Now I know that's a lot and it can be complicated that's why I believe it is really important for you to have a team of professionals helping you navigate this entire process and a realtor like me a
You Have An Accepted Offer, Now What? [Part 5]
Dated: November 7 2023
Now I know that's a lot and it can be complicated that's why I believe it is really important for you to have a team of professionals helping you navigate this entire process and a realtor like me a real estate agent is part of your team to help you navigate all of this stuff that can be overwhelming that you don't really understand or maybe you do understand. But you still want somebody else advocating on your behalf as your agent working for you to get to a successful close.
So you have this offer doesn't mean that's exactly what your home is going to sell for because you know we have this inspection that we have to get through and maybe renegotiate we have an appraisal we have to get through and we get to renegotiate.
Something about the appraisal: the buyer doesn't get to pick the appraiser and you don't get to pick the appraiser at least where I serve. Our lenders have five appraisers that they use, local appraisers that they use to appraise properties that they're considering offering mortgages on and you know the next appraiser up let's say this one got a deal yesterday that have to go out and look at, this one got one the day before, and this one got one the day before so the fourth one on their list is going to be the one that actually gets the appraisal order to go and make the appraisal.
So that it's kind of an arm's length, your uncle, your cousin, the lender's uncle or cousin or brother or sister or whoever the buyers nobody connected with the lender nobody connected with any of the parties involved is doing the appraisal because we want to make sure that it's a fair and unbiased valuation of the property. Nobody's putting their thumb on the scale to make it either be valued higher be valued lower it's all independent. So nobody gets to choose who that is at least in our markets.
So you've gotten an offer in you've worked through all of the elements everybody's agreed to everything we've moved past the inspection we've passed the appraisal the buyer gets their clear to close because they have submitted all their paperwork they're a good risk for the lender they have the money they need to put down for down payment to put for their closing costs.
And guess what it's time to meet at the attorney's office, sign the paperwork, hand over the keys and get your money. It may sound that simple but there are a lot of moving pieces behind putting a sign in your yard, getting it listed on the MLS and on Zillow and realtor.com and wherever it's going to be on social media and actually having money put in your bank account after you've transferred keys over. There's a lot involved in that. Again, I suggest that you have an agent, a real estate agent, a real estate attorney, all those folks helping you as those professionals that are partners with you on getting your home sold.
I’m going to go ahead and address earnest money for just a moment. Earnest money that leases in my market is not a requirement. It is usually done, and what it means is the buyer is earnestly pursuing all the stuff that they need to do to purchase the property.
I have seen earnest money as low as. $500 and earnest money can be $5,000, $10,000, $20,000, whatever. Sometimes the seller would say they want X percent of earnest money, 1%, 2%, 3%, 10%, whatever that may be or you don't put it in there.
On the lower end properties of $200,000, $300,000 property, in our market I usually see $500 or a $1,000 in earnest money it could be a lot more it just depends. And that earnest money is kind of like I kind of describe it kind of like an engagement ring. An engagement ring doesn't make you married, it just says to the lady. Hey, I'm serious about you. I don't want to be connected with anybody else but you and I am planning to spend the rest of my life with you. Are you okay with that and can we move forward to make that happen?
That's what that earnest money is for. The sellers probably would prefer their agent, their brokerage to hold the earnest money the buyers would prefer their agent, their brokerage to hold the earnest money. And here's why because at the end of the day if the buyer terminates the deal they're going to want their money back.
Now if they terminate their deal for cause that's listed in the offer, they get their money back. If we can't work through the inspection and get an agreement to move forward the deal is terminated they get their money back. If the house doesn't appraise for the value that it's being sold for and we can't reach an agreement on a new sales price, they get their earnest money back. It's not their fault it didn't appraise for that and they couldn't pay more and you the seller wouldn’t take less, so they get their earnest money back. If they're not able to qualify and get their mortgage, get their loan for the property, if they lose their job, if the spouse dies, if they screw up their credit report because they go out and buy furniture ahead of time or buy a car ahead of time and they can't get that funding they messed it all up.
However in our boilerplate contracts it says that they can't get funding and that they get their money back. They get to terminate the deal and they get their earnest money back. If they just decide hey we prefer that house down the road we like it a whole lot better, we want to go buy that you get to keep the earnest money. If they just decide hey we're going to just rent right now or no I'm taking a job somewhere else and we're not going to pursue buying that property. They're going to ask for it back, they're going to ask to terminate the deal and ask for it back but you get to decide whether or not you're going to give it back.
Now if you don't, there's still the potential that they could go through legal channels for arbitration or whatever to try to get their money back. If the buyer's brokerage is holding the earnest money it's easier for the buyer to get it because the buyer's agent represents them and they're going to be a little more lenient to giving in that money.
If the listing brokerage holds the earnest money, your agent, your brokerage is going to be less likely to just hand them the money back unless it's a clear reason that they're able to terminate the deal.
It's all part of the negotiation who gets to hold the earnest money and it can be a third party. Now the closing attorneys that I've spoken with and that I know in my market, they hold earnest money but the ones I've talked to really don't want to. They don't want to be caught in the middle of having to figure out what's going on and if it gets involved in a legal case and they're holding a thousand dollar check. They don't want their time and effort having to go to court to defend the seller or the buyer; it's just not worth it for them. They hold the earnest money as a service for their client but at least again in my market it's not something that those agents, that those closing attorneys really want to do.
So again it depends on your market it depends on whatever agreement you put in place with the other party to move forward to continue to get your home sold to close to get your money.
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