooperative, but if you had written a letter to the president of your loan company explaining your situation and what you proposed to solve the problem, you would have been treated much better than you were after filing bankruptcy.
Financing rural property
Q-I want to buy a 60-acre property, which is leased to a tenant farmer who lives nearby. The property has a wonderful old farmhouse, is near a big lake and would be a perfect vacation home for our family.
The problem is finding a mortgage. I’ve talked to nearby banks, S&Ls and mortgage brokers, but they can’t find financing. I have only a 10 percent down payment. Any ideas?
A-The best finance source for rural property is the seller because, frankly, few lenders want to make risky loans on a property like the one you describe. If the seller won’t finance the sale, he or she probably won’t be able to sell that property.
Make a written offer that provides for a 10 percent down payment and a 90 percent mortgage, at perhaps 7 percent interest for 20 years.
