Ask Phyllis: a blog series of frequently asked real estate questions. Email us here
Dear Phyllis,
My fiancée and I recently closed on our first home. Our Realtor instructed us that it is customary to make a deposit for escrow to hold of 3% of the agreed price. We did so and felt that everything was going well initially. After loan approval the lender needed some more paperwork and we didn’t want to waive the loan contingency until we had the final approval. The seller and their agent were pushing us to waive our contingency, even though they knew we didn’t have full loan approval.
Just three days after this contingency was supposed to be waived, the seller and their agent sent us a Notice to Perform. It was quite surprising when our agent explained that the seller could cancel escrow in 48 hours. We hounded our lender and she pushed the final conditions through. After that we did sign off on all of the contingencies. My question therefore, is really just about the procedures. I think the seller and their agent were very harsh. Can you offer further explanation regarding the protocol of contingency removal?
Doug
Dear Doug,
Congratulations on your first home!
Real estate contracts are constantly changing. The Residential Purchase Agreement now requires buyers to remove contingencies in writing. Once a contingency has been removed, your earnest money deposit held in escrow is at risk. This is why the Listing Agent wanted you to remove your contingency in writing. The agent was simply looking out for her client’s best interests. This is the listing agent’s job.
Perhaps the listing agent and your Realtor could have worked better in unison to understand your reluctance and reached a compromise. Maybe your lender could have communicated better with the listing agent regarding timing etc. Sorry, this process was so stressful to you and your fiancé.
I wish you both much happiness in your new home.
