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While YOU may think that, I don't believe that most home searchers see it the same way.
Agreed. As a buyer I don't see a house dropping out of escrow as a devaluing prospect unless I have information that the house didn't appraise or substantial defects in the house that materially affect its value are known.
Buyers change their mind just as sellers do. That being said, you've got the remedies as described in your contract. Here is the thing though, what serves your best interests? What you are entitled to and what you can get might not be the same thing.
As with all things, everything is open for negotiation. If your house is hot, you had multiple offers and the apparent value has gone up, perhaps you could come out way ahead by retaining an amount in escrow (maybe not the same escrow and separate from house itself) to cover any anticipated shortfall you might incur from remarketing and possibly having to settle for a lower offer. This doesn't work though if you want to punish the buyer. What could happen if something can be worked out is that you end up with someone who will rave about the way they were treated, talk up your house and even provide a reference. You can't pay for that kind of advertising.
As you said already, you'll contact your agent or attorney but this is something you can bring up in those discussions, it can't hurt because options don't cause damage, bad choices do.
3) We can go to court to force the escrow company to release the money to us but while the case is in court we can't put the home back on the market. The buyer will use that knowledge to force us to settle and give him most if not all of his earnest money back.
I'm not doubting your agent and the settlement person, but did they explain why they say that? There's a leap in the logic: you have to go to court therefore you cannot sell the house. Just reading it, it makes no sense. There's got to be more to this - is it a law in your state that prevents the plaintiff from selling if plaintiff is suing for EM? What is the reasoning behind you not being able to sell the house while the case is in court? Even if you lose the case, it doesn't affect the house. So this is rather curious to me.
I'm not doubting your agent and the settlement person, but did they explain why they say that? There's a leap in the logic: you have to go to court therefore you cannot sell the house. Just reading it, it makes no sense. There's got to be more to this - is it a law in your state that prevents the plaintiff from selling if plaintiff is suing for EM? What is the reasoning behind you not being able to sell the house while the case is in court? Even if you lose the case, it doesn't affect the house. So this is rather curious to me.
Next week we are going to hire an attorney which is more money out of our pocket. The agent is one of the top real estate pros in the area so at this point I have to trust her.
This is why I don't let my buyers' escrow money go to a title company or attorney. In Florida, we have very specific and free escrow dispute resolution IF the deposit is held in a real estate broker's escrow account. Escrow deposits held at title companies and attorney trust accounts don't have the same easy and free resolution process.
Snooper, your sales contract should include a closing date. Once that closing date is passed, and the house hasn't been sold, and there are no contract amendments extending that date, the contract is null and void. The house is no longer under a binding contract between seller and buyer, and you are free to accept other offers and sell the house to whoever you want. The buyer cannot hold up this process.
Now - you and the buyer can go back and forth about the earnest money, and they may not get it back, they may get some of it back, and they may get all of it back. But this is SEPARATE from the future sale of your home. They have no claim to your home and cannot impede offers or the sale after the terms of your contract (closing date) expire.
I can find no evidence anywhere that New Mexico real estate law states otherwise. That's where your zip code implies that you live.
This is why I don't let my buyers' escrow money go to a title company or attorney. In Florida, we have very specific and free escrow dispute resolution IF the deposit is held in a real estate broker's escrow account. Escrow deposits held at title companies and attorney trust accounts don't have the same easy and free resolution process.
Might be good advice for your state but here we must get the EM to the title company within 48 hours. Brokers here do not hold the funds, ever.
This is why I don't let my buyers' escrow money go to a title company or attorney. In Florida, we have very specific and free escrow dispute resolution IF the deposit is held in a real estate broker's escrow account. Escrow deposits held at title companies and attorney trust accounts don't have the same easy and free resolution process.
Quote:
Originally Posted by Rakin
Might be good advice for your state but here we must get the EM to the title company within 48 hours. Brokers here do not hold the funds, ever.
One thing I love about City Data is the value of seeing how things are done across the country.
Here is a third alternative view:
In NC, either listing or selling broker can maintain a trust account for EMD, or an attorney can hold EMD funds in trust. Title companies are not typical.
The NCAR Standard contract places the same responsibility on the escrow agent, whether broker or attorney, and that responsibility is accepted when the escrow agent signs the receipt for EMD.
Disbursement of EMD in trust can only be at the agreement of the two parties, and in cases where disbursement is contested, the monies are sent to the clerk of courts. That helps brokerages and attorneys keep their books neat when they do not have to hold contested EMD for extended periods of time.
Next week we are going to hire an attorney which is more money out of our pocket. The agent is one of the top real estate pros in the area so at this point I have to trust her.
Not necessarily money out of your pocket. You need to protect yourself. Even though your agent is a top pro, she is not an attorney and cannot even "talk" legalities! She should not be discussing this with you at all, at this point. She should have sent you to an attorney immediately.
Maybe all you need is a consultation from the attorney. And .... get a real estate attorney not the guy who did your Will unless he also is an expert on real estate.
A consultation, IF he charges you, maybe $200 ? His time is worth it. Peanuts to pay for peace of mind and get you on the right track for maybe the biggest transaction of your life, the sale of your property.
People who default on a contract because they're feeling "bad Karma" need to get properly educated, you have damages $$$$.
Might be good advice for your state but here we must get the EM to the title company within 48 hours. Brokers here do not hold the funds, ever.
Brokers in Arizona have the option of holding money in their own escrow account, or a title. I don't know any broker who wants to hold it in their escrow account. I don't want to be responsible for it, and I don't want to be sued in the event of a dispute.
I don't even want to handle the check anymore for my buyers. They hold their check, and they deposit it at the title company. However, I will fight very hard to get the earnest money to my buyer or seller client if the contractually have it coming to them.
Not necessarily money out of your pocket. You need to protect yourself. Even though your agent is a top pro, she is not an attorney and cannot even "talk" legalities! She should not be discussing this with you at all, at this point. She should have sent you to an attorney immediately.
Maybe all you need is a consultation from the attorney. And .... get a real estate attorney not the guy who did your Will unless he also is an expert on real estate.
A consultation, IF he charges you, maybe $200 ? His time is worth it. Peanuts to pay for peace of mind and get you on the right track for maybe the biggest transaction of your life, the sale of your property.
People who default on a contract because they're feeling "bad Karma" need to get properly educated, you have damages $$$$.
Again you are mixing up east coast and west coast RE law. In the west the likelihood is that such a dispute will be handled by the RE community or the Small Claims Court system.
The cost of a consultation with an RE Attorney is likely to be $350 or more. A letter will probably take it over $500.
Recovering legal costs means a trial in District Court. That is above $5000. You may get it back presuming you win. But you will have to pay it up front.
Specific performance actions upon the part of the seller virtually never work and are prevented by a standard clause in our contracts limiting damages to the EMD.
In Nevada as in AZ the RE brokerage can maintain an escrow accout. Virtually no one does. We do however retain the check from the buyer and forward it to escrow upon opening of escrow.
Practically you might try offering the buyer a few thousand to terminate the escrow.
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