Home Buying in Arcadia>Question Details

Drgeeforce, Home Buyer in Arcadia, CA

I'm a buyer but seller's agent/broker/escrow owner/banker is making demands that I use only his escrow & not negotiable. Is this?

Asked by Drgeeforce, Arcadia, CA Wed Aug 3, 2011

ethical/legal? I'm trying to buy a $749,000 house but the seller's broker who also owns an escrow company and a local bank, has counter-offered to use his escrow company. He has told my agent, this is NOT negotiable. He has sent a disclosure listing a base escrow fee of $200 plus $3/1000 and a minimum $700 in extra fees. Is there a violation of any real estate law or ethics or even the California Realtor's Assn bylaws? This is NOT a good faith rather a disclosure of fees. As usual, at the bottom of this disclosure is another "disclosure" that we are not obligated to use his escrow company.

Help the community by answering this question:


Unfortunately, this is very common. It is a common practice for the seller to want to select choice of services. In this case, it's easy to see why they want you to use this escrow company, they have a vested interest in that escrow company. It's irritating at times because the buyers agent in most case has a couple favorite escrow companies they like to work with, but seldom get to because the seller always wants to be in control of the process. There are laws on the books prohibiting a seller from requiring a buyer to use specific companies for escrow services, but it's a slippery slope. If you insist on services, they just might be compelled to accept some other persons offer. Hang in there, it'll all be over with in few short weeks. I am not sure you want to add any more stress to an already stressful process.

Best of Luck!
Web Reference: http://www.AFN-Loans.com
1 vote Thank Flag Link Wed Aug 3, 2011
I am selling a lot in LA, my agent told me that I have a cash offer and send me The Vacant Land Purchase Agreement and Join Escrow Instructions. I signed them. After that I reserached that the buyers agent works for a company who is part owner of the Escrow Co. they want to use. This Escrow Co. Chartwell Escrow has very but reputation. They made an addendum to explore the land. I received the the closing documents but I am refusing to sign them. I want them to change Escrow Co. because I see a conflict of interest with Chartwell Escrow. Do I have any right to ask for an addendum to change escrow Companies?
Flag Sat Aug 16, 2014
I noticed that you had posted this over a year ago. So how did you resolve the situation? Did you wind up buying that house? It's pretty obvious that the seller's broker had quite a few ethics violations in his demands.

If you have anymore home buying / selling questions in the future, please feel free to contact me. I pride myself on being professional, knowledgeable, and working with integrity.

If you actually wind up seeing this post, please feel free to give me a "Best Answer". I'd appreciate it :)

0 votes Thank Flag Link Sun Sep 9, 2012
Sometimes, agents make a fatal mistake of representing their interests instead of the interests of the seller. Make a new offer that stipulate an independent escrow company and spell it out on an addendum as the listing agent must present all offers to the seller. The seller will usually tell the agent to pound sand when they are selling the home. However, if this is a short sale, the escrow company may have already performed work on this property getting the short sale approved.

Harold Sharpe - Broker
So Cal Homes Realty
(951) 821-8211
California Department of Real Estate Broker License # 01312992
0 votes Thank Flag Link Fri Aug 5, 2011
Let him demand to the hi heavens but there's no way they can enforce that. Make picking your own escrow company part of your offer.
0 votes Thank Flag Link Thu Aug 4, 2011
Rachael you make this sound like buying protection from the mob.

DrG, complaints at http://www.dre.ca.gov

Happy funding, Rudi
Web Reference: http://www.umboc.com
0 votes Thank Flag Link Thu Aug 4, 2011
No one can force you to use an escrow company, or any service provider, and it is illegal to do so. You do have a right to negotiate that. However, in most cases buyers and their agents do comply with the seller's choice of service providers, as they do not want to jeopardize having another offer picked over theirs. You also may need to negotiate other issues once you are in contract (like repairs), and you don't want to jinx your chance of the seller complying with such requests. It may be best to let this one slide and then deal with the situation after your home closes escrow.

If you are concerned it is best to speak with a real estate attorney. You can also have your agent ask his/her broker, and possibly pursue a claim after the close of escrow.

Best of luck,

Rachel LaMar, J.D.
LaMar Real Estate
0 votes Thank Flag Link Thu Aug 4, 2011
Escrow is negotiable. In fact foreclosures properties are even mandated to not force buyers into using their preferred vendors.
You can counter back and state you want your escrow company. $3 per/ $1000 is high, most charge $2/ $1000. I am curious if his seller's know you are being bullied. The sale is between the buyer and the seller. Agents need to check their egos at the door.
You may even have a ethics complaint with the Ca. board. Counter their counter and see what happens. Talk with your agent, see what their opinion is.
0 votes Thank Flag Link Thu Aug 4, 2011
Drgeeforce, Was this disclosed upfront in the listing information? This information should have been stated in the listing information on MLS. If not, then I do not know how they can do this. Your contract is with the seller, not the listing agent. Whatever the seller signed and agreed to with the listing agent should have been disclosed to you if it affected you before you submitted an offer to the seller. Builders typically do this, using the fact that they are paying closing costs to force you to use their attorney, title company and bank. If you don't use their "people" then they will not pay your closing costs. Your situation sounds very unusual and definitely questionable. Your attorney can give you the best advice on this.
0 votes Thank Flag Link Thu Aug 4, 2011
This could be considered a conflict of interest, but as they have said before, we are not attornies and cannot speak to the legality or ethical ramifications on this.

One of the negotiating tools that I use is: If you DEMAND that we use your escrow and it is non-negotiable, then fine. We will use your escrow company. But YOU pay all of the escrow costs. This will limit your liability in case "unusual" or "extra" fees come up in the process, which USUALLY happens in these types of cases.

The other option is to send a notice of withdrawl of offer and clearly state why it is that you are withdrawing your offer, and ask that the notice of withdrawl be signed by the seller. I would be willing to be that unless the seller is releated or a very good friend of the agent/escrow company owner, they don't know that she/he is making these demands and potentially costing them an offer on the home.

Contact a real estate attorney in your area and ask about the legality of what is going on, and/or call the local real estate board.

Best of luck with the situation. Keep us updated.

It's more than real estate. It's RAYL-Estate!

Brian Rayl
Keller Williams Elite - Dallas, TX
0 votes Thank Flag Link Thu Aug 4, 2011
Seller's choice of services is common, but yes, in this case it does sound on the unethical side (I can't say it's illegal as I am not an attorney) $3/1000 seems high. My escrow company (Coast Cities Escrow) would charge to the seller side based on a $749K purchase price $1498 + $200. If you want to compare, shoot an email right now to RobinRiley@CoastCitiesEscrow.com & just say "Emily told me you could quickly tell me what the escrow charges would be for me, the buyer on a $749K purchase price",,,,,then counter back with this figure or ask your agent to ask their trusted escrow co & get a 2nd or 3rd opinion.

You DO have the right as the buyer to NOT be forced to be Title insurance through whomever the seller wants you to use. You can buy your own Title insurance anywhere.

Good luck with your purchase.

562-430-3053 c
Realtor Since 1996
Main Street Realtors
0 votes Thank Flag Link Thu Aug 4, 2011
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