Long story short, closing date on our house purchase is approaching in 3 weeks. My lender is having a problem getting the appraisal completed on time. They notified me the earliest appraisal will be 5 days after closing date. In a very hot market in which we beat 7 other offers, im worry the seller might deny our extension request and keep our deposit. Can I offer money directly to the seller as incentive to persuade them to accept our extension request? This won’t be in escrow but will be direct payment to the seller in check or cash app.
Have you released the contingencies, if you had one in the first place (like appraisal or inspection contingencies)? My friend was in your situation. He requested an extension to the sellers agent. The sellers agent extended his offer and even ignored the other offers some of which were at higher price. Like in any business, Character matters in the real estate. The other agents who were bidding high had history of creating trouble at later stage. So, the seller decided to stick with my friend who was a genuine buyer and had strong financial.
Just tell seller that you are genuine and your loan is ready to be approved pending appraisal. Most sellers will understand and continue with you. Remember. Everyone wants to work and deal with nice people. So, be nice to seller.
It is very difficult for the seller to “keep” your deposit.
They could request cancellation, and start over. If they try to keep your deposit, you could tie up the property for many weeks, possibly 6 months. They cannot list it until you both signed the cancellation. It is better for the seller to give you an extra 2 weeks.
Seems like I am missing something in this. If the buyer does not perform (complete the transaction per the contract) can seller not cancel the contract? I do not understand how the buyers signature is required to cancel?
Yea, I am pretty sure that the buyer’s signature is needed. It is a form from the title company where buyer and seller agree what to do with the EMD. The title company does not want to be involved in a lawsuit. That’s why they want the buyer’s signature.
3 quick data points
around 2009, a broker with decades of experience told me that “no seller in California has ever kept a deposit”. I was the seller in a transaction in San Jose, and he represented me, I realize he probably exaggerated, but I got his point.
around 2006, I backed out from a non-contingent offer (Arizona). Earnest money was $1000. The tract home builder agreed to my offer of $500 for him to keep. I dodged a bullet there.
just sold a house recently, some of the offers had earnest money greater than 3% of contract and to be released to the seller upon acceptance. I asked my listing agent if I would actually get funds from the title company upon acceptance. For some reason I did not. They closed the sale in half the time that the contract allowed, so I did not get to find out if I would be “the first seller to keep EMD”
The original question has two parts.
And this is how I understand:
Can the seller cancel the contract if the buyer does not perform/close by the timelines in the contract?
Can the seller keep the deposit if the seller/buyer decides to cancel the contract?
Answer: Seller must have the buyer’s consent to keep the deposit. The buyer and seller both agree must agree on how to release the deposit.
I do not think the seller will not be ready to release the deposit if he can sell the property to another buyer, particularly in a hot and rising market. This is what I found in a California Association of Realtor’s purchase agreement (rpa-ca). Please note that RPA-CA is not a mandatory document. Buyers/sellers can have their own agreement on how to complete the transaction.
F. EFFECT OF CANCELLATION ON DEPOSITS: If Buyer or Seller gives written notice of cancellation pursuant to rights duly exercised under the terms of this Agreement, Buyer and Seller agree to Sign mutual instructions to cancel the sale and escrow and release deposits, if any, to the party entitled to the funds, less fees and costs incurred by that party. Fees and costs may be payable to service providers and vendors for services and products provided during escrow. Release of funds will require mutual Signed release instructions from Buyer and Seller, judicial decision or arbitration award. A Buyer or Seller may be subject to a civil penalty of up to $1,000 for refusal to sign such
instructions if no good faith dispute exists as to who is entitled to the deposited funds (Civil Code §1057.3).*