3 buyers lost up to $5,000 this month. PROTECT YOURSELF.
Just within the last couple of weeks we have had 3 REALTOR®s call us on the phone and ask us to breach contract for their buyers. They each said something similar to, "I know that we are past the deadlines to keep our earnest money. Will you let us keep our money?" What is the point of earnest money if people feel like the buyers should keep it no matter what? It would all be pointless.
Earnest money is to protect the seller of the property. They are agreeing to take their home off the market while the potential buyer investigates the option of buying the home. The truth is we only collect earnest money when buyers, their agent, or their lender, don't fulfill their responsibilities in the agreed upon time-frame.
How do you protect yourself from losing money?
- Use an agent that sells more than an average agent. The agent's proven success demonstrates their ability to accomplish what is needed. 2 of the agents were full time and great agents. Everyone makes mistakes. You need a system in place where the mistake wont cost you money. An agent with a proven success record will help reduce your chances of losing money. When these agents ask me to be kind and give the money back, I have to remind them that it is not my money. It is my sellers' money and they kept it.
- Use a reputable lender who gets things done on time and fast. This is another place where an above average agent comes in. If they've done more deals, they know which lenders can get them done. In one of the situations this month the buyer's lender did not tell the REALTOR® they had a low appraisal. They had it in time, they just didn't do anything with it for a couple days. This lack of communication caused the buyers their Earnest Money.
- Know your paperwork and deadlines. Your agent is working for you, and you have every right to keep them on the ball. Set up reminders for yourself to check on your agent and lender.
- Never have the earnest money go to a title company. State law requires brokers to have a trust account. They should put the earnest money in their own trust account.
About the Author:
Utah Dave - Daybreak Neighboorhood Expert and Local Resident
My friends nicknamed me Utah Dave in high school because they said it didn't matter where we went in Utah, I would know how to get there and who we needed to talk to. The name sticks today as UtahDave has formed into a professional real estate network of Neighborhood Experts all across the state. I live in Daybreak with my wife and 4 amazing children. I enjoy dancing (which is how I met my wife Dawn) as well as traveling, coaching, and learning.
