When Do I Lose My Deposit Buying A House In Maine?
Earnest money was put down in real estate sale but when do I lose my deposit buying a house in Maine?
This blog post covers the situations when the money put in a real estate broker’s trust account is returned to the buyer. Or the times when deposits on a house get forfeited to the seller. When dispite the best efforts, a property sale just goes south. And the sit down for the pass the keys please is not happening at a real estate closing.
This blog post will also cover the situations where the earnest money put down in good faith to take a property off the real estate market.
Then gets split in two. Returned to both the buyer and seller in a failed home sale.
For starters, let’s back it up and explain what is a deposit on a house. Why the need for earnest money funds in buying a home. Say you are the seller of a home listed for sale and actively marketed in the search for a real estate buyer. To entice the owner of the home to stop looking for a ready, willing and able buyer for the property, money or consideration is put down.
The earnest money deposit on the home is to show the seller a good faith gesture. That you put your money where your mouth is are serious. The deposit on a home shows the seller that you mean business and intend to purchase his or her property. A dollar is enough deposit to make it legal. With a dollar down, you the buyer don’t worry so much about losing your deposit buying a house in Maine.
Even in a cash sale, there is a time factor in getting the purchase and sale agreement to buy a home to the attorney or title company assisting in the real estate transfer. If a bank is involved six to eight weeks can be needed to produce and shuffle the paperwork needed to cause the clear to close memo to circulate. In the home sale, time to check the title, to do inspections are built into the contract to purchase the property. So are contingencies for obtaining bank financing, to get up and over appraisal review, to cover the need for the buyer to sell another home they own first.
Does the size of the deposit in a house for sale in Maine really matter?
You bet it does. If the buyer is only willing to put a dollar in a real estate broker’s trust account, that send a signal that they are weak, have little money. Or that they are not trying as hard as possible to cause the seller to accept their offer.
The purchase price offer is one very important aspect of a real estate offer being accepted or not. But the size of the deposit a home buyer is willing to plunk down to be used as liquidated damages. If they do not follow through with the sale. That’s promise backed up with a deposit is just as important.
As a Maine real estate broker for 40 years, I would rather not put a property under contract for sale if the likelihood of it ever closing is very poor. We always look for red flags that signal problems ahead and how to fix them early on.
The bigger the deposit on a sale that sinks like the Titanic. It is just going to be fought over and not let go of easily. Lawyers get involved, accusations are made, court house steps and a man or woman wearing a robe get involved.
Like a tenant in possession of a home, getting them in is easy. Making them legally move quickly is not so possible. No matter how hard a home buyer needs to get in.
Five hundred, a thousand dollars is a lot of money when it is your hard earn funds being poured into the home buying dream. But if a home buyer decides not to purchase for their own personal reasons and due to no fault of the property inspection results or a case of house purchasing remorse, it is small potatoes.
I would rather not be forced with going through with a sale on a Maine home I no longer need. Because I have been transferred, served with divorce paperwork or a bad medical report was dropped like a grenade into the home buying exercise arena.
The longer a real estate sale lingers and delays with one after another set backs, the more unlikely the chances of making it through the operation.
Life happens right on schedule. Hot buyers, sellers cool off with time. Home buying decision making is impacted with everything else going on in a person’s life. Real estate is emotional. Families, transfers, estates, lack of money, winter weather are all involved.
Often times an out of state property buyer will ask me what do I need to send you to put a hold on the place?
How can I tie it up? Until I can clear my schedule to get up there for a looksie? What size deposit check can I write to stop the show. To send ASAP that will take the place off the market and tie it up securely?
As a Maine real estate broker, I don’t want the place off the market. Waiting for a possible buyer that may or may not show up to do the up close and personal tour. That could change their mind between then and now. It locks the front, side and back door. To a buyer that already did the house showing a few weeks back. That calls and is ready to come back into the picture to buy. But can’t despite their once loose ends now all neatly squared away.
The home seller wants the property available to whoever is deemed ready to buy. That has the funds. Is not adding a mountain of contingencies that could hinder the home sale.
The earnest money deposit is put in place to buy time for home appraisals, property inspections, the title search.
To provide time for securing house insurance, to do repairs to obtain mortgage under-wiring. The earnest money to take a place off the market brought to the closing. Or kept, applied as a credit toward the agent or broker’s real estate commission. The deposit does not evaporate. It quickly gets deposited. Parked in usually a non interest bearing bank account. Unless the deposit is large. Hefty sized and to “hold a property” for a long period of time. Waiting for milestones to happen along the way to the closing. That the broker or agent report on as they happen to keep everyone informed. (Fingers and toes crossed).
The earnest money deposit on a home or other property placed “under contract” or “sale pending”. It can be interest bearing. But not to benefit the broker or agent that administers the real estate trust account.
Who gets the interest is spelled out clearly in the purchase and sale agreement. Also what happens to the money in the event a buyer backs out of the deal? Better be crystal clear black and white large font.
Forfeiture of the deposit for liquidated damages for the loss of marketing time or expensive delay can be contentious. When a home buyer is on the hook for appraisal fees, bank application and title work costs. The signing off on the deposit to the seller is not always easy. Sellers while tied up lost out on other potential house sales and were damaged. We maybe headed to small claims court if mediation does not happen for a solution. The money stays in the trust account until everything is worked out legally.
Getting signed earnest deposit releases work best. If a home buyer is not able to purchase or just had a change of heart, often the usually nominal deposit is returned. To just move on if the property was not off the market long. The most important goal in a house sale is to successfully locate and sell to a new buyer. Not get bogged down into being tied up wrangling over what happens to the deposit from a failed sale.
If the home for sale does not appraise at or above the contract price. Or a home inspection shows issues the seller is not willing to correct to the buyer’s satisfaction. If the title is flawed and correction is not time or money economical for the seller. All these are grounds for return of the earnest money deposit to the home buyer.
The home owner who thought they could but when it came right down to it will not let the real estate sale happen and retreats.
Seller remorse happens.
If the seller backs out, the earnest money deposit goes back to the buyer. The buyer will not lose their deposit. And hopefully the seller is not sued for specific performance. To legally force them to honor the contract and go on with the sale. Have a trained real estate lawyer review any paperwork before signing it. Get he or she involved early on. To avoid talks in the closed door conference room about what you should have done but did not in the legalese you agreed to in writing.
People ask how big an earnest money deposit on a house for sale should be. Lots of factors swirl around this one. If the market is hot for waterfront cottages like the one the buyer is eye-balling, better plan on as large as you can afford waterfront buyers. Especially if more than one anxious, aggressive buyer is after the real estate parked next to H2O.
In any real estate sale, the seller when there is more than one or a lone wolf. They will select the buyer with the best terms and conditions. So make it a short list on any contingencies and the price, the deposit as attractive as possible. The deposit if large sends a signal to the seller this buyer is not pussy footing around and means business. He or she plans whole heatedly to own this property and make it their own thank you very much.
In markets where a house in rural Maine can sell for $20,000, $30,000 a one percent deposit can seem small.
But in a more affluent part of Maine around Falmouth Foreside, Mt Desert Island or Ogunquit that one to ten percent of the purchase price could be a hefty chunk of change. They say the ability to save is a lost art. The days of you keep renting an apartment until you have quarter of a home purchase price squirreled away are not the only bank mortgage lending flavor. No or low down payment home loans rule the day to work around the lack of funds saved up for property buying.
Did the deposit ever get made and to whom? In the event of a co broker real estate sale where there are buying and selling agents/brokers involved, who is going to hold it? Within five days or less, the money on it’s way by Fed EX, the USPS or hand delivered, wired. It will be showing up to put in the trust account. All that is addressed in the purchase and sale agreement contract language right? It better be.
No consideration, no funds, no contract. Earnest deposits $10,000 and over add a new wrinkle for the trust account deposit holders and lenders. Was the money from a terrorist or drug related endeavor and in a large paper bag of unmarked tens and twenties? Cash can send the bank with the trust account into orbit of regulations to comply with to stay in business.
Before taking a deposit, prior to generating a purchase and sale home sale agreement, is the buyer even approved for lending on a house? For a loan on one like this the seller wants to let go off? Can the buyer afford a home in this price range? Keep your deposit and put the time into learning the answers to those secrets.
Pre-approval paperwork is important to make sure credit score, debt ratios and mortgage underwriting lending looks possible. To make sure the check boxes are ticked off one by one before getting everyone hot to trot to sign on the dotted line that ties up the setting. That commits the buyer to buy this house and belly up to the bar to satisfy the terms of the contract.
What are reasons to not forfeit your deposit on a house for sale in Maine?
The place did not appraise for enough. Or the mortgage loan program you qualify for does not fit the house you want to buy. You get your deposit back if the seller contracts a case of the remorse blues and backs out of the home sale commitment.
If you had to sell your old home before buying the new one. When that domino two step just does not happen in time. Then the deposit contingency usually provides for return of the earnest money to the buyer. Unless the option to purchase one while selling the other was tied together with a non-refundable deposit option.
An option to purchase buys time like money put in a parking meter. Long time, more money needed and sometimes the seller does not care. Other instances they are in a major hurry. It is why the price is wearing the fire sale sticker.
If the buyer for a home plans to pay cash, look Mom no bank.
Then the size of the deposit. The lack of delay going through bank financing hurdles. It makes the size of the deposit less an issue in a cash home sale. More tips on getting a mortgage on a house in Maine. Time is money. And if the property is not being tied up for long. When the property is top shelf just like the squeaky clean title, everyone gets to the real estate quick and easy.
Home inspection gone bad. Check please.
That can mean give the buyer gets the deposit red rover red rover sent back over. What if the new home builder does not get the house completed on time. You get the deposit back. On the home to be built that was not for what ever the reason causing the stall in completion on time.
Land for a house to be constructed and stick built or a modular slid on to it.It means permits, zoning variances, waiting on lots of layers of players. The well driller, septic system installer, the electrician, plumber, carpenter, mason… lots of folks involved building a house in Maine.
Maybe the take your time DIY is the approach speed you are lucky to pick. But if the land has title issues with heirs that did not sign off in say an estate sale. Or there is a right of way, other easements not disclosed or known. Then deposit money returns to the house buyer unless the issue can be cleaned up adequately and in a timely fashion.
A deposit fought over when both home buyer and seller can not agree on what happens to it.
That deposit can tie up the property and keep everyone hooked together with barbed wire. Get the buyer out of the picture if they are not going to purchase for whatever reason.
Here’s your deposit, it did not work out. When there is no way to make everyone happy. Make it possible to entertain other home buyers in the house hunt.
A big part of our job is tell the audience how the process works and what to expect when real estate is involved. Putting a deposit on a house, buying a home in Maine. You thinking of being in that dream? Know what to expect. Whether buying or selling a home in Maine, MOOERS REALTY is here to help make the process smooth, fun, less expensive.
207.532.6573 | [email protected] |
MOOERS REALTY 69 North ST Houlton ME 04730 USA