Everything in real estate is about time frames. As a real estate buyer you have a certain amount of time, which is agreed upon by all parties in writing, before escrow opens, to conduct inspections, investigations and to get a loan.
Also, there is also a certain amount of time, which you agree to during the negotiation phase of real estate, in which you can back out of the transaction retaining your original EMD, Escrow Money Deposit.
Simply, your deposit is the amount of money you said you would deposit into escrow to start the transaction if your offer was accepted by the home seller(s).
In California, Santa Clarita, if nothing different is negotiated before all is executed by all parties, a buyer has 17 days to conduct inspections and 21 days to obtain a loan. (I’m simplifying, each scenario is different and subject to attorney review)
In simple terms, if the buyer changes their mind, in my scenario, during that time they get their deposit back.
Some escrow companies may retain some of the buyer’s deposit for services rendered. These types of companies are not too common, but they are something to watch out for.
Your Real Estate advisor (realtor), will have all, or should have, all of the intel related to who does what and will give you this advice:
“Do not sign anything without us first viewing it and giving you permission. If something is mailed to you by escrow, do not sign it and return it back without us first knowing about it in it’s entirety, I don’t care how tempted you are to do so. Even if you think you are inconveniencing us, you are not!” At least we say this to our clients, anyway…
The three things you won’t get back if you cancel the deal
I had to preface this because real estate is not as simple as just stating what the three things are.
Deposits are sometimes attempted to be retained by the home sellers.
But, if you are not in that position to have your deposit retained by the seller, and you cancel the transaction, here are the three things you won’t get back upon doing so, if you have had them performed.
- The home inspection fee amount – when you buy real estate you are going to need to have a home inspection completed on the home you are buying, this includes new housing, re-sale homes, condos and town-homes. The home inspector will charge you a fee. If they discover something which makes you want to cancel or if you find something on your own and want to cancel after this service was performed, they will not refund you. Typical cost of the Home Inspection $300-$600.
- The termite inspection amount – termite is a negotiated item. It used to be understood as being paid by the home owner (seller). That changed recently. If you are in escrow, you are going to want the home inspected for termites. You will pay the company to inspect the home. If you decide to cancel the deal after the termite inspection, the company will not refund you what you paid them. Typical cost of a Termite Inspection $80-$150.
- The appraisal – if you are obtaining financing, needing a loan to buy the home, your lender is going to hire and dispatch an appraiser. This protects you and the entity loaning you the money related to the true value of the home you are purchasing. Banks, nor you, don’t want to pay too much for anything, so hence this step. If you decide to cancel the transaction after the appraisal, the appraiser will not refund your money. The appraisal fee is usually charged to you by your lender. Typical cost of an appraisal is $500-750.
These are fees due upon completion and are not part of the closing costs which will be collected by escrow in order to complete the real estate transaction.
Most times, these services are performed quickly after escrow opens. Depending on the availability of the service providers and the timeframes which were agreed to by all parties.
There are also other “strategies”, which your real estate expert will speak to you about, concerning the “timing” of these inspections, if applicable.
In some cases, the aforementioned service providers will give you a “discount” for a second go around, if you cancel after the first time you paid them on a different property. In most cases they do not.
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