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100% nonsense. You write a check to a RE Broker, you should have your head examined. I've bought 7 homes and would never, ever do that. That's why you have an escrow company to begin with.
The concept of an independent escrow company does not exist in this area.
The laws that govern an escrow company, in those areas, where their use is common, are the same for those brokers who hold escrow monies in my area. Both are audited to ensure that funds are promptly deposited and accounted for and not comingled with operating funds. Both are required to maintain insurance. Release of escrow is not discretionary and depends on the contract and state regulations. Generally speaking this means agreement by both parties or in absence of, a court order.
When I say broker I mean national franchise brokerages or large independents, not Joe Blow who has a broker's license.
Real estate practices vary across states and within states. There is no one right way to achieve anything.
I would yield to local experts like MAM on that localized custom, though.[/quote]
My last transaction in the city involved a 10% earnest money deposit, $65,000.
The sellers had lost a previous contract during attorney review and the perception of increased certainty floated their boat and helped to negotiate a better price and an accelerated close which put them unexpectedly into temporary housing.
My guy was paying cash, and probably would have put the entire price in escrow, given how much he wanted the place and a quick close.
100% nonsense. You write a check to a RE Broker, you should have your head examined. I've bought 7 homes and would never, ever do that. That's why you have an escrow company to begin with.
Quote:
Originally Posted by Silverfall
On the west coast, most earnest money goes directly into escrow. Not so in other states.
In Idaho, Earnest money is held by the buyer's agent's broker in a designated trust account that is audited by the state real estate commission every year or so. It has very very specific rules, and if you don't account for every penny all the time, in a very specific manner, you can get huge fines, or they can even shut down the company. Only an idiot broker would mess with that money. You WILL get caught and you WILL get in big trouble.
So, to adolpho, if you ever buy a property in Idaho, you will have to specifically request that EM is held by a title company, rather than your broker, and the seller has to agree to let you (not that there is any reason why they shouldn't). It is pretty unusual here to do that, I would say less than 1% of transactions, so if you don't mention it specifically, the agent may not even ask.
Last edited by Lacerta; 01-27-2010 at 03:57 PM..
Reason: To fix stupid mistake - buyer's, not seller's
My last transaction in the city involved a 10% earnest money deposit, $65,000.
The sellers had lost a previous contract during attorney review and the perception of increased certainty floated their boat and helped to negotiate a better price and an accelerated close which put them unexpectedly into temporary housing.
My guy was paying cash, and probably would have put the entire price in escrow, given how much he wanted the place and a quick close.
"Wow," said Mike.
Of course, it is negotiable, right?
And high EMD is a strong buying sign.
And high EMD is a strong good faith gesture.
Cash?
Sounds like you might just have been working with a "Buyer," not a "Commitment-Phobic Tire-kicker."
We as brokers can also hold escrow..but I would say the more often than not it's held by the title company. The buyer can designate who holds it, be it the title company that will actually do the closing, a title company the buyer or their agent works closely with, or the buyers brokerage.
The difference is...if the title company has it, they have to have something signed by both the seller and buyer to return it. If they can't both parties and it's a 'clear cut' case of who should get it, they will require a form signed that they are held harmless and the party receiving the funds understands they could be liable for the return of the funds. Otherwise they need a court order specifying where the funds go. It's just something to keep in mind when laying out an escrow deposit down here. It's different than NY..in NY the attorney held escrow.
We as brokers can also hold escrow..but I would say the more often than not it's held by the title company. The buyer can designate who holds it, be it the title company that will actually do the closing, a title company the buyer or their agent works closely with, or the buyers brokerage.
The difference is...if the title company has it, they have to have something signed by both the seller and buyer to return it. If they can't both parties and it's a 'clear cut' case of who should get it, they will require a form signed that they are held harmless and the party receiving the funds understands they could be liable for the return of the funds. Otherwise they need a court order specifying where the funds go. It's just something to keep in mind when laying out an escrow deposit down here. It's different than NY..in NY the attorney held escrow.
Interesting that the funds can be disbursed by a broker, with disclosure of a possible clawback.
Here, we have the same trust rules as anyone else who holds funds in trust for real estate.
None of us can disburse until both parties sign, and after 90 days, we can notify both parties, and disburse to the Clerk of Courts to get it out of our trust accounts.
Well, here, if there is a clear cut contractural reason to return the funds they can. If there isn't then they have to go to the state board to get a ruling. The state then takes responsibility for the decision. I would say it's why most of the escrows are held by the title company...the brokerages don't want the liability.
Well, here, if there is a clear cut contractural reason to return the funds they can. If there isn't then they have to go to the state board to get a ruling. The state then takes responsibility for the decision. I would say it's why most of the escrows are held by the title company...the brokerages don't want the liability.
Right on liability.
It was a great relief for firms here when we were allowed to kick funds to Clerk of Courts with no more justification than the passage of a set amount of time, and written notification to the parties.
We don't have to care about or parse out "clear cut" anything but the pages on the calendar.
$20k? Absolutely not. How would you feel if you lost that $20k? Too much money to put up initially. If I were you I'd put up $1-2k and then pledge more in your purchase agreement when things go hard. Ie after you have initial inspection, etc.
That's the whole point!
As a seller, I wouldn't even entertain an offer with only a $1k or $2k deposit. It would be too easy for a buyer to get cold feet or have buyer's remorse and just walk away without a second thought. For $20k, they're not going to risk breaking the contract. When you put up $20k you're telling the seller that you seriously want the house.
I recently sold my house and received five offers, all at or above the listing price. (actually two of them had escalation clauses). The two highest offers were almost identical, but one submitted an earnest money deposit of $5,000 and one submitted a deposit of $30,000. Guess which one I accepted.
I put $15k EMD for $700k house in DC Metro area based on the realtor's suggestion, if that's any help. I did think it was high, but I didn't question it either.
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