How do I request my broker to refund my good faith deposit?

Question

I've been in the process of bidding on a short sale since October. Today after increasing my offer 4 times my broker said the bank has declined my offer once again. So I've finally decided to walk away.

I have a $1000 good faith deposit with the broker and today he told me that he'll speak to his supervisor to see if he can get it me a refund. I don't understand why that would even be a questionable thing as I've been earnestly seeking to make this deal happen.

Any comments, suggestions would be appreciated.

I was also thinking of writing a formal request in addition the the phone request I made today. Something like this:

"Hi ____,

I'm writing this email to make a formal request for the refund of my good faith deposit.

I believe that I am entitled to a refund of my entire good faith deposit of $1000. Since October, we wrote 3 contracts, four if you include the amendment of the 3rd. We increased our offer price four times, starting from a price you suggested and finally stopping at 12% below bank appraisal which I believe was a reasonable offer. I did not reneged on any of those contracts and exhibited my good faith in both compliance to your requests and consistent follow ups. "

Charlie MacPherson · Answer

@Behrooz K. Your money should be refunded without question.

The brokerage most likely has a form for you to fill out that gives them a paper trail.  If there's any more friction than that, you should send them a certified letter demanding that your funds be returned immediately.

Mishandling client funds is a fast way for a broker to lose their license.

Russell Brazil · Answer

Nope, they can do it just to be a jerk, and that is usually the case. If the real estate brokerage is holding the deposit in escrow, there is a remedy to the seller not releasing, but they can still block it if they are more active.  With the title company, it is entirely passive their blocking the release.  Some title companies literally have money in escrow from 25 years ago thats never been released.

Russell Brazil · Answer

The return of your deposit will be dictated by state law.  Lots of advice here from people not in your state. As someone who does business in multiple states, I can tell you the process can be extremely different from state to state.  In Maryland, if the title company is holding the deposit, and seller refuses to sign a release, the only way to get it back is through court order for instance, so a demand letter for it would do absolutely nothing.

Account Closed · Answer

Add: "Please return my good faith deposit by Feb 7 2018 to 1234 Main St, Anytown, USA.

Thank you for your prompt attention to this matter.

Sincerely,

Joe Schmoe

(Your Phone Number)

Judy Parker · Answer

Write a letter to the Broker-Owner stating that you are withdrawing your offer on the Subject Property and want your Deposit monies returned immediately.

Joe Splitrock · Answer

Maybe the seller needs to release it, but even if they don't release it, they don't get to keep it. Seller has to either perform on the contract or release the funds. Call them twice a day until you get your money.

Joe Norman · Answer

This is what I am referring to regarding whether or not the contract was contingent on 3rd Party Approval.  Was there an addendum to the contract with "Short Sale" or "3rd Party Approval" in the title? As @Russell Brazil pointed out, regardless of whether you are due the deposit or not, it could be difficult to get if the seller and your broker don't want to cooperate.  Sorry to hear you're in such a pickle.

Mike Cumbie · Answer

Hi @Behrooz K.,

Is this a EMD check written out for that specific property or is it a "Good faith" check given to the brokerage at the start of you two doing business. Like one when you signed an "exclusive right to represent"? One of those put $1,000 down and when we find something we agree it will come off commissions type deals? If it is the latter, that language and what you signed will dictate your responsibilities in that case. If it is the former, odds are the bank will release it because they are all about crossing T's and dotting I's.

Good Luck!

Joe Splitrock · Answer

@Behrooz K. the contract is with the seller. If the seller accepted an offer for less than what they owe on the property, then the seller needs to come up with the difference to close on the property. The seller has two options, either return your earnest money or come up with the cash for closing to satisfy the bank. If the contract was contingent on the bank approving the short sale, then after the bank rejected the price, the contract goes void.

Any way you look at this, it is failure to perform on the contract on the part of the seller. You are entitled to the money, so as others suggested, send a letter with time line for release. If you don't receive the money, take them to small claims court.

How do I request my broker to refund my good faith deposit?

Most Popular Reply