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FWIW, on the issue of earnest money... If I were advising you on thinking about earnest money, I would caution you not to ever expect to get to keep it if the deal falls apart. Unless you are in an area that is so hot buyers are dropping the typical contingencies, such as inspection and financing at the very least, most offers will come with enough opportunity for buyer to change their mind and get their earnest money back, that you will not likely get to keep earnest money ~anyway~. It is unusual for earnest money to not be returned to the buyer. Our financing contingency runs until close.
At least ~in our area~ ~with our contracts, competently written by a good buyer's agent~
We are starting to see EMD as a second thought.
DD Fees are so high they serve the purpose to some extent, and everyone knows that EMD can be clawed back easily enough.
We are starting to see EMD as a second thought.
DD Fees are so high they serve the purpose to some extent, and everyone knows that EMD can be clawed back easily enough.
We don't have a separate Due Diligence (?) Fee. ~in our area~
Still Earnest money is a token amount and an afterthought... in the vast majority of cases.
if it said that ALL the earnest money went to the Brokerage, you might have the beginning of a point.
Anyone who is not a broker gets the point. Contracts presented to consumers to sign are written overwhelmingly in favor of brokers and supplied to unsuspecting buyers/sellers. There could just as easily be blanks to fill-in for this item or it all could go to the seller.
We don't have a separate Due Diligence (?) Fee. ~in our area~
Still Earnest money is a token amount and an afterthought... in the vast majority of cases.
Here you have to buy a contract before you buy the house.
Non-refundable DD Fees, and in hot areas, can be several thousand dollars.
They are credited at closing, but if the buyer gets remorse or inspection issues cannot be resolved with the seller and buyer terminates, that DD Fee is gone.
I'm also not from NC, and language to that effect is not part of our listing contract. You did say that it is split between the "firm and the seller", and then claim that it's going to the listing agent. Do you know for fact that any or all of it is distributed to the listing agent? I don't know how much $$ we're talking here, so just curious.
2nd point is that I agree, it does seem odd. I've never liked to hear anything to the effect of 'yes it's in there, but it's never enforced' with regard to contracts. If it were me and I took issue with something in a contract I would want the language clarified or altered so that I could agree with what I was signing. Not sure I would take issue, in this case, because again, I don't know the dollar value or the details.
Section 11. Earnest Money.
NCAR Standard Form 2-T.
Yes. It is in there.
I have never seen it enforced as written, and suspect that is because many agents feel as you do.
But, bear in mind, this paragraph provides the listing agent with no claim on the Due Diligence Fee, which goes entirely and immediately to the Seller.
Additionally, it is quite reasonable to expect that this amount would be deducted from the listing agent's fee when bringing another buyer.
SC has a similar clause and I've never seen the EM go back to anyone except one of the party of the transactions. I suspect not a single broker would step up to argue a change if one were implemented stating the EM would go the buyer or seller.
Money always goes to the Seller here in TX if it's forfeited. We are not part of the contract, EM deposit is between Buyer and Seller to cover damages to Seller.
I can imagine a Broker wanting a piece of it wanting to cover their expenses.
In Colorado, it used to say the earnest money forfeiture was split between Brokerage firm & the Seller up to the commission amount.
Now we choose:
20. FORFEITURE OF PAYMENTS. In the event of a forfeiture of payments made by a buyer, the sums received will be: (1) 100% will be paid to Seller; (2) divided between Brokerage Firm and Seller, one-half to Brokerage Firm but not to exceed the Brokerage Firm compensation agreed upon herein, and the balance to Seller; (3) Other: __________. If no box is checked in this Section, choice (1), 100 % paid to Seller, applies. Any forfeiture of payment under this section will not reduce any Brokerage Firm compensation owed, earned and payable under § 7.
Our forms have been approved by the state. They do not favor brokerages.
Can't help but feel NC is "special" in making every attempt to favor the brokerage. Other items in the contract are so convoluted that it is difficult to understand what they are getting at. It's easy to see why FSBO is so appealing. It's even the seller's fault if the numbers in the closing documents are miscalculated.
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