Who pays agent’s fees on a foreclosure?

Q: We're first time homebuyers looking into buying a foreclosed house. We've been working with a Realtor who has been sending us listings, taking us on tours, etc. We've never talked about fees. Who pays him and when (especially if we do buy the bank-owned home)? -- G.O.

A: Real estate brokers are traditionally paid at the closing, on the day you become the new owners. They're usually paid by the seller (yes, even if it's a bank). If you signed a written contract specifically hiring that agent, you may be obligated to pay a fee in certain specific situations. Otherwise, commissions need not be any concern of yours.

Problems With Closing

Q: I have a problem. I am in the middle of selling my home. Per the contract, we are to close in two weeks as the buyer requested. Just today, we were told that an extension to the closing date was needed. We were told the buyers were not yet cleared by the mortgage underwriters. However, this buyer had been preapproved and we received weekly updates from our agent that the process was on track. The problem is the extension would make us pay another month's mortgage payment. We cannot afford this because we have already rented an apartment.

What are our options or can we require anything from the buyer? -- J.L.

A: You can ask a lawyer to investigate whether you're being lied to. If not, I don't see what you can require from your buyers. If they don't have the mortgage money by the original closing date, what can they do?

I haven't seen the terms of your sales contract. It might say there can't be an extension unless you agree. Often, though, the closing date is just a target. If it comes and goes the contract is still in effect. At that point there is a legal procedure called making time of the essence, by which you can set a binding "show up or drop out" date, but that wouldn't solve your problem. Besides having legal expenses, you'd have to start all over. Snags often do come up before closings. I'm afraid all I can offer you is sympathy. Hang in there.

Partner In Foreclosure

Q: My friend bought a vacation home with a guy that owns other houses. That guy is now allowing three of his houses to go into foreclosure. The home they own together is not included in the guy's foreclosures. How can this affect my friend? Is my friend's credit score (747) going to be affected? What protective measures should be taken by my friend? -- K.

A: As long as bills on the vacation home are being paid on time, your friend's credit rating should not be affected.

Other complications might arise, though, if judgments are placed against the co-owner's share.

Edith Lank will respond personally to any questions sent to her at 240 Hemingway Drive, Rochester, NY 14620 (please include a stamped return envelope), or readers may e-mail her at ehlank@aol.com