What can I do? I think my realtor is ripping me off.?

Question

I was 2 buy a foreclosed condo in July. It was a HUD home, not just a regular foreclose bank owned. It was listed with only a 5% down. I was approved for that. After I gave the 1000.00 deposit & paid $250 to appraisal the bank wanted 20percent. I wasn't approved for that. My realtor says she can only get me 500 back. she is holding the other 500 until her company says its ok 2 give it back. She wasn't the listing agent. Why would she have the check? What can I do? Please Help!

Answer 1

the earnest check ($1000) is HELD until the purchase agreement is signed by all parties - then the check belongs in the SELLERS BROKERS escrow account - if the purchase agreement is cancelled or other negotiations break down the sellers broker is to refund the earnest money depending on how the purchase agreement is written.

READ the purcahse agreement and if you don't undersatnd it - contact your agents BOSS (broker) and meet with them to explain WHY a portion of your earnest is being withheld - and if you have any difficulties at that point -talk to your state dept of commerce (and no your agent shouldn't have the check - it should be in a viable excrow account) Generally speaking, if you don't qualify for financing then you should get all the earnest money back - again it depends completely on WHAT was written in your purchase agreement.

Answer 2

.   The listing on the HUD home doesn't loan you any money.  When it said 5% down, that was a general guideline showing that this house was in good enuf shape to qualify for a loan.  SOme HUD houses are so beat up that you can't get a loan.  You were not personally offered a 5% down payment.  They didn't even know you when it was written.  Once you committed to get the loan, you were stuck for the earnest money.  

But your agent did a very poor job.  That's why you hire an agent.  To protect you.  And to make sure you don't apply for a 5% down loan and get a surprise later.  Demand your money.

Answer 3

I'm not sure where the other folks here think that earnest checks are to be held until an offer is accepted get their information.  In my state, at least, earnest money checks are required by law to be deposited within 48 hours of the offer being written.  The earnest money is held in the trust account of the listing real estate agency until the sale either closes or until the both parties agree and sign that the funds can be released.

Since this is apparently a HUD foreclosure, the listing agent must get approval from HUD to release the funds.  I'm not sure why they are willing to give half of it back.  Under these circumstances, we would give NONE of it back to you until all the appropriate paperwork was signed and filed.

Answer 4

That's BS she shouldn't have the check.  I'd threaten her with a lawsuit.  Has she cashed the check?  Normally they don't cash it until later, if not stop payment that baby.  Otherwise, I'd fight like h**l, call your local real estate commission and nag them to death.  Or threaten that you're going to have a lawyer hit the commission up.

Answer 5

You will get your money back.

Probably not for the appraisal though.

WHY did they now want 20%? That is a big difference, but similar things ARE happening. Usually 5% to now 10%. Lenders are worried about declining values in some areas.

You should have used HUD (FHA) financing, there would have been no appraisal required, no discrmination as to possible declining value zip codes, and no repairs required. HUD's appraisal is good with ANY lender as long as you are doing an FHA loan (owner occupied of course).

The Real Estate Agency is probably waiting for a release from HUD. The money should be in a Trust account on your behalf. The Agency is responsible and required to send that deposit to HUD if requested to do so, that should be in your HUD contract. Remember, you are dealing with a government agency and a civilian contractor administering the HUD sale.

Be patient, and continue to followup.

Answer 6

That check is only supposed to be cashed after the offer is accepted.  Your offer could only be accepted if your pre-approval was in order.  Therefore they should not have cashed your check as it sounds like you were not "approved" by the mortgage company to buy the property.  If they havent physically cashed the check go to your bank and do a "stop check".  If they have cashed your check ask them to show you the document that you signed that states they could keep half.  If they cannot provide documentation threaten legal action.