I am under the impression that earnest money is to be presented when I sign a sales contract which shows I am committed. It does not make sense to me that I would have to give someone an earnest deposit to make a verbal offer in a bidding war with other people and have them do the same. I had a real estate agent today ask me for an earnest money deposit to even make a verbal offer. He also told me that two other people had given him $1000.00 each just to make an offer. Is this common practice, ethical or even legal?
2006-12-05 17:20:38 · 5 answers · asked by MuLLady * 2 in Business & Finance ➔ Renting & Real Estate
It depends. Basically, this sale has become an auction between three buyers.
It's not unusual for a seller to ask for a deposit to ensure that you have a real interest in purchasing this property. Your deposit is FULLY REFUNDABLE if you don't win the auction.
As soon as someone signs an offer and the seller accepts, the auction is over.
It's probably not technically illegal and in Boston it's not uncommon for a property that is being bid on. I don't know if it's unethical, because that's a judgement.
It may vary state to state, but if your agent is instructing you to do so, then it's probably OK. You would have recourse against them as well if your deposit isn't returned. Make certain that you get it IN WRITING (from your broker, who should be holding the money) that your deposit is fully and immediately refundable.
It's not illegal for a broker/ agent to tell you that there are other buyers and your offer is not the best offer. It would be illegal for your agent to tell you exactly what the other bids are. Usually, the auction turns into a 'last and final' offer, where all bidders make their best offer.
If the buyer is asking for $1,000 just to MAKE an offer, then it's illegal and your agent shouldn't be telling you to make any deposit.
2006-12-05 22:23:37 · answer #1 · answered by greebyc 3 · 0⤊ 0⤋
Absolutely NOT! First, a contract for the sale of real estate valued at over $100 is not enforceable unless it is in writing (common law Statute of Frauds - adopted in one form or another in every state). Second, an agent must give an earnest money receipt for any sums received. Finally, an agent cannot ethically even DISCUSS the terms of another offer - just that there IS one.
You should report that agent, or better yet, get someone to pose as a potential buyer and trap him/her into incriminating him/herself.
2006-12-05 17:33:46 · answer #2 · answered by Anonymous · 1⤊ 0⤋
It sounds like you are dealing with the sellers agent. What does your Buyer Agent say? They should know better than to get involved with verbal offers. They amount to nothing. Verbal negotiations between agents is one thing because they always end up in writing before presentation to the seller
2006-12-06 01:01:34 · answer #3 · answered by Anonymous · 0⤊ 0⤋
Ultimately this can be a subject of contract among purchaser and vendor. The intent of the earnest cash is to guarantee the vendor that the purchaser may not waste the vendor's time, with the condo off the marketplace whilst the sale is processed. I under no circumstances placed down greater than $one thousand --- although final condo I purchased used to be ten years in the past. I had been requested for 20 percentage "down cost" from an agent who did not recognize what she used to be doing---that used to be earlier than present used to be permitted and any ultimate date used to be set. If the purchaser is influenced, a fair quantity of earnest cash could be permitted--I is not going to believe greater than $5000 for a $three hundred,000 condo, deliberating inflation on account that my individual enjoy--however that's my opinion. You would check out creating a cellphone name to a few truly property marketers to discover out what present train is for your discipline. As a purchaser, you'll regularly cross to one other agent if you happen to believe the agent you're handling is "sticky". The agent in most cases is the agent of the vendor and no longer the purchaser so that you owe her or him not anything.
2016-09-03 11:44:18 · answer #4 · answered by Anonymous · 0⤊ 0⤋
$1000 is the same I put down when I made an offer on my house but I would not give it away without something in writing. The are people out there that will rip you off and you need to protect yourself.
Oh, and when I say don't give the money without something in writing, I mean that you need some sort of receipt saying what the money is for.
2006-12-05 17:29:55 · answer #5 · answered by Anonymous · 0⤊ 0⤋