Handling cash deposits on your home:
Escrow agreements are designed to record an "earnest money" deposit on the purchase of a home, also known as a "binder". The Buyer makes out a check to the Seller but gives the check to a third party named in the Escrow Agreement.
California Residents
- California specifies the use of an Escrow Agent to handle all the tasks our web site assigns to a Closing Attorney.
- As a neutral third party, the Escrow Agent handles all cash deposits.
- Special Escrow agreement are not required in California and other states that mandate the use of Escrow Agents or Title Company officers to handle closings.
The third party (usually the Buyer's real estate agent or the Seller's attorney), holds the deposit and turns it over to the Seller or returns it to the Buyer based on conditions set in the Escrow Agreement. For Example:
- If the Buyer is unable to get a mortgage loan, the deposit is usually returned.
- If the Buyer changes his mind about purchasing the property, the Seller gets to keep the deposit or binder.
Handling escrow deposits is one of the things a real estate agent does for his fee; the agent provides the Escrow Agreement and fills it out with himself as the third party who will hold the cash deposit.
This is a handy document to have when selling your home without a real estate agent. You can name your lawyer, the buyer's mortgage broker, or even a neighbor as the person to hold the deposit.
Escrow Agreements are available at major office supply stores such as Staples and Office Depot. They are also included with our set of Forms & Contracts which can be downloaded to your computer.
A home warranty is a form of short term insurance to cover major appliances and systems while the home is for sale.
- Builders always offer home warranties with new homes.
- We recommend a warranty for older homes as an inexpensive way to make prospective buyers feel comfortable with the age of appliances, plumbing, etc.
If you buy a Seller's warranty: Advertise the fact! Mention it in your Internet and Newspaper ads!
Seller's Warranty: Paid for by the Seller.
Cost: $300 - $400: Insurance to cover following items while home is for sale.
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- Major appliances
- The plumbing system
- Electrical system
- Heating and air conditioning
- Will repair or replace the above (with a deductible of $50-$60).
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Home Warranty of America offers a Seller's warranty at zero cost to the Seller during the listing period. Payment is due at closing when the policy converts to a one year Buyer's warranty. In most cases the Seller includes the cost of the warranty in the asking price for the house.
Buyer's Warranty: Paid for by the Buyer.
Cost: $300 - $400: Covers same items as a Seller's Warranty, but starts on day of closing and lasts for a full year.Can be renewed each year.
Companies providing Home Warranty services (This is not an endorsement)
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