the seller's agent opened escrow on a short sale property without the bank's approval. should i write the good faith deposit check or not?

Asked by Newbie Buyer, Orange County, CA Wed Jul 28, 2010

Help the community by answering this question:

+ web reference
Web reference:

Answers

5
Sylvia Barry,…, Agent, Marin, CA
Fri Jul 30, 2010
Then OC is a bit different from Marin county. We don't send to escrow until the short sale is approved, But eitehr way, the way your escrow company does it is the same. And they might be able to assist in short sale process by providing essential information to the short sale lenders.

In real estate transactions, the agents do not get paid until close escrow and escrow company does not get paid until after close escrow either.

Sylvia
0 votes
Newbie Buyer, Home Buyer, Orange County, CA
Thu Jul 29, 2010
according to my agent, the escrow company simply holds the check until the seller's lender approves the deal. once the deal is approved by the lender, then the escrow company goes ahead and cashes the check and away we go. but my understanding is that the escrow company doesn't do a thing until the lender has approved the short sale....not even the escrow company gets paid unless the lender approves the deal....is this a common thing? how is this related to "accomodation escrow"?
0 votes
Sylvia Barry,…, Agent, Marin, CA
Thu Jul 29, 2010
Hi Newbie Buyer:

Hope your agent is a savvy short sale agent.

In CA contracts, there is a short sale addendum. On the addendum, you can specify whether you will open escrow immediately or after you receive written approval from the short sale lender; you can also specify whether you need to put the good faith deposit into escrow when the contract is ratified or when you receive short sale approval. For my buyer clients, I check the box ways after receive written approvals.

However, that's when you will deposit the check into escrow.

You question asked if you should 'write' the good faith deposit check or not. The answer for my clients will be an YES. The check is used to show good faith to the owner seller (that you actually wrote the check). But the check should be held by your agent at a safe place until a short sale approval is recieved before he/she send it to escrow.

Best,
Sylvia Barry
Frank Howard Allen Realtors
Short Sale Specialist
Web Reference:  http://www.SylviaBarryRe.com
0 votes
Lars Nordstr…, Agent, Anaheim Hills, CA
Thu Jul 29, 2010
NB,

In that addendum that Kathy mentioned, there is also a space to provide an approval date. I tend to write one that is reasonable, but releases you from the escrow after a longer than desired wait time (if you choose or find something else). Check with your Realtor about what the addendum says. Check the date, and make sure the box that Kathy mentioned is checked!
0 votes
Kathy Weber, Agent, Murrieta, CA
Wed Jul 28, 2010
NB,

Just to clarify - the Selling Agent would be "your" agent. The "Listing Agent" is the representative for the seller.

In several situations, the Listing Agent requires the buyer to deposit funds into escrow. By doing this, it usually shows that the buyer is serious enough to stay for the long duration of a Short Sale. This is sometimes called an "Accomodation Escrow". Meaning that the bank has not given approval, but an escrow account has been established so when & if the approval is received, the sale can proceed. Many escrow companies get the ball rolling early so they can expedite the process when the approval is received.

I would consult with your agent on their take on your particular situation. When we open an Accomodation Escrow for our clients, we write an Addendum clarifying that the full deposit be returned if approval is not received. Although it's the norm that it is refunded, we still back it up with the Addendum.

Best of luck!
0 votes
Search Advice
Search
Ask our community a question

Email me when…

Learn more