Wednesday, September 13, 2006

Deposits Held in Escrow

There are always questions about the deposit money when we sit down to write an offer. The deposit is collected from the buyer when an offer is accepted. It is deposited in escrow and held until the close of escrow. It will go towards the buyers closing costs and down payment, or, it may be refunded to the buyer if not needed for down payment or closing costs.

In the case of an escrow cancelling, the deposit is disbursed according to the progression of the contract. If the buyer has not released all contingencies, the deposit would ordinarily go back to the buyer. If all contingencies have been released by the buyer, the seller may have claim to the deposit based on the buyer defaulting on their contractual obligations. In either case, both buyer and seller are required to sign the cancellation prior to all deposits being disbursed.
So, back to the large sums I've seen in recent contracts. The typical amount we've been seeing here in Ventura County is about 1% of the purchase price. In going lower than this, it may express a lack of committment to the contract. The larger than 1% deposits may show the seller that the buyer is committed to completing the escrow, and that the buyer has the financial strength to make such a large deposit.

Search the MLS for Ventura County Real Estate at:
www.HopeGoss.com

1 Comments:

At 3/16/2005 9:37 AM, Blogger Lorraine Burns, Realtor said...

I am representing the seller in a transaction that just blew up at the last minute. I did not require the buyers to come in with a large deposit which I should have done. Now my clients are only going to get $1000 for the loss of 3 months time while their home was in escrow. I will insist on larger deposits from now on.
Lorraine

 

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