Actually the agent may be the agent of the seller or not. Unless the agent is working for the listing company, that is and even then many states now have individual agents working for the buying side or the selling side. Even at the same company. Many areas of the country have all but banished subagency (all agents working for the seller). Buyer Agents should tell you how the system works, but even here calling oneself a buyer agent doesn’t mean you get someone who knows what they are doing.
Would the seller have even looked at your offer without a real earnest money deposit… I know I would not have advised taking if I were working for a seller. The earnest money check is good faith money. A note typically isn’t worth the paper it is printed on.
Should note that a check would not be cashed until there was acceptance. Sounds like this had taken place.
It is true that some agents are mistaken on how earnest money works. In most instances it is governed by state law. Usually the statutes will state that the brokereage has X amount of time to place the check into the special earnest money account once the offer has been accepted. Many areas it is 24-48 hours.
I don’t know of any states that would let you hold a check until closing. Unless there was a provision in the statutes that allow the seller to grant this request. But why they would, I don’t know.
Steele
Steele V. Propp
Foreclosure Specialist
Schatz Real Estate Group
Minneapolis, Mn steelep@aol.com
Ernest Money - When does it get cashed? - Posted by S Greer
Posted by S Greer on October 29, 2005 at 12:57:34:
I recently bought a house and my realtor made me give him a $1000 ernest check (as a deposit). He told me this money would not be cashed until the closing (Dec)at the end of the year. I went to the bank to find out the money was already cashed even though we are waiting on approval of the loan. Is this correct. I feel very mislead. At what point do they cash the ernest check?
Posted by John Merchant on October 29, 2005 at 14:49:53:
The check should have gone into the brokerage’s esrow/trust account immediately.
The agent probably had no legal right to tell you it would be held for any time at all as it isn’t his/her right to deal with EM checks at all.
Remember the agent is an authorized agent for the Seller and has fiduciary duties to that principal and no right to “represent” you in any way…or to make any deals or representations to you that aren’t cleared by his principal client.
The sad truth is all too many agents handle EM pretty carelessly and are in violation of their licensing rules by not getting that check delivered to escrow or their own agency’s trust account immediately.
This is one of the many things that give RE Brokers gray hair, and with a bunch of agents, there are always issues like this that agents are fouling up.
If you’d had a B’s agent, he/she would maybe have advised you to give a EM Note to be paid on acceptance of your offer or at closing…and this way the B knows his check isn’t going to be mishandled.