Could the Earnest Money Get Stolen?
The Earnest Money - Part 8
Could the Earnest Money Get Stolen?
The short answer is - Yes.
The longer answer is, you have pretty much zero chance of it being stolen if you use a reputable real estate agent, working with a known and reputable real estate company.
My longest standing joke around earnest money is the following:
When asked, “Who do I make the earnest money check out to?”
I answer, “The Phil Leng Hot Tub fund!”
It has always been met with a chuckle or a laugh!!
If ever there was not a laugh after this outrageous remark, I would know I have not educated this buyer at all.
Of course, ACTUALLY losing your earnest money is no laughing matter!
There are all kinds of horror stories about earnest monies being lost or stolen. If you work with a reputable real estate broker, who works with a reputable real estate company, and uses reputable closing and title agencies to close the sale, you will bring the risk of your earnest money being stolen to pretty much zero.
So here are my Top Four Ways To Maximize the Risk of Having Your Earnest Money Stolen.
1. Pay cash for your earnest money.
Now no one can trace what happened to it, when it eventually ends up missing, borrowed from or stolen.
2. Work directly with the seller.
Reputable real estate agents, and reputable real estate companies, are licensed and supervised by the State. Homeowners are not. If you try to buy a property directly from the homeowner, and they ask you to give THEM your earnest money, you very likely will never get it back.
2. Respond to a Craigslist Ad that has a bargain property to sell.
The price is too good to be true! You must send a deposit to ensure that you are the one to get the property! Preferrably, the owner happens to live in Nigeria!!
3. Work with a disreputable real estate agent.
A reader from New Brunswick, Canada, Sylvie Schriver, claims she lost her $2,500 earnest money deposit by handing it over to an individual who professed to be a real estate broker. She says the broker stole a brokerage's logo and business supplies to make it appear that he was legitimate; however, he vanished when Sylvie called to ask questions about her mortgage. When she reported the crook to the police, she then discovered that others had filed complaints. Sadly, at that point, Sylvie's money was gone.
A long time ago in our area, the owner of a real estate brokerage was struggling financially. He staged a burglary on a Sunday night, lit a fire in his office to try to destroy his office files and records, and headed out with $65,000.00 of his company’s buyer’s earnest monies.
At that moment, everybody’s earnest money was stolen.
He fled the country. Fortunately, his office was part of a national franchise. As soon as they were informed of what had happened, they stepped in, took control of the office, and replaced everybody’s earnest monies with their own funds. They also successfully prevented the story from hitting the media by their prompt actions.
Can your earnest money be stolen? - Yes!
Can you minimize the possibility to almost zero by working with a reputable agent who works in a known and reputable real estate company? - Yes!
The Earnest Money - Part 8 Could the Earnest Money Get Stolen?
The Earnest Money - Part 8
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