What happens to deposit?

[lelliot3]

I am selling a house in CA and the closing should be by Friday, October 22. That's when the "closing within 30 days" stipulated in the contract is up. Everything I was required to do (Section 1 pest repairs, roof cert, smoke detectors, hot water heater bracing, clean title) was completed by October 11th. All the buyers' contingencies were formally removed early last week per the contract (17 days after counter-offer accepted). The buyers provided documentation with the offer that they were pre-approved for the required loan amount and closing funds were verified as on hand. The house easily appraised for the selling price.

My realtor faxed over a copy of the buyers' final walk-thru conducted Friday and there were several items that were listed on the form that we think that want repaired prior to closing (including replacing the screen in the screen door-give me a break!). The conditions of the contract stipulate that a maximum of $1500 will be spent on repairs including the repairs to clear Section 1 of the pest report and it took all of the $1500 (and a little more) to clear Section 1. I faxed images of the cashed checks which had been written to the repair company. The buyers had the opportunity to do a home inspection but declined to do so and put it in writing that they were deciding not to do it.

What happens if we don't close by Friday and the 30-day window is missed and they want to argue about additional repairs? I have performed everything required of me as the seller in a timely manner. What does it take to snatch away that $2500 deposit and put the darn thing back on the market again? Do I have to sue to get the money from the escrow company? That should be interesting since I don't live in CA. I really do want to sell the property and I don't really want their deposit money but if the buyers want to screw around at the last minute, they are going to put me in a very bad mood!

Maybe no one on the buyers side realized I had already spent the $1500 limit on repairs and the images of the checks will clear everything up and get this deal closed ASAP! I am working with my agent but I was curious what someone here might have to say about the situation.

[Dan Auito]

Closing should be by Friday, October 22. That's when the "closing within 30 days" stipulated in the contract is up. Everything I was required to do was completed by October 11th. All the buyers' contingencies were formally removed early last week per the contract (17 days after counter-offer accepted).
My realtor faxed over a copy of the buyers' final walk-thru conducted Friday and there were several items that were listed on the form that we think that want repaired prior to closing (including replacing the screen in the screen door-give me a break!). The conditions of the contract stipulate that a maximum of $1500 will be spent on repairs including the repairs to clear Section 1 of the pest report and it took all of the $1500 (and a little more) to clear Section 1. I faxed images of the cashed checks which had been written to the repair company. The buyers had the opportunity to do a home inspection but declined to do so and put it in writing that they were deciding not to do it.
What happens if we don't close by Friday and the 30-day window is missed and they want to argue about additional repairs? I have performed everything required of me as the seller in a timely manner. What does it take to snatch away that $2500 deposit and put the darn thing back on the market again? Do I have to sue to get the money from the escrow company? That should be interesting since I don't live in CA. I really do want to sell the property and I don't really want their deposit money but if the buyers want to screw around at the last minute, they are going to put me in a very bad mood!

Maybe no one on the buyers side realized I had already spent the $1500 limit on repairs and the images of the checks will clear everything up and get this deal closed ASAP! I am working with my agent but I was curious what someone here might have to say about the situation.[/QUOTE]

Ohy sounds like a little waffling on the buyers part, a little last minute remorse, you certainly have held up your part of the bargain, The title company(officer) who is holding the earnest money is the one who will initially informally try to arbitrate a peaceful resolution to the funds dispersement. But they would not release it to the shaky buyers without further hearings, its appears your case would stand up for a forfiture in your favor if you fought it. I think the sale will go through, but I would fix the screen just the same.

Maybe they see the market starting to slide a little and they're getting the nit-picking jitters, you just have to hate these last minute Snafu's. Keep riding herd on them all the way up to the closing table. If they balk on the final day then tell the title co you want the earnest money and intend to take it to court or an arbitrator higher than the title co officer at present.

You have a good case, they do not have an inspection condition to satisy.

[lelliot3]

I am sure they are first time buyers and getting a little nervous about signing on the dotted line for the first time. I know it was a little nerve wracking when I bought my first house for a whopping $65,000. This house is selling for "only" $210,000 because it has been a rental property and it shows. I received the offer 3 days after listing it because it was priced correctly for its condition. There are ZERO single family homes listed for sale below $220,000 in the thirteen zip codes of northeast Sacramento where this home is located so its priced well for the area. We'll see what happens.

[Dan Auito]

I am sure they are first time buyers and getting a little nervous about signing on the dotted line for the first time. I know it was a little nerve wracking when I bought my first house for a whopping $65,000. This house is selling for "only" $210,000 because it has been a rental property and it shows. I received the offer 3 days after listing it because it was priced correctly for its condition. There are ZERO single family homes listed for sale below $220,000 in the thirteen zip codes of northeast Sacramento where this home is located so its priced well for the area. We'll see what happens.

I write about this situation in the book Lelliot, it is common and it helps to understand the type of buyers you have and the mindset that exists, as 1st timers this is very common. Keep answering their questions and reasuring them all the way up to the closing table. I think you have it in the bag you just need to ride herd! It will close. Dan

[secoon]

Did this house ever have an under slab water leak? Just currious..

When selling, we always write into the contract that when contingencies are removed, the buyer will deposit with US, a cashires check in the amount of XXX (you will have to guage this by the property, deal and buyer). That check is made out to US, is non refundable, and goes toward the down payment.

This is a hard negotiating tool, but you will know right away if they are stringing you along and wasting time, or if they intend to close.

Yes, the earnest money is yours also, but, as you know, the title company is holding it, who they dispurse it to is ultimately up to them.

Sean

[lelliot3]

I write about this situation in the book Lelliot, it is common and it helps to understand the type of buyers you have and the mindset that exists, as 1st timers this is very common. Keep answering their questions and reasuring them all the way up to the closing table. I think you have it in the bag you just need to ride herd! It will close. Dan

I got a fax last night which finally explains the lack of responsiveness from the buyers' agent and the title company. The seller wants me to increase the selling price to $226,000 from the original selling price of $211,000 and then I will "contribute" the additional funds to the HART program. Supposedly these funds funds will be available to the buyer to do improvements. My net proceeds remain virtually the same (within $30).

I will not be signing a new contract. Why should I? Everything is done so let's close at the original sales price.

Has any one heard of this HART program in California? Isn't it interesting how I get this major contract change 3 days before closing? I get nothing additional from the deal other than a higher selling price that probably causes me to pay more state and federal taxes. This tells me the house appraised for at least $226,000 which means my agent left an enormous amount of money on the table. It also tells me the buyer can easily afford the original loan amount and there is no issue with their financing so let's close the deal! Or not close the deal and I will put it back on the market and tell prospective buyers the house appraised for $226,000!

Is this as funky s it sounds? They can get a HELOC after we close or close one with the loan. Leave me out of it.

[lelliot3]

I got a fax last night which finally explains the lack of responsiveness from the buyers' agent and the title company. The seller wants me to increase the selling price to $226,000 from the original selling price of $211,000 and then I will "contribute" the additional funds to the HART program. Supposedly these funds funds will be available to the buyer to do improvements. My net proceeds remain virtually the same (within $30).

I will not be signing a new contract. Why should I? Everything is done so let's close at the original sales price.

Has any one heard of this HART program in California? Isn't it interesting how I get this major contract change 3 days before closing? I get nothing additional from the deal other than a higher selling price that probably causes me to pay more state and federal taxes. This tells me the house appraised for at least $226,000 which means my agent left an enormous amount of money on the table. It also tells me the buyer can easily afford the original loan amount and there is no issue with their financing so let's close the deal! Or not close the deal and I will put it back on the market and tell prospective buyers the house appraised for $226,000!

Is this as funky s it sounds? They can get a HELOC after we close or close one with the loan. Leave me out of it.

I googled HART and California and found the program. There is one problem in that the "donation" to HART is after closing so the extra $15,000 shows up in my proceeds triggering additional state (9.3%) and federal taxes (15%) on that amount. NOT!

Quoted from HART website:
The seller's/builder's participation is an important factor in helping to support the HART non-profit organization and enable HART to continue in its efforts in assisting future homebuyers. By making a charitable contribution after closing, the seller/builder helps to replenish HART's "blind mixed pool of funds."

[DionEvalueMortgage]

The HART, program off the cuff, sounds like a buyer down payment assistance program. Now adays there are many neighborhood gold, downpayment plus even one sponsored by the government. These programs are designed so buyers don't have to come up with the total down payment to get into their mortgage. These programs come from a pool of funds but they are not free! Usually what happens is they play with the sale price to get the funds covered and paid back without the buyer or seller having to loose or use any money.

The thing to understand is just because someone can afford a 300k loan doesn't mean they can get into it without money. The borrower more than likely didn't have a down payment and closing cost money or it wasn't seasoned or there was some issue with it. This would cause it come up at the end of the transaction. Shame on the broker or mortgage company putting it together!

[Dan Auito]

Thanks again Dion for coming on board and adding your professional insights, again I would just like to thank you for coming aboard! :thumbsup:

[lelliot3]

The HART, program off the cuff, sounds like a buyer down payment assistance program. Now adays there are many neighborhood gold, downpayment plus even one sponsored by the government. These programs are designed so buyers don't have to come up with the total down payment to get into their mortgage. These programs come from a pool of funds but they are not free! Usually what happens is they play with the sale price to get the funds covered and paid back without the buyer or seller having to loose or use any money.

The thing to understand is just because someone can afford a 300k loan doesn't mean they can get into it without money. The borrower more than likely didn't have a down payment and closing cost money or it wasn't seasoned or there was some issue with it. This would cause it come up at the end of the transaction. Shame on the broker or mortgage company putting it together!

Yes, I agree with you. Those are the perfect words for both the loan guy and the buyers' agent...shame, shame, shame. In the end, it's less of a problem for me because I can probably resell the house over the weekend and now I have all the Section 1 pest report items cleared. From what I understand, the first-time buyers are in a tizzy which I can totally understand. They thought they were going to be moving into their "new" house this weekend and we are still arm wrestling at the eleventh hour.

The buyers' agent is also a lawyer and apparently the loan broker is part of the same group. Very cozy. In the original offer, there was a loan contingency until the day of closing which I considered odd. Of course, in my counter offer I had that removed because a loan pre-approval was presented with the original offer. Why would someone need a loan contingency in the contract when they were already pre-approved? I'm thinking the agent and/or broker have pulled this last minute switch before but in this case they had no leverage because there was no loan contingency left in the contract and the deposit will be mine if we don't close on Friday. I never expected anything like this to happen.

[lelliot3]

Yes, I agree with you. Those are the perfect words for both the loan guy and the buyers' agent...shame, shame, shame. In the end, it's less of a problem for me because I can probably resell the house over the weekend and now I have all the Section 1 pest report items cleared. From what I understand, the first-time buyers are in a tizzy which I can totally understand. They thought they were going to be moving into their "new" house this weekend and we are still arm wrestling at the eleventh hour.

The buyers' agent is also a lawyer and apparently the loan broker is part of the same group. Very cozy. In the original offer, there was a loan contingency until the day of closing which I considered odd. Of course, in my counter offer I had that removed because a loan pre-approval was presented with the original offer. Why would someone need a loan contingency in the contract when they were already pre-approved? I'm thinking the agent and/or broker have pulled this last minute switch before but in this case they had no leverage because there was no loan contingency left in the contract and the deposit will be mine if we don't close on Friday. I never expected anything like this to happen.


Well, I signed most of the papers Tuesday and several FHA loan papers today, Wednesday, 12/27/2004. I agreed to a 3 day extension to the closing because Friday didn't happen. I had a backup offer in hand so I didn't care whether these goofballs ended up closing or not. The buyers' agent kicked in $3500 of his commission to cover any potential tax liability from the jacked up selling price for the HART program. I have never been involved in such a sloppy, unprofessional deal. My agent was at her wits' end trying to move things along. The loan is supposed to fund today, record tomorrow, and the wired proceeds received Friday. We'll see what happens.

For those of you who are wondering about the health of the post-hurricane Florida market, let me assure you it remains very healthy. I am moving to Ohio and just sold my Florida home in 2 weeks for 98.2% of the asking price (full price offer with us paying some closing costs).

[Dan Auito]

Glad to see your going to rap this thing up Lelliot. Now that your moving to Ohio (WHY) I hope you will get your connection established and sign back on here with us. We don't want to lose you so soon. Florida will be healthy for years to come. With the aging population the writing is on the wall. The average discount given is 6% you did good! Dan

[secoon]

Lelliot3,

Good deal! Glad to hear that things look to work out. I just returned north from 2 day in Sacramento.. Man, you can HAVE that place!! To get back from lunch by 2:00 you have to leave at 10:00am.

You mention selling Florida.. Wondering, did you sell the one that you thought you overbought? If so, how did that work out for you?

Sean

[lelliot3]

Lelliot3,

Good deal! Glad to hear that things look to work out. I just returned north from 2 day in Sacramento.. Man, you can HAVE that place!! To get back from lunch by 2:00 you have to leave at 10:00am.

You mention selling Florida.. Wondering, did you sell the one that you thought you overbought? If so, how did that work out for you?

Sean

Yes, the one that sold in FL in 2 weeks for 98% of asking price is the one I fretted about having overbought. Actually, it looked like I overbought because my VA appraisal came in so low but I knew the house was something special and paid $27,000 over the VA appraisal. The appraisal for the new buyer was yesterday (10/29/04) and the numbers are supposed to be in on Monday. We'll see how it goes. The agent is the mother of one of the buyers and she knows this house is something special for her son and pregnant daughter-in-law.

Hopefully, she is working with a good lender that has "good" appraisers who can properly appraise this custom built home. We required that the appraisal be within 14 days and they made it happen within 4 days. If the appraisal comes in low, we need to know immediately if they are in a position to still purchase the home. I'm assuming the agent/mom thinks it will appraise at the sale price (or close) or she would not have offered full price with some closing costs thrown in. It is extremely well-constructed with a perfect floor plan (designed by the original owner) in a beautiful neighborhood in a great location.

Why am I moving to Ohio and selling this gem of a house? Unfortunately, there weren't any good jobs for me in the area so when I quit the rotten job I moved there for, I had to look outside the area. I accepted an excellent position with some old friends at a company located near Lima, OH making 2.5 times my Florida salary. I can afford to keep my OH home at 80 degrees all winter! :-)

[lelliot3]

Glad to see your going to rap this thing up Lelliot. Now that your moving to Ohio (WHY) I hope you will get your connection established and sign back on here with us. We don't want to lose you so soon. Florida will be healthy for years to come. With the aging population the writing is on the wall. The average discount given is 6% you did good! Dan

The oldsters are going to have to fight the youngsters for the houses because many of the people I knew that were new arrivals to Central Florida were not retirees but young couples just starting to have kids or still having kids. I would bet the average age of Floridians is starting to drop. The "kids" buying my home had recently moved to Florida from OH! The husband might have been 30 but I'm pretty sure the pregnant wife was under 30. I am very jealous they are buying this house at such a young age!

[Dan Auito]

The oldsters are going to have to fight the youngsters for the houses because many of the people I knew that were new arrivals to Central Florida were not retirees but young couples just starting to have kids or still having kids. I would bet the average age of Floridians is starting to drop. The "kids" buying my home had recently moved to Florida from OH! The husband might have been 30 but I'm pretty sure the pregnant wife was under 30. I am very jealous they are buying this house at such a young age!

What did or does our young buck do for employment?

[lelliot3]

What did or does our young buck do for employment?

Buckette! My background is in all things related to the design and manufacture of surgical medical devices (ever heard of an endoscopic stapler?). I have worked in medical device design and manufacturing at a Fortune 10 company and I also helped build a medical device company (start up) from the ground up in Orlando (www dot ortheon dot com). My last FL adventure was with medical device reprocessing (yuck). This new job in OH is managing a plant which manufactures plastic components and assemblies for my previous employer.

Before all of that I was in the USAF. When I resigned, I was assigned to McClellan AFB and the F-117A Stealth Fighter program. That is how I ended up with the CA rental property and the sale that has been giving me all the heartburn lately.

[Dan Auito]

Well it certainly is nice to have your background! But what I meant was what does the 30 yr old kid who is buying the florida home do? You silly girl! Dan :SM058:

[Keith(CA)]

Hey, I'm living/renting in Sacramento...if that thing falls out of escrow send me the detail, would ya?.

[lelliot3]

Well it certainly is nice to have your background! But what I meant was what does the 30 yr old kid who is buying the florida home do? You silly girl! Dan :SM058:

Bummer. I thought you were calling me young! I don't know what the "kids" do. The husband reminded me of the fresh-faced P&G'ers I used to see in Cincinnati but there is no employer like that in Lakeland. The pregnant wife looked like a teacher or a homemaker. I categorize her based on my neighbors in those professions. Actually, there is a P&G type employer in Lakeland........Publix. Publix grocery has its headquarters and manufacturing in Lakeland. They make many of their perishable house brands there such as dairy, bakery, meats, potato salad, etc. The husband might work for them. It's a HUGE operation in the Lakeland area. Publix semi trucks are everywhere.

[lelliot3]

Hey, I'm living/renting in Sacramento...if that thing falls out of escrow send me the detail, would ya?.

My agent reactivated the listing 2 weekends ago for one day and we got a solid backup offer. If the first deal or the backup doesn't turn out, I will find you back here and give you the details.

[lelliot3]

My agent reactivated the listing 2 weekends ago for one day and we got a solid backup offer. If the first deal or the backup doesn't turn out, I will find you back here and give you the details.

All the paperwork finally went through and the proceeds finally appeared in my credit union. I guess it's really not mine anymore and boy does that make me happy!

[OKRICHLAND]

All the paperwork finally went through and the proceeds finally appeared in my credit union. I guess it's really not mine anymore and boy does that make me happy!
I'm smiling with you. :SM013:

[Dan Auito]

I'm smiling with you. :SM013:
Make that two smiling guys, I always new it would close! :SM013: :SM013:

[lelliot3]

Make that two smiling guys, I always new it would close! :SM013: :SM013:

They would have been fools to let the deal fall through but it was the funkiest deal I have ever been involved in!

Now, time to complete the sale on my current primary residence and the purchase of my new home in Ohio. Yes! I found one to purchase and we will be able to move directly from the old one to the new one.

I'm getting my new loan from INGDirect so I'm going to put a plug in for them here. Hope it's okay. The 5/1 rate of 4.375% is the lowest I can find with no points and NO (zero, nada, nothing) lender fees. I applied Wednesday at about 9 am over the phone and I was approved by 11 am. I faxed the purchase contract for the new home and the sales contract for the old home on Thursday and the appraiser was at the new house today, Saturday. I am responsible for getting the title insurance work done and that started Friday.

The only other piece of paper I owe INGDirect is a copy of my last (which is also my first) paystub from my new job. We will be closing an 80% first mortgage and a 10% HELOC (for future use, as required). I was only required to put down 10% and there would be no PMI. INGDirect is actually running a promotion right now so they will be including a $500 rebate I can use against my closing costs. The lock is for 60 days and they let you float down for free and there is no pre-payment penalty. Fax machines, email, phones, and the internet but quick and efficient service at a reasonable price.

[Dan Auito]

Great information Lelliot thanks for taking us cradle to grave or shall I say from crib to crib on this one. Thanks for the ING info as well, We have no problem with earnest plugs here! Please stay in touch! Dan and the crew! :icon_buss