Working largely in an industry within real estate that provides a service behind the scenes presents problems in conveying value to the people who recommend our services: Realtors and Loan Officers.
It has always been an awkward situation. Realtors and Loan officers are customers, not clients. There is a difference, not in importance each plays in a transaction (very important), but in how the relationship is treated by each party to the other.
You have essentially two camps:
1) Agents and loan officers who believe that they control your business by intimidation or by the threat of moving their business to a competitor or both. They sometimes feel like title and escrow companies “owe
Tim- There must be something about you and Lynlee living in Snohomish with three kids that enables you to write such meaningful, useful articles for Rain City Guide. Do keep it up. Jerry
Thanks Jerry. I don’t know what it is. I have a healthy appreciation for housing and a keen interest in what makes people tick in business, warts and all.
Tim
Good description of two different ways to interact with people and conduct business.
As you note, some of the problem revolves around education.
And some of the problem just is about: how people are, how they treat others, how they conduct themselves in the world.
In my 31 years in the real estate business (as you describe in scenario #1), I have seen RE agents and loan agents treat title and escrow folks in a way I would describe as “disrespectful”.
This always bothers me big time. Title and escrow people have a lot of files and a million details to look after. They work hard and most things that happen are totally outside their control. Agents need to understand that the title and escrow folks work hard to close transactions so the agents can earn pretty substantial checks relative to their salaries.
I treat my title and escrow people with respect and courtesy. They like me. I like them. I give them much of my business and they go out of their way to help me. It works. It is just a natural process.
Agents who conduct themselves as described in scenario #1 above, give the real estate industry a bad name. Fortunately, #1s are in a minority.
This can also effect the real estate consumer – buyer and seller. Agents in any community know which agents are difficult to deal with and those that aren’t.
All things being equal, the agents who are co-operative, who work together to find solutions and keep their cool during the process are more likely to have their offers accepted than offers from agents who fall into camp #1. As a listing agent reviewing offers with your sellers, price is certainly important but other factors enter into a final decision.
What did our parents say about “a carrot and a stick” or “honey than vinegar”?
Thank you Arn. 30yrs in the biz? Wow, now you have some serious experience!
Tim
Good description of two different ways to interact with people and conduct business.
As you note, some of the problem revolves around education.
And some of the problem just is about: how people are, how they treat others, how they conduct themselves in the world.
In my 31 years in the real estate business (as you describe in scenario #1), I have seen RE agents and loan agents treat title and escrow folks in a way I would describe as “disrespectful”.
This always bothers me big time. Title and escrow people have a lot of files and a million details to look after. They work hard and most things that happen are totally outside their control. Agents need to understand that the title and escrow folks work hard to close transactions so the agents can earn pretty substantial checks relative to their salaries.
I treat my title and escrow people with respect and courtesy. They like me. I like them. I give them much of my business and they go out of their way to help me. It works. It is just a natural process.
Agents who conduct themselves as described in scenario #1 above, give the real estate industry a bad name. Fortunately, #1s are in a minority.
This can also effect the real estate consumer – buyer and seller. Agents in any community know which agents are difficult to deal with and those that aren’t.
All things being equal, the agents who are co-operative, who work together to find solutions and keep their cool during the process are more likely to have their offers accepted than offers from agents who fall into camp #1. As a listing agent reviewing offers with your sellers, price is certainly important but other factors enter into a final decision.
What did our parents say about “a carrot and a stick” or “honey than vinegar”?
I wonder if something that helps people be in “camp 2” is having compassion for all parties. I think it should be a requirement that we all walk in each other’s shoes–even if it’s just a week long “job shadow” to help fully understand the process.
To me the mark of a good RCG article is the kind of comments it elicits. This is off to a good start. J-
When I was a brand new loan processor in the early 1980s, Safeco Title so badly wanted our business that my rep, Dan Crittenden, arranged for then title officer Steve Jewitt to come into our office once a month (or once a week? Can’t remember) and give me an hour long class on title insurance until I had all the basics down pat. Steve switched companies halfway through and was replaced by Doug Pittman, junior title officer who was just promoted into the very big shoes of Steve Jewitt.
I will never forget how that title company went out of its way to educate me. Back then, it was the loan processor’s job to clear title before we sent our file over to escrow.
Title and escrow ARE required topics now for brand new loan originators who are seeking licensure under a mortgage broker and consumer loan company. The new course they’ll have to take is 20 hours long and the curriculum is directed by the federal SAFE Act.
The VERY FIRST thing I do (i guess this is blatant self promotion. my apologies.) is draw a big circle on the white board and write down a list of all of us involved in a transaction from the real estate agent to the appraiser, LO, escrow, title, home inspector, funder, etc. We are all part of the mortgage machine and it’s the client who is in the center when it’s a refi. With a purchase, it’s the buyer and seller.
LOs and also Realtors tend to think they are the center of the circle (universe) because it’s all they know when they’re brand new.
An LO or Realtor is not on the opposing team of the escrow company.
Tim, there are a plethora of “free” title and escrow classes taught for Realtor clock hours by all the title companies all over the state.
The best one yet is where the escrow closer instructor creates a mock signing appointment and the Realtor is taught what happens during signing.
I think that title and escrow classes taught by real estate attorneys can also be very good. I believe the Sea King Co Assoc of REaltors offers a class like this about once a month.
Jillayne- As one of those custom home design architects who creates the family homes the RE Industry then merchandises over and over again, I’m continually amazed at the complexity of it all. It’s sort of like having children and watching them grow up. I’ve been explaining this on my PI.Com Reader Blog- (Click) http://blog.seattlepi.com/northwestmodernhomes/ J-
I know there are tons of clock hour classes all over but I’m talking about meaningful solution oriented tools. Tools that help agents take that knowledge and actually apply it to their practice. Similar to Rhonda’s thoughts, it could be having real time involvement in live transaction work. They don’t have to “learn” the business. That’s not what I’m suggesting. But, learning some key components would give a wonderful compliment to add to their knowledge and real estate practice.
Kinda like a ride-a-long with the Police to see what goes on during a days shift.
Talking about titles and settlement statements is different that DOING them and understanding how you arrived at certain figures. Telling an agent that their transaction may not close or record is one thing: having them actually see why a transaction (or another live one) did not record will completely be a game changer in understanding how to counsel clients in the event an “uncontrolled” event takes place. There are so many applications that I can think of.
True, Tim…it could help instill some compassion for each other… but in reality, if someone is a jerk to the core, they really don’t care what we (escrow, title or mortgage) do in our jobs…and they’d probably gladly tell you so.
I have no problem letting an agent know that we’re not a good match to work together if they are a #1 type from your post vs the true professional…it makes my job easier and more enjoyable. I wonder if our current climate will help weed out those agents and LO’s who are not professional?
I think sometimes the “#1’s” think they’re doing it (being a bully or unprofessional) “for” their client…it’s still unprofessional IMO and reflects badly on them and adds additional drama to an all ready potentially “high stress” moment.
When I was a brand new loan processor in the early 1980s, Safeco Title so badly wanted our business that my rep, Dan Crittenden, arranged for then title officer Steve Jewitt to come into our office once a month (or once a week? Can’t remember) and give me an hour long class on title insurance until I had all the basics down pat. Steve switched companies halfway through and was replaced by Doug Pittman, junior title officer who was just promoted into the very big shoes of Steve Jewitt.
I will never forget how that title company went out of its way to educate me. Back then, it was the loan processor’s job to clear title before we sent our file over to escrow.
Title and escrow ARE required topics now for brand new loan originators who are seeking licensure under a mortgage broker and consumer loan company. The new course they’ll have to take is 20 hours long and the curriculum is directed by the federal SAFE Act.
The VERY FIRST thing I do (i guess this is blatant self promotion. my apologies.) is draw a big circle on the white board and write down a list of all of us involved in a transaction from the real estate agent to the appraiser, LO, escrow, title, home inspector, funder, etc. We are all part of the mortgage machine and it’s the client who is in the center when it’s a refi. With a purchase, it’s the buyer and seller.
LOs and also Realtors tend to think they are the center of the circle (universe) because it’s all they know when they’re brand new.
An LO or Realtor is not on the opposing team of the escrow company.
Tim, there are a plethora of “free” title and escrow classes taught for Realtor clock hours by all the title companies all over the state.
The best one yet is where the escrow closer instructor creates a mock signing appointment and the Realtor is taught what happens during signing.
I think that title and escrow classes taught by real estate attorneys can also be very good. I believe the Sea King Co Assoc of REaltors offers a class like this about once a month.
I know there are tons of clock hour classes all over but I’m talking about meaningful solution oriented tools. Tools that help agents take that knowledge and actually apply it to their practice. Similar to Rhonda’s thoughts, it could be having real time involvement in live transaction work. They don’t have to “learn” the business. That’s not what I’m suggesting. But, learning some key components would give a wonderful compliment to add to their knowledge and real estate practice.
Kinda like a ride-a-long with the Police to see what goes on during a days shift.
Talking about titles and settlement statements is different that DOING them and understanding how you arrived at certain figures. Telling an agent that their transaction may not close or record is one thing: having them actually see why a transaction (or another live one) did not record will completely be a game changer in understanding how to counsel clients in the event an “uncontrolled” event takes place. There are so many applications that I can think of.
True, Tim…it could help instill some compassion for each other… but in reality, if someone is a jerk to the core, they really don’t care what we (escrow, title or mortgage) do in our jobs…and they’d probably gladly tell you so.
I have no problem letting an agent know that we’re not a good match to work together if they are a #1 type from your post vs the true professional…it makes my job easier and more enjoyable. I wonder if our current climate will help weed out those agents and LO’s who are not professional?
I think sometimes the “#1’s” think they’re doing it (being a bully or unprofessional) “for” their client…it’s still unprofessional IMO and reflects badly on them and adds additional drama to an all ready potentially “high stress” moment.
Hi Rhonda,
In the past, we have treated the position of loan originator as more of a retail sales position than that of someone who needs to develop compassion for our clients.
With the introduction of fiduciary duties at the broker/LO level in Wa State, I am definitely seeing signs that the LOs who remain in the business today are far more compassionate and client-centric than the thousands of LOs who have left the business in the last 18 months.
Rhonda, Jillayne I like to think the homebuilding/designing industry too will emerge better, more customer/client oriented after these last 18 months. Mercer Island in particular has had more than its share of super-dingbat builders turning out indifferent product. J-
Jillayne, you know I have a hard time relating to your “retail sales person” view of mortgage originators. I have never viewed myself in that light. Well before our state’s legistlation, I put my clients needs first and have had compassion for my clients.
Hi Rhonda,
In the past, we have treated the position of loan originator as more of a retail sales position than that of someone who needs to develop compassion for our clients.
With the introduction of fiduciary duties at the broker/LO level in Wa State, I am definitely seeing signs that the LOs who remain in the business today are far more compassionate and client-centric than the thousands of LOs who have left the business in the last 18 months.
“Realtors and Loan officers are customers, not clients”
Agree 100%. Tim, you know about MY recent experience while on the road with a title company. In my 20+ years in real estate I don’t think I have ever been so upset with any Escrow office. Was it a mistake?… yes. Will it happen again? …yes….Could I have done something different to alter this outcome? oh yes!
But, what I see is cutbacks at Escrow offices, phone calls that do not get picked up, voice mails consistently, office closures, and an ever-increasing rate of incompetence brought on by the bottom-line of trying to stay afloat and pressure from competitors.
I urge all Agents to take very seriously their relationship with title/escrow and who they choose. The last experience opened my eyes to how a wonderful transaction can turn tragic when utilizing the wrong Escrow company.
It easily could have been avoided if my personal relationship with this Escrow company was on the same level as that of the Listing Agent.
Ray see my comment below at #343840
“Realtors and Loan officers are customers, not clients”
Agree 100%. Tim, you know about MY recent experience while on the road with a title company. In my 20+ years in real estate I don’t think I have ever been so upset with any Escrow office. Was it a mistake?… yes. Will it happen again? …yes….Could I have done something different to alter this outcome? oh yes!
But, what I see is cutbacks at Escrow offices, phone calls that do not get picked up, voice mails consistently, office closures, and an ever-increasing rate of incompetence brought on by the bottom-line of trying to stay afloat and pressure from competitors.
I urge all Agents to take very seriously their relationship with title/escrow and who they choose. The last experience opened my eyes to how a wonderful transaction can turn tragic when utilizing the wrong Escrow company.
It easily could have been avoided if my personal relationship with this Escrow company was on the same level as that of the Listing Agent.
Tim, you really hit on a topic that resonates with me. It’s pretty complex as well. Jillayane and Rhonda have both talked about components of it. Our customer and clients both need to better understand more about what we do. Escrow people, need to recognize that almost every phone call is a teaching moment (if the customers and clients are willing) And having classes about what escrow does is imperative, just not very sexy.
I can recall having a class called…”Things that go bump in the closing room” – all about small things that Realtors do or don’t do which can cause a delay or a blow-up. I.E. writing a Purchase and Sales Agreement for an FHA borrower with a seller concession. If you don’t clarify that the concession includes or does not include FHA non-allowable closing costs the transaction goes “bump” in the closing room. There were about 20 or 30 such things mentioned in the talk. Understanding how our jobs interact, escrow, Realtor and lending is critical.
Assertive communication is another thing. No escrow personnel should have to be browbeat or verbally abused by a client or customer. Escrow staff should be taught good communication skills and assertiveness. Their management should support them to the point that they could “fire” a customer who continually verbally abuses them, threatens every closing and just generally makes life miserable.
Proactivity. If everyone on the transaction doesn’t understand that part of all our job is to looks down the road and based on our collective experience be able to “see” and takes steps to resolve issues, then we all sink with the broken link. No contact information for the Seller from the listing agent results in no pay off information or late payoff information which results in a delay closing or a nasty suprrise like a pre-payment penalty which results in dissastified clients and customers.
And finally…expectations! Title company sales people go out, get a new customer….do a little happy dance and for the most part slam them into escrow. How about meeting and discussing how this relationship will work. What are realistic expectations and desires about communicating about files, communicating with the Sellers and Purchasers? What should happen if an issue developes? What is the best way to reach you? Who else is on your team and what do they do? It takes a village to close an escrow (especially these days)
It’s just like any other relationship and, for a healthy one, must be nurtured like any other.
Kudos to the Rain City Guide again!
Nancy, I recently had a RE agent tell me it wasn’t my business if the buyer was receiving a portion of her commission at escrow. She also forgot to provide me with the addendum which was an additional credit to the buyer for a roof repair.
We found out two days before the buyers appointment to sign at escrow…only because I was reviewing an updated Good Faith Estimate with my client before her signing and she asked where those credits were…otherwise this would have been discovered at the signing table.
Hard to say if this agent (not someone I’ve worked with before) would have blown up and tried to be bully his way to get the issue resolved or calmly cooperate and be a true professional.
Tim did a great job covering the two types of agents I’ve dealt with as a mortgage originator and a title/escrow person. I’m very fortunate that I’m in a position in my career where I can just work with the professionals. 🙂
Tim, what if the consumer decide where the title and escrow went to? Sometimes when I’m reviewing a GFE for a buyer and I tell them the title and escrow fees are estimates because the providers have not be determined yet… I let them know that this process generally takes place with the agents via the purchase and sales agreement. I’m wonder with the new GFE, if consumers will get more involved in making a choice in their third party providers.
Rhonda, those are great examples of a Realtor not understanding what impacts the rest of the team and proactively workng to insure a smooth closing.
Some other perrennial favorites are:
Make sure your Purchase and Sales agreement includes a legal desctiption, NOT a tax account number or an address. If it’s long attach it. This avoids misunderstandings about what is being sold. Check the map attached to your preliminary title report when it comes.
The Escrow Agent and the lender will want all addendums to the Purchase and Sales Agreement, not just the ones that the Realtor woiuld like to share.
If your client is going to use a POA tell the lender and the Escrow Agent early. Both Lenders and title companies must approved the use of a POA in a closing and certain people who have a fiduciary capacity cannot choose to have an Attorney in Fact sign for them. (like Trustees, Guardians etc)
Escrow can’t work with verbal instructions so if you have decided to purchase a home warranty (for instance) from your commission make sure you follow up with a new Broker demand.
Discuss with your client what constitutes “collected funds”. We still get Buyers coming in with checks from their Merrill Lynch money market account who are less than happy to learn these funds aren’t collected and there will be a delay for them to “collect” in the escrow Trust Account.
When you get an estimated HUD (that the escrow officer has worked miracles to get out prior to closing) LOOK at it and don’t just file it away with the other paperwork.
I could go on……but the difference may be that many escrow people (especially in slow times) don’t feel they can pick and choose when it comes to business.
“The Escrow Agent and the lender will want all addendums to the Purchase and Sales Agreement, not just the ones that the Realtor woiuld like to share.”
That’s my favorite, Nancy 🙂
As a manager of a escrow/title company, I agree that it is very important to defend the escrow teams from abusive customers and constant “SHOUTING” email communication. It takes more than a few instances to best determine what camp (1st-abusive or 2nd-professional) a customer falls in. A customer that squarely falls into the 2nd camp may have circumstances either transactional or personally related that will put them over the edge. However, continual abuse will not be tolerated.
Even well intentioned customers will mistake fighting for their clients as a noble cause when in reality, they are just plain fighting and dragging everyone through the mud. The one that gets scarred the most is the person that feels the worst. Escrow is a position that other real estate pros commonly state “you couldn’t pay me enough to to that job”.
I value our staff of escrow professionals and will do everything I can to shield them from abusive customers. Threats of damaging our reputations through spreading the word through their office or blogging will never be tolerated as long as I am in the business. Twenty-six years and it seems like ten. I love this business!
I received my real estate license in 1994. In 2003 I had to leave the area and settled in Southern California – not wanting to sell I decided to work on an escrow team with New Century, then we moved to Alliance and then finally settled with First American. I had never in all my real estate years been so exposed to the horrid treatment of escrow teams by real estate agents! I know that not every agent treats their escrow team in a horrid way – but after spending two years closing escrows I will tell you that it was the WORST job I had ever held – and to clarify that I will tell you that I did flip burgers for a living in high school!
However, I am so glad I spent time in that profession. I did come away with an understanding of the home selling process that I didn’t have in my first almost 10 years of successfully selling real estate. I think that every real estate agent should have to spend several weeks learning that part of the transaction. I sure learned a ton and it has made me a better agent. I can tell you that escrow as my customer will receive the respect they deserve during a transaction and they will receive the TIME needed to provide their service in the way it is intended.
Jo, I do think everyone in the RE industry should have to “do time” in escrow 😉 I remember when I was a brand new receptionist for Safeco Title in 1986, I asked the county manager what escrow was…he said something along the lines of “Escrow is where we try to do everything right but because we’re at the end of the transaction, if anything goes wrong, we get the blame”. I knew then I would never become an escrow officer. I did manage escrow branches for various title companies I worked at and did many signings to support our escrow officers. Some agents and LO’s you enjoyed working and with and others not so much.
Tim, great post and thank you for writing about this. I was just about to tackle this issue on our own blog after dealing with emotions that flared up on a recent transaction we closed. As you are keenly aware, there are several moving parts to closing any real estate transaction. I have always preached that you could poke holes in even the best closing if you chose to. Closers could be in signings rather than available for phone calls, critical info could have been communicated minutes sooner, etc. The ultimate success of a closing may end up being in the hands of how real estate professionals handle these scenarios.
For the particular file we recently closed, every aspect of the contract was followed and the transaction closed on time with possession taking place per the purchase and sale agreement. However, one critical piece was missed after recording which resulted in one of our customers being uninformed in front of their buyer. This clearly represented what our company defines as a mistake. Helping our customers look good in front of their people is a goal we strive to achieve.
Mistakes can and will continue to happen as long as people are involved in a process. Part of my job is to provide our escrow teams with the support they need to help alleviate mistakes and make them look good. The other part is to make sure we’re staffed with people that truly care about about our business. I believe that we have great staff and I know that you do as well Tim.
Tim, great post and thank you for writing about this. I was just about to tackle this issue on our own blog after dealing with emotions that flared up on a recent transaction we closed. As you are keenly aware, there are several moving parts to closing any real estate transaction. I have always preached that you could poke holes in even the best closing if you chose to. Closers could be in signings rather than available for phone calls, critical info could have been communicated minutes sooner, etc. The ultimate success of a closing may end up being in the hands of how real estate professionals handle these scenarios.
For the particular file we recently closed, every aspect of the contract was followed and the transaction closed on time with possession taking place per the purchase and sale agreement. However, one critical piece was missed after recording which resulted in one of our customers being uninformed in front of their buyer. This clearly represented what our company defines as a mistake. Helping our customers look good in front of their people is a goal we strive to achieve.
Mistakes can and will continue to happen as long as people are involved in a process. Part of my job is to provide our escrow teams with the support they need to help alleviate mistakes and make them look good. The other part is to make sure we’re staffed with people that truly care about about our business. I believe that we have great staff and I know that you do as well Tim.
Ray, I think what has to be on the table is this: how can title and escrow function well when there are so many different needs and operational differences unique to each participant in a transaction?
I’ve always held that it is a miracle that transactions close with so many people involved.
Escrow and Title people cannot control how agents confer with and counsel our mutual clients outside of the scope of our work. Escrow and title are not always “in the loop” of communication about what is discussed between a buyer and their agent about transactional protocols. This is where things can get dicey. The industry players like to talk large about communication but sadly, escrow and title are in many instances the very last to learn of items critical to closings.
For example, we had a client (this happens frequently) whom we contacted to arrange for signing their paperwork. The client told us that they were told by their agent/LO that we would meet them at a specific place and time. They never asked escrow about our schedules and availability of doing a mobile signing. And this is after promising docs day after day after day. Since when do I tell my Physician that I’ll have my surgery done at this date and this time and just show up with your team? Since when do I call my Pharmacy and tell the Pharmacist that I can only come to pick up my prescription on my time?
Who controls who’s business? So, what is the point here and of my post? Collaborate.
Agents should seek the advice of escrow and title officers. Their experience and specialized knowledge is a wealth of wisdom that can help agents navigate their transactions and make the agent or loan officer the hero we want them to be. Yes, there are differences between operations of title and escrow offices and there are different personalities that you have to get used to.
Ray, you are passionate about your business and clients well being and that is admirable. There is not a person on the landscape of real estate that does not want a positive outcome.
Some tough questions I don’t know the answer to:
1) Should the agent be the one who decides if the client (those paying title and escrow) has been harmed or not received good service and followed standard practices of closing transactions AND the transaction closed routinely?
2) On the flip side, should title and escrow contact the buyer or seller outside of the knowledge of the agent to discuss how the agent has structured their contract that may be costing the buyer or seller thousands of dollars needlessly or setting them up for litigation?
3) Should escrow contact the client outside of the loan officers knowledge to discuss why closing on a specific date may end up costing the client more in interest even though the loan officer wants to close asap to get paid faster?
Here’s suggestions for working to resolve problems: if there is a problem, first check to see what counsel I have given the buyer or seller to see if it is consistent with closing routines. Have I communicated all information to escrow to facilitate their work flow? If you have found an error, contact the individual personally by phone only. Nobody likes confrontation, but it is easier when you are standing naked together over the phone and you see the problem from each others perspective. Technology and automated trigger “event” programs are nice, but it also has it’s drawbacks. Technology has removed the art of communicating.
If a title and escrow situation arises where there has been an error, let the the company you are working with make it right to the client. That is what you are after. That is integrity. If they do this, you should keep them as a resource. That’s who you WANT to do business with.
Ray, I think what has to be on the table is this: how can title and escrow function well when there are so many different needs and operational differences unique to each participant in a transaction?
I’ve always held that it is a miracle that transactions close with so many people involved.
Escrow and Title people cannot control how agents confer with and counsel our mutual clients outside of the scope of our work. Escrow and title are not always “in the loop” of communication about what is discussed between a buyer and their agent about transactional protocols. This is where things can get dicey. The industry players like to talk large about communication but sadly, escrow and title are in many instances the very last to learn of items critical to closings.
For example, we had a client (this happens frequently) whom we contacted to arrange for signing their paperwork. The client told us that they were told by their agent/LO that we would meet them at a specific place and time. They never asked escrow about our schedules and availability of doing a mobile signing. And this is after promising docs day after day after day. Since when do I tell my Physician that I’ll have my surgery done at this date and this time and just show up with your team? Since when do I call my Pharmacy and tell the Pharmacist that I can only come to pick up my prescription on my time?
Who controls who’s business? So, what is the point here and of my post? Collaborate.
Agents should seek the advice of escrow and title officers. Their experience and specialized knowledge is a wealth of wisdom that can help agents navigate their transactions and make the agent or loan officer the hero we want them to be. Yes, there are differences between operations of title and escrow offices and there are different personalities that you have to get used to.
Ray, you are passionate about your business and clients well being and that is admirable. There is not a person on the landscape of real estate that does not want a positive outcome.
Some tough questions I don’t know the answer to:
1) Should the agent be the one who decides if the client (those paying title and escrow) has been harmed or not received good service and followed standard practices of closing transactions AND the transaction closed routinely?
2) On the flip side, should title and escrow contact the buyer or seller outside of the knowledge of the agent to discuss how the agent has structured their contract that may be costing the buyer or seller thousands of dollars needlessly or setting them up for litigation?
3) Should escrow contact the client outside of the loan officers knowledge to discuss why closing on a specific date may end up costing the client more in interest even though the loan officer wants to close asap to get paid faster?
Here’s suggestions for working to resolve problems: if there is a problem, first check to see what counsel I have given the buyer or seller to see if it is consistent with closing routines. Have I communicated all information to escrow to facilitate their work flow? If you have found an error, contact the individual personally by phone only. Nobody likes confrontation, but it is easier when you are standing naked together over the phone and you see the problem from each others perspective. Technology and automated trigger “event” programs are nice, but it also has it’s drawbacks. Technology has removed the art of communicating.
If a title and escrow situation arises where there has been an error, let the the company you are working with make it right to the client. That is what you are after. That is integrity. If they do this, you should keep them as a resource. That’s who you WANT to do business with.
Tim, I would love to answer all the questions but I’m horribly defocused by the hawk game in AZ.
I would like to emphasize this. Our business is 95% buyers. In each and every transaction I discuss with the Buyer who would they like to utilize for Escrow. In nearly every transaction the Buyers seem to not care and ask me who I would suggest. We get solicited monthly by numerous Title and Escrow companies.
Up until Thursday (for the last year or so ) I utilized who the listing agent directed us towards for the “ease of the transaction.” Too many moving parts as we both know causes problems.
We are now looking for that Escrow office that will facilitate our Buyers and no longer will rely on who we are directed towards. This was a bad practice on our part and I blame myself.
This transaction opened my eyes to severe problems occurring in your industry with cutbacks, staffing, professionalism, and what damage it can cause.
answer to number 1: Agent and Buyers should decide that. Most Buyers do not know if there was something done improperly unless noted by the Agent.
#2: Can you please provide me some exp’s of what you are suggesting?
#3: Specific closing dates are negotiated between buyer and seller for the ease of all parties involved. Our Buyers expectations are focused on the closing and getting into their new home. I personally discuss this with our Buyers prior to offer.
Tim, I would love to answer all the questions but I’m horribly defocused by the hawk game in AZ.
I would like to emphasize this. Our business is 95% buyers. In each and every transaction I discuss with the Buyer who would they like to utilize for Escrow. In nearly every transaction the Buyers seem to not care and ask me who I would suggest. We get solicited monthly by numerous Title and Escrow companies.
Up until Thursday (for the last year or so ) I utilized who the listing agent directed us towards for the “ease of the transaction.” Too many moving parts as we both know causes problems.
We are now looking for that Escrow office that will facilitate our Buyers and no longer will rely on who we are directed towards. This was a bad practice on our part and I blame myself.
This transaction opened my eyes to severe problems occurring in your industry with cutbacks, staffing, professionalism, and what damage it can cause.
answer to number 1: Agent and Buyers should decide that. Most Buyers do not know if there was something done improperly unless noted by the Agent.
#2: Can you please provide me some exp’s of what you are suggesting?
#3: Specific closing dates are negotiated between buyer and seller for the ease of all parties involved. Our Buyers expectations are focused on the closing and getting into their new home. I personally discuss this with our Buyers prior to offer.
Really interesting questions and in the past I would say everything should go through the agent, but today there are way too many agents who are inept.
I always council both my buyers and sellers to use John Wagner escrow. I like John and trust his staff. There have been mistakes made, over the twenty five years I have used the service. There have been times when other escrow companies had to be used, such as with Talon, and people who speak another language other than English.
For myself I would never allow any third party to talk with my clients directly. You can explain your logic to me and I will discuss it with my client. I think that should be the first step.
I have also had transactions where I will not communicate with escrow directly. A case in point was when a listing agent directed a well known escrow company in Ballard. I only communicated with the listing agent who in turn talked with escrow. They were never to talk to my clients. We eventually closed under threat of lawsuit, but will never again go down that road. That guy may have a few more years of experience now, but it was a complete joke.
Escrow should be held to a very high standard. I have personal dealing where escrow has cost me tens of thousands of dollars, and once a deal is closed, it’s closed. In the State of Washington it’s a done deal, there are no do overs. You can go to court, but it’s pretty useless.
I appreciate your post and the fact you probably do good business. I would trust you to do the right thing. Your point, I think, is that doing the right thing lately is getting harder to figure out.
David, agents not allowing escrow to talk directly to our own clients is ridiculous. This is a common misunderstanding that agents may have and it is played out every day. Just like Nancy said, buyers and sellers are the principals in the transaction. This isn’t to say the role of an agent is not critical, it really is. Somehow, someway title & escrow has probably promulgated this idea that we just pay the water bill. LPO’s are held to the same standard of care of an Attorney. 7 people of 25 who sat for the exam held by the WSBA on Oct. 5th passed. Last October (2008) 13 of 53 passed. Typically, people who apply for the exam have worked years in the title and escrow field.
Really interesting questions and in the past I would say everything should go through the agent, but today there are way too many agents who are inept.
I always council both my buyers and sellers to use John Wagner escrow. I like John and trust his staff. There have been mistakes made, over the twenty five years I have used the service. There have been times when other escrow companies had to be used, such as with Talon, and people who speak another language other than English.
For myself I would never allow any third party to talk with my clients directly. You can explain your logic to me and I will discuss it with my client. I think that should be the first step.
I have also had transactions where I will not communicate with escrow directly. A case in point was when a listing agent directed a well known escrow company in Ballard. I only communicated with the listing agent who in turn talked with escrow. They were never to talk to my clients. We eventually closed under threat of lawsuit, but will never again go down that road. That guy may have a few more years of experience now, but it was a complete joke.
Escrow should be held to a very high standard. I have personal dealing where escrow has cost me tens of thousands of dollars, and once a deal is closed, it’s closed. In the State of Washington it’s a done deal, there are no do overs. You can go to court, but it’s pretty useless.
I appreciate your post and the fact you probably do good business. I would trust you to do the right thing. Your point, I think, is that doing the right thing lately is getting harder to figure out.
Buyers and Sellers are the principles in the escrow. I simply can’t understand an agent who will not allow escrow to speak with the Buyers and Sellers. When escrow needs a SS# from a seller, does the agent really want (or do the Buyers and Sellers really want another person to have their personal information) to be in that line of communication? The information which needs to be communicated is complex and oftentimes, time critical. Not allowing escrow to talk to your clients is like taking grandma to the doctor but not letting him listen to her heart or examine her.
My experience has always been that if escrow makes an error (and I’m speaking of title company related escrow) they step up and do the right thing. I’d be interested to know how escrow cost David tens of thousands of dollars. Escrow is pretty regulated and there are many options if they are really negligent. Court is only one of them.
The misunderstanding I have seen most often is where title misses some taxes, or a sewer lien and, after protecting our insured (the buyer and lender) we go after the seller whose owed the taxes or lein in the first place. A title company loss is done for any penalty or interest due as a result of overlooking the taxes or lien. Or when a seller makes another draw on a line of credit and the pay off is short or the seller bounces a check for the last payment credited on their loan. Again the title company protects their insured but can and does go after the seller for the repayment of the loss.
Relationahips are key. Some agents take their escrow to the last company who gave them tickets or dinner and some find a closer who knows their stuff and communicates well and sticks with them.
They are generally the ones who will throw their closer (or the other agent or the lender under the bus) if things get sticky.
Nancy, superb commentary.
Buyers and Sellers are the principles in the escrow. I simply can’t understand an agent who will not allow escrow to speak with the Buyers and Sellers. When escrow needs a SS# from a seller, does the agent really want (or do the Buyers and Sellers really want another person to have their personal information) to be in that line of communication? The information which needs to be communicated is complex and oftentimes, time critical. Not allowing escrow to talk to your clients is like taking grandma to the doctor but not letting him listen to her heart or examine her.
My experience has always been that if escrow makes an error (and I’m speaking of title company related escrow) they step up and do the right thing. I’d be interested to know how escrow cost David tens of thousands of dollars. Escrow is pretty regulated and there are many options if they are really negligent. Court is only one of them.
The misunderstanding I have seen most often is where title misses some taxes, or a sewer lien and, after protecting our insured (the buyer and lender) we go after the seller whose owed the taxes or lein in the first place. A title company loss is done for any penalty or interest due as a result of overlooking the taxes or lien. Or when a seller makes another draw on a line of credit and the pay off is short or the seller bounces a check for the last payment credited on their loan. Again the title company protects their insured but can and does go after the seller for the repayment of the loss.
Relationahips are key. Some agents take their escrow to the last company who gave them tickets or dinner and some find a closer who knows their stuff and communicates well and sticks with them.
They are generally the ones who will throw their closer (or the other agent or the lender under the bus) if things get sticky.
Real deal here:
We have had transactions where we have been released to record by a lender and we wait, and wait and finally realize we never will get the money. But, a common remark is, “the loan officer said you have been wired the money. How come you have not closed yet?” Our response, “I understand that that is what was said, but we were never funded.” Being released to record is not a guarantee that escrow will be funded. Those sales never did close. In this market escrow offices will not record unless money is in hand (Trust Account.) If we don’t get funded until late in the afternoon….what is the cut off time for recording documents people??
Try undoing a transaction where escrow does release to record and you never get funded. Oops, you just effectively gave the buyers a house. And that get’s REALLY messy.
Real deal here:
The seller owns several pieces of real estate and inadvertantly furnishes escrow with the wrong loan number for the pay off. The pay off gets ordered and no one catches that it is on the wrong property. (including the Sellers who initial the pay off demand)
Oops….wrong loan paid off. Just yuk! Sometimes it’s easier to fix than others but a bad thing nonetheless.
Or my favorite:
A Countrywide short sale. Escrow does everything right. The HUDS are approved and the escrow is closed in exact accordance with Countrywide’s instructions. But oops….the short sale guy at Countrywide forgets that he has not gotten back the signed agreement for the seller to pay the deficiency. The Seller’s attorney and the Seller (who have been negotiating the short sale long before escrow was opened) say that they notified Countrywide that the seller would not agree to sign the agreement.
Now Countrywide returns the payoff and reinstates the loan. Now we have two loans on the property (one in foreclosure), a seller who has moved back to Mexico and a new buyer in the house.
Some days you just can’t win.
Real deal here:
The seller owns several pieces of real estate and inadvertantly furnishes escrow with the wrong loan number for the pay off. The pay off gets ordered and no one catches that it is on the wrong property. (including the Sellers who initial the pay off demand)
Oops….wrong loan paid off. Just yuk! Sometimes it’s easier to fix than others but a bad thing nonetheless.
Or my favorite:
A Countrywide short sale. Escrow does everything right. The HUDS are approved and the escrow is closed in exact accordance with Countrywide’s instructions. But oops….the short sale guy at Countrywide forgets that he has not gotten back the signed agreement for the seller to pay the deficiency. The Seller’s attorney and the Seller (who have been negotiating the short sale long before escrow was opened) say that they notified Countrywide that the seller would not agree to sign the agreement.
Now Countrywide returns the payoff and reinstates the loan. Now we have two loans on the property (one in foreclosure), a seller who has moved back to Mexico and a new buyer in the house.
Some days you just can’t win.
Maybe things are different in Washington, but at least in California and Hawaii, a real estate agent cannot prevent the seller or buyer from talking directly to the escrow/title company.
David Losh, how do you enforce your cone of silence? By contract?
Whether I am the buyer or seller, if I want to talk to the escrow person (or the other way around), then I talk to the escrow person. If some realtor has “control” issues, that’s not my problem.
My last transaction (on Kauai) as a buyer, we had an excellent escrow person. She was far and above the most knowledgeable person involved in the transaction, and was paid a pittance compared to the saleswoman “realtor”.
Maybe things are different in Washington, but at least in California and Hawaii, a real estate agent cannot prevent the seller or buyer from talking directly to the escrow/title company.
David Losh, how do you enforce your cone of silence? By contract?
Whether I am the buyer or seller, if I want to talk to the escrow person (or the other way around), then I talk to the escrow person. If some realtor has “control” issues, that’s not my problem.
My last transaction (on Kauai) as a buyer, we had an excellent escrow person. She was far and above the most knowledgeable person involved in the transaction, and was paid a pittance compared to the saleswoman “realtor”.
This is all asuming that title and escrow people are more capable than an agent. That’s just not the case.
What I like is in one comment Nancy is asking how escrow can cost a person tens of thousands of dollars and in the next comment gives a couple of examples.
Do buyers and sellers talk to escrow? Absolutely. There is no cone of silence, it’s Real Estate. Real Estate agents don’t deal in contracts.
If you as an individual trust the title or escrow people more than your agent then you need another agent. Which is kind of my point all the way around.
Wait a minute, I have a file right here from First American Title and Escrow. The escrow person had, a hundred files, or was it twenty, I forget, but she let me know she was really over worked.
It took me a couple of days to go over the file with her, nothing was right, she had called me a half dozen times with off the wall questions, but she was really working. She did fail to complete a couple of pay offs, but hey, she was really busy. I didn’t pick First American, the lender had a sweet heart deal with First American. We moved ahead because I had two other transactions tied to this one.
Talking like title and escrow are some how above the fray, and they know best, just isn’t right. Like I said John Wagner is an attorney, he has seasoned staff, and mistakes get made. Those mistakes should be run by me first before involving my clients.
OK many transactions run smoothly, but for the ones where there are problems, like underwriter requests, I’d like to know at the time rather than get the information in an e-mail at the end of the week.
This is all asuming that title and escrow people are more capable than an agent. That’s just not the case.
What I like is in one comment Nancy is asking how escrow can cost a person tens of thousands of dollars and in the next comment gives a couple of examples.
Do buyers and sellers talk to escrow? Absolutely. There is no cone of silence, it’s Real Estate. Real Estate agents don’t deal in contracts.
If you as an individual trust the title or escrow people more than your agent then you need another agent. Which is kind of my point all the way around.
Wait a minute, I have a file right here from First American Title and Escrow. The escrow person had, a hundred files, or was it twenty, I forget, but she let me know she was really over worked.
It took me a couple of days to go over the file with her, nothing was right, she had called me a half dozen times with off the wall questions, but she was really working. She did fail to complete a couple of pay offs, but hey, she was really busy. I didn’t pick First American, the lender had a sweet heart deal with First American. We moved ahead because I had two other transactions tied to this one.
Talking like title and escrow are some how above the fray, and they know best, just isn’t right. Like I said John Wagner is an attorney, he has seasoned staff, and mistakes get made. Those mistakes should be run by me first before involving my clients.
OK many transactions run smoothly, but for the ones where there are problems, like underwriter requests, I’d like to know at the time rather than get the information in an e-mail at the end of the week.
David L – In the first sentence of your prior comment you say “but today there are way too many agents who are inept.” We agree on that point.
Now you say “This is all assuming that title and escrow people are more capable than an agent. That’s just not the case.” I certainly do not agree that title and escrow employees are more “inept” (your description) than agents.
It sounds like you would not want a client who does not follow your orders. By coincidence, I would not want an agent who does not follow my orders. Does that mean we agree or disagree?
“Real Estate agents don’t deal in contracts.” Agree.
My point, David, was that in my experience escrow repairs their errors and makes the injured party whole again. Missing taxes or a lien or catching a short pay off usually does not cost the party anything that they did not already owe. I certainly agree that it is inconvenient.
Everyone in a real estate transaction is human and can make errors. Knowledge, communication, collaboration and working as a team still works best when trying to close a transactin with any kind of issues, or one without any issues for that matter.
“By coincidence, I would not want an agent who does not follow my orders.”
This to me is the heart of the problem. People decide they can handle a Real Estate transaction and agents are too willing to just collect a commission check.
An agent is there because they know what to do. They have dealt in hundreds of transaction more than you have. If they are starting out they should be mentored by some one who has done hundreds of transactions. That’s why we have the brokerage system.
Turning a client over to a title or escrow agent seems like a lack of responsibilty. I’m aware it’s kind of become standard procedure. Agents are kept in the loop, but they kind of leave it all up to escrow.
I’ll give you the classic escrow policy and procedure that costs every one money. The transaction is set to close at the end of the month so the file sits on a desk until a few days before closing.
Title was oredered within a few days, but no one actually looks at the title report until some one cracks the file.
I know that Real Estate is a volume business, you have to keep that pipe line full. In my opinion though people pay the Real Estate agent to handle the transaction. Otherwise you might as well hire Craig and get some one who at least has a system in place.
David — Since “handling the transaction” (i.e. staying on top of the process, insuring that all steps necessary for closing are completed) is in the client’s interest, we most certainly provide that service as well. We may not be as directly “hands on” as the agent (for example, we are unlikely to follow up directly with the buyer’s lender) but we at a minimum consult with our client about follow-up steps that are necessary and appropriate and then let the client address.
I’m still not clear on your perception of our service, except for the fact that you pretty clearly still do not understand it.
“By coincidence, I would not want an agent who does not follow my orders.”
This to me is the heart of the problem. People decide they can handle a Real Estate transaction and agents are too willing to just collect a commission check.
An agent is there because they know what to do. They have dealt in hundreds of transaction more than you have. If they are starting out they should be mentored by some one who has done hundreds of transactions. That’s why we have the brokerage system.
Turning a client over to a title or escrow agent seems like a lack of responsibilty. I’m aware it’s kind of become standard procedure. Agents are kept in the loop, but they kind of leave it all up to escrow.
I’ll give you the classic escrow policy and procedure that costs every one money. The transaction is set to close at the end of the month so the file sits on a desk until a few days before closing.
Title was oredered within a few days, but no one actually looks at the title report until some one cracks the file.
I know that Real Estate is a volume business, you have to keep that pipe line full. In my opinion though people pay the Real Estate agent to handle the transaction. Otherwise you might as well hire Craig and get some one who at least has a system in place.
David — Since “handling the transaction” (i.e. staying on top of the process, insuring that all steps necessary for closing are completed) is in the client’s interest, we most certainly provide that service as well. We may not be as directly “hands on” as the agent (for example, we are unlikely to follow up directly with the buyer’s lender) but we at a minimum consult with our client about follow-up steps that are necessary and appropriate and then let the client address.
I’m still not clear on your perception of our service, except for the fact that you pretty clearly still do not understand it.
My problem with Escrow is they are there to serve a function, or to execute the written instructions of the contract. They write their own contract, completely oblivious to the intitial contract, or the original instrument of why Escrow companies have a job, which is the PSA.
So then, my problem is… When a termination is given due to the written CONTRACT (i.e. deal fails due to inspection, or financing) and a UNILATTERAL notice is given of termination (notice, no Rescission) to the seller, why does the escrow company NOT comply with the written language?
They require that you sign a Form 51 by both parties, which in it’s true definition is falsehood. We are not rescinding on the contract, we are terminating the contract.
Answer: CYA! It’s pathetic, but it’s true. I know of one title company that is willing to do this, but no one else as they are too worried about being sued.
I’m with you on this one, Jason. If the buyer has the UNILATERAL right to cancel based on inspection, escrow should not impose a condition whereby the seller must sign in order for the buyer to have their Earnest Money returned. That IS effectively “re-writing” the terms of the Purchase and Sale Agreement as you stated, and not their right to do.
Sellers never like it when buyers cancel on inspection, and the buyer should not need the seller to agree, in writing, in order to have their Earnest Money returned. (same with all unilateral rights to cancel).
Hmmm… In the case of the inspection contingency, there already IS a form that can be used to provide notice of termination by agreement of the parties, the Form 35R, the Inspection Response. I agree with you, Ardell, that escrow should NOT also demand a mutually signed rescission IF the basis for the return of the EMD is failure of the inspection contingency AND escrow is provided with a FULLY SIGNED (i.e. Seller has signed in Part II) Form 35R indicating that the contract has terminated and EMD must be returned to buyer. Ardell and Jason, in your experience has escrow wanted a Form 51 as well under these circumstances? If so, I agree that is inappropriate.
However, if the Form 35R is not signed by the seller (POSSIBLY because the seller never signed and returned) the buyer still has the right to terminate with the 35R. However, under those circumstances, escrow would reasonably want consent of BOTH parties, and if the Form 35R was not signed then escrow does not have such consent. So, a Form 51 rescission would be appropriately required by escrow. Admittedly that might be frustrating because now the buyer has to get some degree of cooperation from a seller who has already indicated a refusal to do so (by sitting on and not returning the 35R).
In all other cases, I think it is appropriate for escrow to ask for mutually agreed instructions as to disbursal of the EMD.
Craig,
I do not believe the seller’s response in Section II is needed or relevant if the buyer is cancelling, only if the buyer is requesting something that needs the sellers response.
Ardell — I disagree. If the buyer in Part I indicates that the contract is terminated, what evidence does escrow have that the termination notice was timely given to the seller? Termination is effective upon receipt of the notice by the SELLER (or the listing agent) per paragraph k of the Form 21, NOT receipt by escrow. Since the date of delivery is the operative date, rather than the date of execution, delivery of a form 35R to escrow without any evidence of timely delivery to the seller leaves some room for doubt about whether or not the buyer is truly entitled to the earnest money.
My prior comment envisioned the buyer terminating AFTER the buyer first proposed a repair in Part I (rather than termination). Under those circumstances, I continue to stand by my earlier analysis. Unless the seller signed Part II, there is less-than-conclusive evidence on the face of the notice that the buyer is indeed entitled to the earnest money. For example, how does escrow know that the 35R was timely given to the seller and that the seller did not respond? That fact (timely delivery) is a necessary precursor to buyer’s right to the earnest money, and unless that fact is evident — on the face of the document or otherwise (such as a communication from seller acknowledging timely receipt) — then escrow cannot be certain that buyer is entitled to the money.
The bottom line is that escrow must remain loyal to both parties. If escrow assumes a fact and relies on that fact in conferring a benefit on one party at the expense of the other, then escrow does so at its own risk. So, I’m far more willing to tolerate requests by escrow to show — at least by clear and convincing evidence — that the buyer is entitled to the earnest money. The surest way to do so is to get the seller’s consent.
Perhaps this is another difference between agents and lawyers. Escrow, take note: I’m far more understanding of your situation. 😉
“what evidence does escrow have that the termination notice was timely given to the seller?”
Pretty simple. They send it to the seller when they receive it. Next?
“My prior comment envisioned the buyer terminating AFTER the buyer first proposed a repair…”
That is not generally the case that imposes a unilateral choice. Unilateral is most often where the buyer simply cancels on inspection, and under the current contract they do not have to attach a portion of the inspection report to show why. That leaves the seller who is asking why, with no contractual reason for the buyer to have to explain why.
I don’t necessarily agree with the way the form is worded in that regard, as it gives the buyer an open-ended legal out clause. But that’s how it is, and the contract does not require the seller to agree…and most sellers would not. They don’t have the information to form a decision. To require the seller to agree would have to go hand in hand with requiring the buyer to give a valid reason for the seller to consider and potentially refute.
Craig says: “Perhaps this is another difference between agents and lawyers. Escrow, take note: I’m far more understanding of your situation.”
I am more than happy to claim that difference, Craig. Getting my buyer client’s Earnest Money back PRONTO so they can make an offer on a different property is MUCH more important to me than being a “friend to escrow”. Escrow is NEVER my client, and I generally refuse to work with any escrow company that imposes a bilateral agreement to cover their own butts, when the purchases and sale contract allows for a unilateral one.
Out of town buyers do not have the time it might take to get the seller’s agreement of their decision to simply cancel and move on. This is hugely important to most buyer clients…the freedom to quickly switch to an offer on a different property without being unnecessarily tied up by waiting for a seller to agree. Seriously. Why would a seller make it easier for a buyer to leave and make an offer on a different property? That is WHY the contract does not impose that requirement, and no one should be able to insert their own requirement outside of the contracted terms.
In fact, I would expect an attorney who represents buyers to be outraged if their buyer client wanted to get their Earnest Money back to make a quick, new offer on a new property, and was told “no, we ‘want’ the seller’s agreement even though the contract between you and the seller does not require it.”
Ardell — its nice to see you still rise to the bait every once in a while…
First, I think you missed three basic points. First, termination by buyer is ONLY effective if the notice is timely received by Seller. If buyer blows the deadline, then buyer loses the right to terminate. You understand that point, correct? If so, are you saying that escrow has an obligation to the buyer to timely forward to the seller the buyer’s notice? I don’t see the basis for that obligation. Rather, the contract requires notice from buyer to seller, and delivery of that notice in a timely fashion terminates the contract. It is the buyer’s responsibility, not escrow’s, to timely deliver the notice. The key is demonstrating to escrow that the notice was timely delivered.
Second, clearly the seller does NOT need to consent to the unilateral termination by buyer following inspection (per second box Part I). Clearly the buyer has no obligation to “justify” the termination. I am not arguing otherwise. I am simply pointing out that TIMELY DELIVERY of that termination is a requirement for termination to be effective. If the buyer simply forwards the termination to escrow but not the seller, then per the terms of the PSA (again, look at paragraph k) the contingency expires and the termination is not effective.
Third, if my client needs the earnest money right away, and if the seller refuses to cooperate in confirming to escrow that the buyer is entitled to it, you can bet your bottom dollar that I will immediately fire out an exceptionally firm letter to the seller demanding immediate action or the seller will be liable for harm caused. Perhaps here’s another difference between us: As a lawyer, I can lean forcefully on the seller, so I don’t need to lean on escrow. You, on the other hand, have no option but to make a stink with the escrow, because you cannot threaten legal action against the seller.
Oh Ardell, its just like the old days……
My problem with Escrow is they are there to serve a function, or to execute the written instructions of the contract. They write their own contract, completely oblivious to the intitial contract, or the original instrument of why Escrow companies have a job, which is the PSA.
So then, my problem is… When a termination is given due to the written CONTRACT (i.e. deal fails due to inspection, or financing) and a UNILATTERAL notice is given of termination (notice, no Rescission) to the seller, why does the escrow company NOT comply with the written language?
They require that you sign a Form 51 by both parties, which in it’s true definition is falsehood. We are not rescinding on the contract, we are terminating the contract.
Answer: CYA! It’s pathetic, but it’s true. I know of one title company that is willing to do this, but no one else as they are too worried about being sued.
Jason — I agree that mutual consent of the parties for disbursement of the earnest money may not be required, but I don’t see why this is such a pet peeve of yours. Isn’t everyone better served by resolving the potential dispute up front? If escrow routinely interpreted the PSA and applied its terms to subsequent events, I think its safe to say that one party would take exception to that analysis. Thus, that party would have an at least colorable claim that escrow breached its obligations to the parties. I guess, bottom line, is that even if this is CYA, conduct desiged to CYA is not necessarily bad or counterproductive. In fact, it may be the best for all parties.
As to your first paragraph, where you allege that escrow ignores the PSA — well, that’s obvious hyperbole. Clearly that is not the case, and where it is the case the escrow agent has clearly breached his obligations to the parties and will be liable for any harm caused.
I gave you a plug because it is my opinion that you would keep track of escrow better than most agents. The other thing is that an attorney is a good tool to have in the tool kit for any agent.
There have been plenty of times where somthing comes out of escrow no one has ever seen. Escrow really can’t touch it and an attorney may be needed. Bank documents come to mind.
I gave you a plug because it is my opinion that you would keep track of escrow better than most agents. The other thing is that an attorney is a good tool to have in the tool kit for any agent.
There have been plenty of times where somthing comes out of escrow no one has ever seen. Escrow really can’t touch it and an attorney may be needed. Bank documents come to mind.
The issue of refunding earnest money deposit has always been a pet peeve of mine as well. I had a few discussions with the Real Estate Agency (who regulates escrow in Oregon) and this is what they said:
The PSA is an agreement between the parties and as such is not sufficient to instruct escrow to release the deposit. Escrow needs separate, specific ,written and dated instructions.
Last legislative session they passed a new law which says that escrow can now accept a Termination Agreement or another addendum, provided it is signed by both parties and instructs escrow what to do with the money. It also says that the addendum may not be written concurrently with the PSA.
I have been enjoying the post and the comments. We love those professionals who collaborate. In my experience, those professionals not only succeed to closing and receipt of commissions and fees more often, they also end up in fewer disputes, lawsuits, claims and settlements. Thus the “other camp” are not just bad for the customers, they are bad business for the other professionals too.
On the issue of the return of earnest money, I agree that the escrow agent does not require a rescission agreement signed by both parties after a transaction has terminated by its terms due to inspection, financing or other contingencies. My escrow company will rely upon the selling agent to state that the transaction has terminated and the buyer is entitled to refund. Then we ask for quick agreement from the listing agent or seller. If we get an e-mail OK, we disburse. If we don’t get that OK, we send a letter that asks for consent or a written objection within 5 days, and we disburse if we don’t get that objection. It works pretty well in real practice. Most people don’t have a real objection, but if you say you “need” their signature, sometimes they simply don’t want to cooperate.
Dwight,
Thanks for stopping by. It’s good to see you, Rob and some of the larger title company management/executive staff chime in to give perspective on title and closing issues outside of the traditional company mastheads.
Craig says: “The key is demonstrating to escrow that the notice was timely delivered.”
Agreed BUT proof of delivery vs. seller signature “agreeing” to “let” the buyer cancel and get their money back is all that is needed. If they want to cover their butts, they can choose to send that proof of delivery to the seller. What they CAN NOT do (but many do) to cover their butts is force the buyer to wait for the seller to agree to giving the buyer their Earnest Money back, when the choice is a unilateral one by contract.
Your “second” is wiped out by my first 🙂 If escrow has any question about seller being notified, they certainly have the means to forward the proof of timely delivery before releasing the Earnest Money. They do not have the right to hold on to the buyer’s money to cover their own butts, causing the buyer unnecessary and undue harm.
Your third…no stink needed. Contract terms are clear. Hand the money back…end of story. No seller signature required. ONLY alternative is NO Earnest Money paid until after inspection, which USED TO BE an easier alternative. Who changed that? Someone who forgot to care about the buyer…as usual.
Ardell, you’re still missing the point:
“If they [escrow] want to cover their butts, they [escrow] can choose to send that proof of delivery to the seller.”
Ardell, escrow does not HAVE proof of delivery. The buyer delivers the notice, not escrow, so the buyer is the only one in position to get such proof.
“What they [escrow] CAN NOT do (but many do) to cover their butts is force the buyer to wait for the seller to agree to giving the buyer their Earnest Money back.”
Here is our real point of disagreement. I think it is appropriate for escrow to have proof of timely delivery (and otherwise proof of compliance with the terms of the contract that would allow for return of the earnest money to buyer). If such proof is not on the face of the notice, then it is appropriate for escrow to seek seller’s consent that buyer is entitled to the earnest money. I think anything else by escrow subjects escrow to potential liability.
“If escrow has any question about seller being notified, they [escrow] certainly have the means to forward the proof of timely delivery before releasing the Earnest Money.” Huh? Again, its the buyer’s responsibility, so only buyer has proof of timely delivery to seller. The buyer must provide this proof to escrow. I just don’t see how you can see it any other way.
In any event — Tim? Hello? A little help here??
Craig…off to an 11 o’clock meeting…I be back 🙂
Craig,
Proof of timely delivery. No problem. The point that I am NOT missing is NO SELLER SIGNATURE should be required for buyer to get the return of Earnest Money on a timely inspection cancel.
Here’s my point, once you ask the seller for their signature, they often think their approval is needed and it is NOT. It sends a bad message to even ask.
Tim, eventually I’ll have a transaction near your geographic area, and will enjoy working with you and Lynlee! I have several really good escrow companies that I rely on, and I truly enjoy working with them, because, like you, they care about everyone in the transaction. That’s critically important. Often I find that I’m working with a company that I haven’t worked with before, and I can usually tell in the first week if the transaction will go smoothly, or less so, and sometimes, I’ve had to move a file away from a particular escrow company. Very rare, and it feels awful to have to make that kind of decision.
Sure, we’ve all had difficult people or situations, and it’s nice to be able to say ‘geez, that was tough, but we got it done’ when it is finalized :-). Sharing the goal of getting things done well is really the way any business should want to operate.
Years ago, it was pretty common for a real estate agent to attend the escrow signing appointments with their buyer or with their seller. I still do for many of my clients, and even tho my role isn’t to explain the documents, it can be helpful for everyone involved, including whoever is handling the appointment. Sometimes when there is a glitch, I can get the loan rep on the phone right away, and hand the phone to the buyer or escrow person, so they can help answer the question, or resolve the issue. I’ve always thought that my role is more than just finding the house, and writing the paperwork. It’s also making sure things that seem intimidating, or scary, or just plain incorrect, get detailed out in a comfortable way for the parties involved.
It’s been years since my broker exam, but we had to prepare a settlement statement and do it correctly for the test. I hope that’s still part of the broker exam — it was kind of fun.
Tim, I’ve never had a transaction cleared for recording, but not actually ever close … that has got to be one of the most stressful things you deal with — even worse than difficult people.
Tim, eventually I’ll have a transaction near your geographic area, and will enjoy working with you and Lynlee! I have several really good escrow companies that I rely on, and I truly enjoy working with them, because, like you, they care about everyone in the transaction. That’s critically important. Often I find that I’m working with a company that I haven’t worked with before, and I can usually tell in the first week if the transaction will go smoothly, or less so, and sometimes, I’ve had to move a file away from a particular escrow company. Very rare, and it feels awful to have to make that kind of decision.
Sure, we’ve all had difficult people or situations, and it’s nice to be able to say ‘geez, that was tough, but we got it done’ when it is finalized :-). Sharing the goal of getting things done well is really the way any business should want to operate.
Years ago, it was pretty common for a real estate agent to attend the escrow signing appointments with their buyer or with their seller. I still do for many of my clients, and even tho my role isn’t to explain the documents, it can be helpful for everyone involved, including whoever is handling the appointment. Sometimes when there is a glitch, I can get the loan rep on the phone right away, and hand the phone to the buyer or escrow person, so they can help answer the question, or resolve the issue. I’ve always thought that my role is more than just finding the house, and writing the paperwork. It’s also making sure things that seem intimidating, or scary, or just plain incorrect, get detailed out in a comfortable way for the parties involved.
It’s been years since my broker exam, but we had to prepare a settlement statement and do it correctly for the test. I hope that’s still part of the broker exam — it was kind of fun.
Tim, I’ve never had a transaction cleared for recording, but not actually ever close … that has got to be one of the most stressful things you deal with — even worse than difficult people.
Craig – All you attorneys want to send demand letters that do nothing except escalate the matter. If a seller is being iditiotic, they don’t care if you have an esq after your name, or even a fancy schmancy law firm in your signature, they only care about their principles. It seems to me that attorney’s always want to fight it out in court, and frankly, we all know that if EM gets to the courts, all EM is gone in lawyer fees anyways.
So, I don’t think it is unreasonable, Craig, to have the standard pre-printed forms coincide with the efforts in which Escrow is HIRED to do. The proponderance of evidence should be placed on the selling agent to prove they delivered the termination within the guidelines of the contract (proving Mutual Acceptance Date, proving delivering date, and proving the termination is valid, i.e. 35R, 22AR (with proper documentation), termination on Resale certificate, etc.
Craig – All you attorneys want to send demand letters that do nothing except escalate the matter. If a seller is being iditiotic, they don’t care if you have an esq after your name, or even a fancy schmancy law firm in your signature, they only care about their principles. It seems to me that attorney’s always want to fight it out in court, and frankly, we all know that if EM gets to the courts, all EM is gone in lawyer fees anyways.
So, I don’t think it is unreasonable, Craig, to have the standard pre-printed forms coincide with the efforts in which Escrow is HIRED to do. The proponderance of evidence should be placed on the selling agent to prove they delivered the termination within the guidelines of the contract (proving Mutual Acceptance Date, proving delivering date, and proving the termination is valid, i.e. 35R, 22AR (with proper documentation), termination on Resale certificate, etc.
Jason — other than the rank lawyer bashing, you and I are in complete agreement! 😉
For the record, there are good attorneys and there are bad attorneys. Good attorneys ALWAYS keep an eye on the prize, i.e. they keep in mind the amount of money at issue. Good attorneys counsel their clients so that the client does not spend excessively on legal fees, where “excessive” is determined by comparison to the amount at issue.
Craig, that’s just it… Any money spent on attorney’s when it is a UNILATTERAL termination is Excessive!
As discussed above, it is a unilateral termination BUT escrow is entitled to proof of compliance with the contractual terms that give rise to the right to terminate (e.g., proof of timely delivery to seller of 35R). If the seller refuses to cooperate, and if escrow otherwise is not provided with proof of compliance, then incurring legal fees may be necessary as a reasonable and unavoidable cost of the transaction.
That said, the attorney — if he’s a good one — should tailor the counsel and representation to the only reasonable goal: prompt resolution without incurring anything more than minimal legal fees. On the other hand, if the buyer has already retained a lawyer on a flat fee basis to assist with the transaction, then legal counsel may not incur ANY additional legal fees. Just one small advantage of getting the lawyer on board at the inception of the transaction.
There is an agent who would sit on a sellers front porch until the paper work was signed. They had business together so technically it was not trespassing. Once a police report was filed the officers name and badge number was submitted as proof that delivery was made to the seller.
If agents did the job they are getting paid to do there would be fewer disputes. Scanned documents, and having a listing agent present a buyer’s offer just add to the lack of concern, or involvement, agents have with a transaction.
In my opinion people pay an agent to go the extra miles it takes to get a transaction to close, or terminate equitably.
There is an agent who would sit on a sellers front porch until the paper work was signed. They had business together so technically it was not trespassing. Once a police report was filed the officers name and badge number was submitted as proof that delivery was made to the seller.
If agents did the job they are getting paid to do there would be fewer disputes. Scanned documents, and having a listing agent present a buyer’s offer just add to the lack of concern, or involvement, agents have with a transaction.
In my opinion people pay an agent to go the extra miles it takes to get a transaction to close, or terminate equitably.