Archive for December 20th, 2012

Earnest money deposit

Earnest money in a real estate transaction is good faith money put down by a buyer to demonstrate their earnestness to purchase a home or property.

In the last three years there has been a tidal swell of real estate firms that are all too happy to charge a seller 6% commission to list and sell a home but the firm does not maintain a trust account to hold earnest money on behalf of their seller clients.   Perhaps I should revise that to say seller customers.  You see the difference between a client and customer is level of service.  Think about it this way, customers sit in coach on an airplane, clients sit in business or first class.  Customers get peanuts and soda, if they’re lucky, while clients get full meal service, hot food and ice cream sundae desserts.

So why are so many real estate firms in the Triangle Region of North Carolina shirking their duty to their clients and not holding earnest money and maintaining a trust account? Could it be laziness?  Yep.

The North Carolina Real Estate Commission requires, and rightly so, that a broker reconcile their trust account on a monthly basis. Furthermore firms are prohibited by law from comingling monies; that is mixing firm money with client money and earnest money is client money.  Furthermore, North Carolina law requires that brokerage firms hold disputed monies until all parties agree to disposition of those monies.  The Real Estate Commission does not require brokers to have a trust account but it does expect brokers to treat clients and customers in certain prescribed ways.  If a broker or agency is a REALTOR then the expectation of behaviors is even more stringent.

So, if I were shopping for an agent and agency, I’d certainly ask if they maintain a trust account.  In my opinion the answer to that question gauges just how committed the agent and agency in question are to protecting the interests of their clients and whether or not the agency and agent view the prospective seller as a client or a customer.

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