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Sellers agent/broker also owns an escrow company and wants us to use it (included that in the counter offer).
1. Is there a problem with this. This house has failed 2 escrow's now and the agent says both were because the buyer could not get a loan. I (potential buyer) am wary that there could be conflict of interest that the sellers agent could play tricks by either delaying things or if the sale does not go through for whatever reason try to hold back the earnest money for false reasons ?
Any issues you can see here ?
2. Who should choose title insurance company - buyer or seller ?
3. Who should choose home warranty company - buyer or seller ?
4. Who should choose inspection company - buyer or seller ?
I am asking the above because the sellers agent wants us to use all their chosen ones above and they could have a special relationship with these companies or have a conflict of interest in some way just like the escrow.
I'm in Tennessee so I'm not going to speak for every state as some do things differently. When I represent a buyer I strongly recommend that they chose their own Title Company, home inspector, and home warranty company. Under no circumstances should a buyer use a home inspector chosen by the seller. In general, the seller and seller's agent should be making decisions that are in the best interest of the seller. Additionally, I would not recommend any buyer use a company recommended by the seller/seller's agent if that seller/seller's agent has a financial incentive for you to do so. You need to make sure that any decisions you and your agent make are in your best interests.
buyer chooses closing agent,
buyer definately chooses home inspector,
a lot of times the seller chooses the home warranty company because they have it in place before the offer, although you can write it in the offer specifying the home warranty company.
If you were getting some great deal, and the seller asked you if both seller and buyer could use the same settlement agent to save money... possibly. But even then, you can say yes... I will choose agent though.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Originally Posted by iamyoohoo
Sellers agent/broker also owns an escrow company and wants us to use it (included that in the counter offer).
1. Is there a problem with this. This house has failed 2 escrow's now and the agent says both were because the buyer could not get a loan. I (potential buyer) am wary that there could be conflict of interest that the sellers agent could play tricks by either delaying things or if the sale does not go through for whatever reason try to hold back the earnest money for false reasons ?
Any issues you can see here ?
2. Who should choose title insurance company - buyer or seller ?
3. Who should choose home warranty company - buyer or seller ?
4. Who should choose inspection company - buyer or seller ?
I am asking the above because the sellers agent wants us to use all their chosen ones above and they could have a special relationship with these companies or have a conflict of interest in some way just like the escrow.
Please help.
In CA as long as they disclose that they have a common ownership, they are within the law. Here, title companies and escrow companies are regulated by different state agencies than real estate agents.brokers. Here, the buyer customarily picks title, escrow and inspections. In foreclosures, I've had banks give my clients a deal if we used their title escrow preference. Usually the person paying for the service gets to choose the vendor. If the seller gets a special rate from a vendor and is willing to pass it on to you, I'd say OK.
Why would the seller play tricks? They get the money in the event of a sale and I would have to believe that it's just as much in their interest to close as yours.
Here, the seller chooses the title company if they have a preference, unless the buyer has a STRONG preference, and it's negotiable.
Often, the seller's preferred title company will have already opened title on the property, sometimes just so things can go more quickly when an offer comes in, other times because an offer fell through and they were the title company who was involved then and the work has already been done.
I've never been in a situation where the listing agent owned the title company. However, it is in the title company's best interests (and thus the listing agent's, presumably) to do a good job and not have to pay up in the case of something being missed in the title. Since the title company is charged with doing the HUD based on the contract and instructions from the buyer's lender, as well as finding any problems with the title that might preclude them offering title insurance (or having exceptions to the insurance which they have to disclose), it wouldn't concern me unnecessarily.
The real question is, what does your agent say about it? Agents learn, in the course of business, which are the title companies that make closing easy and which ones aren't (due to nothing more sinister than how efficient and competent their escrow officers and assistants are, generally). So you.
As for home warranty, if a new one is being purchased, absolutely, the buyer. If one is in place already (some sellers have such a warranty already or purchase one when they put it on the market), then the seller would likely do so if the warranty can convey to the new owner.
The inspector? Absolutely, for the buyer's inspection, the buyer chooses (and pays) the home inspector. More and more sellers are doing pre-inspections these days, and in that case, obviously they would choose their own inspector for that. This doesn't preclude the buyer getting their own inspection, of course.
Assuming the escrow company is a title company, the buyer should be entitled to decide which title company to use. The buyer is getting a title policy, which the buyer is relying on. It is only fair they get to decide who insures their title. The seller walks away from the transaction and is done with the title company. It makes no sense for the seller to choose the title company. The only exception is if there is a very complicated title history and the seller's title company is already aware of all of the issues. And if that's the case, you need to know up front, because you are going to want to have your own lawyer look closely at the title work.
The earnest money needs to be held by an independent third party. An escrow company that is affiliated with one party's broker is not independent. You should be concerned about this. Good catch.
I am in CA and the seller's agent in their counter has chosen all their companies. I am especially concerned about the escrow company since the sellers agent/broker owns the escrow company - they have mentioned that (in small text) in their counter but given that they have had 2 people fail in escrow already and although they claim it was the buyers fault that the buyer could not secure a loan, I am not sure what happened to the earnest money.
Another question is that there is a seller contingency of being able to close the escrow - which in their last case of offer that fell through in escrow when the buyer could not get funding is still open. I am guessing the buyer is not releasing because their earnest money may be held up and so I want to be careful in my offer as well.
Another question is that there is a seller contingency of being able to close the escrow - which in their last case of offer that fell through in escrow when the buyer could not get funding is still open. I am guessing the buyer is not releasing because their earnest money may be held up and so I want to be careful in my offer as well.
The seller was in escrow recently with someone else. That failed because the buyer could not secure financing (according to sellers agent). The sellers agent owns the escrow company with which the escrow is open.
Their counter offer to us was contingent on that escrow canceling successfully. Apparently that escrow has not closed yet. I am assuming that escrow has not closed because the previous buyer (that fell through) and the seller are not in terms with the agreement and it could be because of the earnest money in some way.
The seller was in escrow recently with someone else. That failed because the buyer could not secure financing (according to sellers agent). The sellers agent owns the escrow company with which the escrow is open.
Their counter offer to us was contingent on that escrow canceling successfully. Apparently that escrow has not closed yet. I am assuming that escrow has not closed because the previous buyer (that fell through) and the seller are not in terms with the agreement and it could be because of the earnest money in some way.
That is a ridiculous position for the seller to take. You can't spend any money inspecting this house or on anything else because you don't know for sure that the other buyer won't come back and try to take the house.
If you do accept that contingency, and I wouldn't -- definitely not in a buyer's market -- you need to make sure that the contract says (1) if the seller can't close on time they reimburse you for all costs you have incurred (in other words, their failure to close the previous escrow should not cost you money), (2) none of your time periods (option period, inspection period, title review period, financing contingency, etc.) start until the seller notifies you in writing that their contingency has been satisfied, and (3) if the seller's contingency is not satisfied within X days (perhaps 10), you can terminate and get your earnest money back (and probably all of your expenses too).
Sellers should not have any contingencies.
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