Wiring deposit funds before purchase agreement signed?

[Mark Hu]

We recently had a seller request we wire the deposit funds into escrow before they signed the purchase agreements. We backed out on this request. The escrow agent said that this was common practice but we have never heard of it. Is this true, that such a thing is now commonly done?

[J Scott]

You should have responded, "Okay, but I'll need the sellers to turn over the keys to the property a week before closing," and see if they thought that was reasonable... :D

Sometimes asset managers selling REOs will require EM at the time of verbal agreement, but for a private sale, I see no reason to provide EM before the contract is signed. How do you know the seller will even sign the contract and what instructions are you including with the escrow money if there is no contract?