When is the earnst deposit cashed? When the offer is accepted or when you give it to the real estate agent?

Asked by Laura, Westland, MI Thu Jul 24, 2008

We want to put a deposit down, but it's a short sale and wondered how safe our deposit would be..... Will it be cashed right away or will they actually have to accept our offer first?

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4
LYNN Afton, Agent, Big Rapids, MI
Thu Jul 24, 2008
Hi Laura-
If you are not working with a buyer's agent under contract, then the real estate agent that you are dealing with, by Michigan law, is an agent or sub-agent of the seller. In the seller's best interest, then, your deposit would probably be banked immediately.

If you are under contract with a buyer's agent, working for YOUR best interests, the deposit should be made after all parties have put a signature on the purchase agreement. Sometimes with foreclosures or short sales, it can take weeks to get a seller-signed purchase agreement. It is to the buyer's advantage then to not deposit the check right away. If the deal falls apart, both parties may be required to sign to release it - especially if the broker has a third party (like a title company) hold all earnest deposits in a special account for that broker.

HOWEVER, some foreclosure & short sale sellers will require proof of the earnest money being deposited before they will even look at your offer! Then you have to decide if you want to risk losing the deposit.
1 vote
Scott Godzyk, Agent, Manchester, NH
Thu Jul 24, 2008
In a regular purchase agreement it should be deposited within 48 hours of the offer being signed and accepted by all parties. The deposit shall be placed in a designated trust account seperate from the agencies general fund. The purchase agreement should stipulate what happens if any of the contingincies are not met such as you do not get financing approval or the home inspection fails.
Web Reference:  http://www.ScottSellsNH.com
0 votes
Derek Bauer, Agent, South Lyon, MI
Thu Jul 24, 2008
Hi, Laura :)

State law says the earnest money must be deposited into the broker's account within 2 banking days of signed acceptance. Since I personally prefer myself or the broker doesn't hold checks, my clients and I either decide when the offer is written if they will provide it then to be deposited immediately, or we wait until the offer is signed, and then it must be deposited within 2 days.

The important thing to note, with our company, is that if the check is deposited and the deal for some reason falls apart due to a contingency in the contract, the money can either be refunded, or transferred to the property you next pursue...

Hope that helps!

Derek Bauer, Associate Broker / Realtor
Real Estate One
derek@doortodreams.com
http://www.DoorToDreams.com
Web Reference:  http://www.DoorToDreams.com
0 votes
Denise Angel…, Agent, Mayfield Village, OH
Thu Jul 24, 2008
The deposit of earnest money is referred to in the purchae agreement. In most cases the check is deposited into the brokers trust account upon the acceptance of a binding agreement. With a short sale the earnest money may be handled differently. Read your contract carefully and ask the agent that is representing you exactly how the earnest money will be handled and if, when and how the earnest money would not be refunded.
0 votes
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