Short Sale Home » Short Sale Buyers » Earnest Deposit and Short Sales

It’s very important not to get your earnest money tied up into a short sale for a couple of reasons: you’ll lose interest on your money for 2 to 3 months and you may never get the home in the first place.

A purchase agreement is not considered a valid contract in a short sale situation till the lender has signed off on the deal.  Thus, escrow should not be opened until the lender has submitted a written approval on the short sale to your listing agent before going forward with escrow.

Usually writing ‘escrow to be determined’ in the “to” line of a check, is suitable enough to submit the purchase agreement to the seller and lender to get the process going.

If the seller’s agent demands the check, do not give your earnest deposit check.  The earnest deposit isn’t required till the lender has given acceptance and the sellers have no rights to your earnest money at this point in time since you DO NOT have an accepted offer on the short sale.

Tags: earnest money, short sale