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Respected Contributor
Posts: 3,892
Registered: ‎09-04-2010

Re: Help! Advice on house purchase closing


@151949 wrote:

A question for those who are realtors ... when a home buyer enters into a contract and puts down earnest money , if they default and lose that earnest money, who gets it? 

And , in this case, where the buyers still want the house but were unable to close within the time the contract was in place - would that mean the earnest money is forfeited?

the money goes into a escrow trust acct at the real estate company. If a buyer backed out the seller should get the money. When I worked at Re.Max I placed the money into an account but I actually never had a buyer back out. Otherwise the money is retuned to the buyer if everything goes thru. Real Estate company makes interest on the money while it is being held in acct.

 


 

Respected Contributor
Posts: 4,428
Registered: ‎07-02-2015

Re: Help! Advice on house purchase closing

[ Edited ]

Haven't read all the posts here, but can make a few general points.  More specific points need to be made by a lawyer, sometimes. 

 

Whether a purchaser gets his earnest money deposit refunded to him depends on many things and on what everyone in the transaction can agree to. 
What they would be willing to agree to depends a great deal on the behavior and circumstances of buyer and seller. 

 

If the purchaser has a financing contingency included in the sales contract, he can get the deposit back if, for some reason, he cannot obtain loan approval, which could be caused by losing his job, for example.  The purchaser should be advised STRONGLY not to jeopardize his loan approval by taking out a new car loan or opening a new credit card.  If he behaves egregiously in this respect, no telling what might happen to the earnest money.

 

If a slight delay occurs that causes the original settlement date to be pushed back, usually the parties can accommodate each other by negotiating something or other.

 

I did see one post that mentioned something about having the real estate brokerage firm earn interest on the purchaser's deposit.  Where I live, the purchaser can and  should ask that the money be deposited by the broker in an account specifically designated as an escrow account with interest accruing to the purchaser-- and a check for that interest presented to the purchaser after settlement occurs.  The purchaser's original deposit is forwarded by the broker to the settlment agent at the closing and it's credited toward the buyer's down payment.

 

 

 

Respected Contributor
Posts: 3,896
Registered: ‎03-19-2010

Re: Help! Advice on house purchase closing


@151949 wrote:

@Allegheny wrote:

I think they are provoked because things didn't go as they planned and are taking it out on you and your husband.  I am not sure what they are asking of you is legal unless there were contingencies written into the contract.

 

My SIL and her husband recently sold their home and purchased another.  The purchasers changed the closing date twice.  My SIL & BIL were more concerned that the sale was going to fall through and they would have to relist the house.


 

 

You are taking this that those who are at fault in this situation are the sellers. I do not see it that way. Those who are at fault in this contract are the buyers who are financially unable to close on the house. This default is costing the sellers considerable amount of money, so why wouldn't they want to recoup it from those who defaulted on them? 


Hi 151949 Perhaps I don't fully understand the situation. I only have experienced a closing once, and it was from when we went from a construction loan to a conventional mortgage. As the purchaser, I was sure I met my obligations to a T. However, the bank could have cared less that I took a day off work when they rescheduled our closing. Anyway, like I said, perhaps I don't understand the process. The way she explained it I thought their contract was valid till August 31st? If the first closing was postponed don't they have until the 31st before they are considered in default?
Honored Contributor
Posts: 25,929
Registered: ‎03-09-2010

Re: Help! Advice on house purchase closing


@Allegheny wrote:

@151949 wrote:

@Allegheny wrote:

I think they are provoked because things didn't go as they planned and are taking it out on you and your husband.  I am not sure what they are asking of you is legal unless there were contingencies written into the contract.

 

My SIL and her husband recently sold their home and purchased another.  The purchasers changed the closing date twice.  My SIL & BIL were more concerned that the sale was going to fall through and they would have to relist the house.


 

 

You are taking this that those who are at fault in this situation are the sellers. I do not see it that way. Those who are at fault in this contract are the buyers who are financially unable to close on the house. This default is costing the sellers considerable amount of money, so why wouldn't they want to recoup it from those who defaulted on them? 


Hi 151949 Perhaps I don't fully understand the situation. I only have experienced a closing once, and it was from when we went from a construction loan to a conventional mortgage. As the purchaser, I was sure I met my obligations to a T. However, the bank could have cared less that I took a day off work when they rescheduled our closing. Anyway, like I said, perhaps I don't understand the process. The way she explained it I thought their contract was valid till August 31st? If the first closing was postponed don't they have until the 31st before they are considered in default?

 

well, today is the 29th and tomorrow is Sunday so unless they can close on monday they are in default. Since getting all parties set up and present for a closing requires a prescheduling I am thinking Monday won't happen.

Trusted Contributor
Posts: 1,580
Registered: ‎06-15-2015

Re: Help! Advice on house purchase closing

 

 

My sister worked in real estate as a sales person and as a broker for close to 45 years. She always told me when I purchased our townhomes and home, "expect the unexpexcted", as she has seen things much worse than what you mention in this thread.

 

I have nothing to offer to you. Seems to me if you real estate agent can't help you rectify what you see as a problem, do you need an attorney? Were any laws or contracts broken by the sellers? If not?

 

Hopefully you can come to an acceptable conclusion to your problem.

hckynut(john)
Honored Contributor
Posts: 13,978
Registered: ‎10-25-2010

Re: Help! Advice on house purchase closing

In Pennsylvania, the earnest money goes into a separate escrow account held by the Sellers Real Estate Broker. ( The Broker who listed the property) In order for the money to be released, it needs the signature of the buyer and seller.

 

I have had a home sale fall though 2 days before the settlement date because the buyer purchased a new car.  The lender refused the loan.  The seller and buyer signed a release and the money was returned to the buyer.  There was a financing on the contract.

 

I have also had sales fall through and the seller released all the money back to the buyers even though they did not have to.

 

When my husband and I sold our first home, the buyers showed up at settlement and they were almost $500 short.  They did not have any more money with them or in savings and the settlement almost didn't go through.  I asked my attorney if we (hubby and I) could pay the moeny for them so that we could settle and sell our house that day.  He said we could, so we wrote out a check for the buyers to purchase our house.  They paid us back at $100 a month. 

Honored Contributor
Posts: 13,978
Registered: ‎10-25-2010

Re: Help! Advice on house purchase closing

Maybe I am not on the right track, but I took the OP's statements to read that her contract said that the closing must be done by Aug 31. 

 

She had a  closing date that was sooner, which is OK, but when her husband lost his job, settlement could not take place on that day.  Now because her husband has a new job, settlement is scheduled to take place on Aug 31 which is the last date for closing on her contract.

 

The problem is...the sellers were counting on closing on the earlier set date and they made plans to go on vacation putting down deposit money to do so.  When the house didn't settle, they decided not to go on vacation.

 

They now are asking the buyer to reimburse them for their vacation deposit money.  The buyer is not at fault.  The seller was not wise to wait until the settlement took place.

 

FYI: It is not at all unusual for  home not to settle on the date listed on the contract.  It happens all of the time especially if the buyer has an FHA loan.  Extensions are granted in this case.  It doesn't make any sense for the sellers not to wait a little longer for settlement.  Who wants to put their home on the markey again and wait for a new buyer and another couple of months after that to settle?

 

The sellers who are asking for money for their vacation deposits are creepy.  I heard of some crazy transactions and this one is up there with the weirdos.

 

The buyer should show up on Aug 31 for her settlement and pay the purchase price plus closing costs.  I would NOT give the seller a penny more.

Respected Contributor
Posts: 2,985
Registered: ‎03-09-2010

Re: Help! Advice on house purchase closing

[ Edited ]

I just hope the OP comes back to let us know what happened.


'I refuse to engage in a battle of wits with an unarmed man'.......Unknown
Honored Contributor
Posts: 8,179
Registered: ‎03-10-2010

Re: Help! Advice on house purchase closing

[ Edited ]



 

 

 

 

 



@luvmyteddy4 wrote:

a mortgage co can look at the new job as stable as long as it is in the same line of work as the previous job.

used to work at Re/Max as a bookkeeper

 

 

 

 

 


I understand that. Haven't the lenders now tightened things up?

Honored Contributor
Posts: 25,929
Registered: ‎03-09-2010

Re: Help! Advice on house purchase closing


@Carmie wrote:

Maybe I am not on the right track, but I took the OP's statements to read that her contract said that the closing must be done by Aug 31. 

 

She had a  closing date that was sooner, which is OK, but when her husband lost his job, settlement could not take place on that day.  Now because her husband has a new job, settlement is scheduled to take place on Aug 31 which is the last date for closing on her contract.

 

The problem is...the sellers were counting on closing on the earlier set date and they made plans to go on vacation putting down deposit money to do so.  When the house didn't settle, they decided not to go on vacation.

 

They now are asking the buyer to reimburse them for their vacation deposit money.  The buyer is not at fault.  The seller was not wise to wait until the settlement took place.

 

FYI: It is not at all unusual for  home not to settle on the date listed on the contract.  It happens all of the time especially if the buyer has an FHA loan.  Extensions are granted in this case.  It doesn't make any sense for the sellers not to wait a little longer for settlement.  Who wants to put their home on the markey again and wait for a new buyer and another couple of months after that to settle?

 

The sellers who are asking for money for their vacation deposits are creepy.  I heard of some crazy transactions and this one is up there with the weirdos.

 

The buyer should show up on Aug 31 for her settlement and pay the purchase price plus closing costs.  I would NOT give the seller a penny more.


 

 

She said "we plan to close ASAP starting the 31st of August" That is NOT closing the 31st of august. The house is no longer under contract after the 31st, which is Monday.