Posted by: Roby Robertson | April 11, 2008

Lake Norman Real Estate, Be Wary of Earnest Money Issues

Lake Norman Sellers,Make Sure your Buyers show you the money!

I am constantly amazed at things that happen in real estate and what people are capable of doing. I am also very glad that the Real Estate Commission and N.C. Bar Association continue to update our contracts as the changes they make are always to the benefit of the client. From my experiences it amazes me that people will sell their biggest investment themselves, however that is for another day.

First our North Carolina Contract as it pertains to Earnest Monies.

Lake Norman Contracts
The above screen shot shows secton 4a of our North Carolina Offer To Purchase. Notice the key phrase. This states that an amount will be deposited into the account of the escrow agent and the amount is included with the offer.

Consider the situation.

Hmm. Ok, Seller, your agent presents you with an offer and a copy of the check from the buyer. Oh, and the buyer is an out of town buyer that is faxing documents to his/her agent to be presented. Everything else in the offer is strong. It seems a safe assumption that this is a good offer and everyone agrees to sign. Oh yea, forgot. The buyer is a cash buyer so there is no loan condition with all the ‘Time is of the Essence’ language with regard to getting a loan. The home is changed to pending status and showings stop.

Now the fun or should I call it frustration. The buyer has not actually sent the money. The buyer’s agent is trying to get the money as hard as they can. Time presses on and all of sudden that buyer says they need to get a loan and are unable to. Both agents are trying to hold the deal together and the house remains pending “off the market”.

Another week goes by the the buyer is now becoming unresponsive. Now, Mr/Ms. Seller we need to put the home back on the market but still hoping this buyer comes through. Dealing with a new offer could be in the distance with this other offer hanging in the balance.

Whew, now seller is upset at his/her agent. His/her agent is mad at buyers agent and buyers agent firm.

Whew, THIS COULD HAVE ALL BEEN PREVENTED.

My procedures for handling this situation!

1. Try to insist that the sellers agent firm hold earnest money. This will enable them to stay closer to the situation. This way they are actually depositing the money instead of getting a copy of a check. Sometimes buyers firm will not allow this, so.

2. Make sure the buyer’s agent actually has the check in hand (not a copy ). or

3. Do not accept the offer with section 4a filled in with an amount of earnest money. However, make the earnest monies be filled in section 4b. Lake Norman Offer to Purchase Section 4bSorry for the difficulty reading this image.

However, this states that the Additional Earnest Monies will be deposited by a certain date, Time Being of The Essence. This allows the contract to be terminated as soon as the date passes with no money.

My fiduciary responsibility to protect my client. Procedures like this can prevent some of the frustration than can arise when things like are not in place.

If you have any questions about our contracts, please contact your Lake Norman Area Agent at 704 451 7051.

See Also:

Your Lake Norman Agent Talks North Carolina Contracts

Creative Ways to Sell your Home

Another Opinion on Seller Concessions

Lake Norman,Know Your Inspections

Lake Norman Sellers, Before you drop that price

A Letter to Lake Norman Home Sellers

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