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Old 04-13-2010, 01:51 PM
 
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Does the earnest money still go to the title company to be held in the case of a FSBO? The title co. cashes the check once the offer is approved, is that how it works? I'm not willing to give the seller any $$ directly so I wondered how it might work.
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Old 04-13-2010, 02:54 PM
 
Location: Tempe, Arizona
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Yes, I recommend using a title/escrow company to hold the earnest money. Never give it directly to the seller. You give the title co the earnest money along with the executed sales contract. They will then open escrow and deposit the check into the escrow account. Your contract should include the conditions under which the seller may get the earnest money (or not) if the purchase is canceled for some reason.
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Old 04-13-2010, 03:57 PM
 
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Does the seller normally expect to keep the earnest money if the financing falls through, or is that what a "financing contigency" in the contract is for? In what kinds of situations would a seller want to keep the earnest money? In a "regular" sale where a property is on the MLS, I understand the idea that they lose some potential buyers when a house is in the pending stage and want some compensation for that. In a FSBO only a handful of people even know about the house being on the market (especially this one, with no sign, no listing on any of the FSBO sites) so I wouldn't be hurting his potential sale much.
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Old 04-13-2010, 04:55 PM
 
Location: Palm Coast, Fl
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You need to get yourself an attorney if you don't have a RealtorĀ® involved. Do NOT sign anything you don't understand or know the ramifications of.
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Old 04-13-2010, 05:31 PM
 
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I have an agent representing me. I'm just asking questions beforehand.
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Old 04-13-2010, 05:48 PM
 
Location: Tempe, Arizona
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You should review your concerns with your agent. Contract terms and conditions affecting earnest money vary from state to state. Your agent will likely use their standard purchase contract, and should be able to explain how it applies to your situation.
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Old 04-13-2010, 05:48 PM
 
Location: NE Atlanta suburbs
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As a seller of FSBO, twice, I was given the earnest money. When I was the buyer of a FSBO, twice, I gave the seller the earnest money.

The title company wasn't involved until later in each transaction, so giving earnest money to title company wasn't feasible.

This is typical of most FSBO's I understand. There should be an amount of earnest money written into the purchase contract and who is holding it. Any real estate attorney can advise you.
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Old 04-13-2010, 06:38 PM
 
Location: Cary, NC
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Quote:
Originally Posted by mcm2010 View Post
As a seller of FSBO, twice, I was given the earnest money. When I was the buyer of a FSBO, twice, I gave the seller the earnest money.

The title company wasn't involved until later in each transaction, so giving earnest money to title company wasn't feasible.

This is typical of most FSBO's I understand. There should be an amount of earnest money written into the purchase contract and who is holding it. Any real estate attorney can advise you.
I would not give EMD to a Seller.
I would want it in a professional trust account, either an agent, title company, or attorney.

The escrow agent should be identified early in the transaction, preferably in the contract.
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