We are in negotiations on a house and the counter we received from the seller has a stipulation to have the escrow company disburse the earnest money to him as soon as all contingencies (loan, appraisal, inspection) are removed.
According to the listing agent, the seller is short on liquid funds and needs the money for rental deposits, moving, and other expenses. This is NOT a short sale. We asked how the seller is able to pay the mortgage if he doesn't even have enough funds for this and the listing agent responded that the seller did a loan modification and has just enough to make the monthly payments but needs some more liquid funds, just in case they're needed before he gets the funds after close.
This would all happen after 17 days or whenever we have removed all contingencies, whichever is later. So, from my understanding, the earnest money would be effectively non-refundable to us anyway at that point. I understand that if things fall through before close and it's the seller's fault, we would have to get the seller to return the money (which could be nice and easy or may require a lawsuit).
Do you experts have any thoughts on this? I have not heard of this before, so we are a little nervous about the additional risk. The earnest money is about $10,000 so it's a substantial amount. We are otherwise getting a great price on the house, et cetera, so we don't want to turn the deal down because of this - unless we're missing something here.
Thanks for the help!
According to the listing agent, the seller is short on liquid funds and needs the money for rental deposits, moving, and other expenses. This is NOT a short sale. We asked how the seller is able to pay the mortgage if he doesn't even have enough funds for this and the listing agent responded that the seller did a loan modification and has just enough to make the monthly payments but needs some more liquid funds, just in case they're needed before he gets the funds after close.
This would all happen after 17 days or whenever we have removed all contingencies, whichever is later. So, from my understanding, the earnest money would be effectively non-refundable to us anyway at that point. I understand that if things fall through before close and it's the seller's fault, we would have to get the seller to return the money (which could be nice and easy or may require a lawsuit).
Do you experts have any thoughts on this? I have not heard of this before, so we are a little nervous about the additional risk. The earnest money is about $10,000 so it's a substantial amount. We are otherwise getting a great price on the house, et cetera, so we don't want to turn the deal down because of this - unless we're missing something here.
Thanks for the help!
