Monday, August 22, 2016
1. From a seller's perspective is it better to have the buyer's escrow deposit held at the seller's title company?
2. From a buyer's perspective, is it OK for the deposit to be held at the seller's title company?
3. From an agent's perspective, is there a good reason for not holding the escrow deposit in a real estate broker's escrow account?
Answers: All three, a resounding NO
This quiz was prompted by another instance this past weekend of a seller's agent requesting that the buyer's escrow deposit be held at the seller's title company. This has become more frequent over the years as more and more brokers stopped maintaining escrow accounts because of the hassles of reconciliation and Draconian oversight. To understate, they are a big pain in the butt, but worth it for the clients' protection.
Our local Association of Realtors made a mistake last year in a revision of the MLS listing entry form and added a listing field for "Escrow Agent". It has always been customary in Florida for the seller to select the title company as they usually buy the owner's title policy for the buyer. What has not been customary is for the seller to select the holder for the buyer's escrow deposit. As soon as this field appeared, rookie and experienced agents alike began demanding that buyers hold escrow with the title company or attorney named in the "Escrow Agent" field. Some of them did this out of ignorance and lack of experience. Others wrongly assumed that it was required since it was a part of the listing.
Our MLS committee corrected the entry form two weeks ago to "Closing Company" to relieve the confusion but some agents are still dangerously requesting escrow deposits to be held by a title company. Why does it matter?
It only matter if the sale falls apart and there is a dispute over the deposit. Most title companies and attorneys will not disburse escrow deposits unless both parties have signed a release and cancellation. A buyer can cancel in good faith under the terms of the contract and be entitled to return of the deposit but if the seller refuses to sign a release and cancellation, the title company will probably not return the deposit to the buyer. From the Florida Association of Realtors :"Ask an Attorney" forum.
In most cases, a title company will require clear written instructions from both parties before releasing the deposit. If the parties can’t provide matching instructions within a reasonable period, the title company will likely deposit the funds with the local clerk of courts, and either party may then file a court case to argue why they believe they’re entitled to the deposit.
Under the same circumstances, if the money is held in a Florida real estate broker's escrow account, there is a free dispute resolution process. The broker holding escrow may request an Escrow Disbursement Order (EDO) from the Florida Real Estate Commission (FREC). They will review the facts and issue an order for disbursement of the funds based on their findings. No cost to either party. Holding escrow in a broker's escrow account is not a casual recommendation on my part. I have been involved in escrow disputes and, in every case, thankfully, the dispute was resolved for free by FREC. Agents who have not been involved in a dispute are likely to have a more cavalier attitude towards it.
Our takeaway: Barring unusual circumstances, it is always safer for the seller, the buyer and the agents involved for a buyer's escrow deposit to be held in a Florida real estate broker's escrow account. Listing agents reading this, be happy that I am willing to hold the buyer's deposit in our escrow account. You and your client are more protected. Buyers and sellers reading this, if your agent recommends the title company hold escrow deposit ask one question; "Why?"
"I wanted to be a comedian." __Kelly Slater
Saturday, August 13, 2016
The little turtle pictured hatched early in the morning (not a good time) in south Cocoa Beach and was just making his way to the ocean as the sun was rising. There was a flock of crows picking off stragglers but with a little human scarecrow action this one made it safely to the ocean for his first day of life.
We entered August with an inventory of just under 250 total condos and townhomes for sale in Cocoa Beach and Cape Canaveral. That's the number of units that have closed since early April this year. The demand/supply imbalance continues to pressure prices higher. Lacking some unforeseen macro event I see nothing to reverse this trend.
Our depleted inventory is part of the aftermath of the bust in 2006-07. When prices fell off the cliff then we had a tremendous amount of supply force-pushed forward. Many people who may have been planning to sell their properties a few years down the road suddenly found themselves upside down (owing more than the property was worth). The decision became; wait it out and hope the value returns soon, sell for a loss, do a short sale or let the bank take it back. Those that decided to wait it out, in some cases, are still waiting almost a decade later. The majority chose to dispose of their properties before it got any worse. The result for us in 2016 is low inventory because some of what would have been for sale this year was forced onto the market years earlier.
Many of those who decided to wait it out are still waiting. A unit at Magnolia Bay that closed last month for $435,000 was pre-construction priced in 2005 at $589,900. Another unit in the same building that closed in July for $530,000 had a pre-construction price in 2005 of $769,900. The story is the same in the older buildings. A unit in the 43 year old Villa Vista building on Ocean Beach Blvd. sold in 2005 for $367,500 and was then totally remodeled. Even with the remodel it sold last month for $242,000, 2/3 it's price 11 years ago. And, the granddaddy of extremes was a small 1/1 condo a couple of blocks from the beach in Cape Canaveral that sold last month for $55,000 after last selling for $142,000 in 2007.
I give these examples for those who are concerned about prices. Our increase has been healthy and orderly since bottoming out about five or six years ago. Bargains relative to peak prices are still being had as long as buyers can accept that they missed the absolute bottom. I see current prices in our slowly rising market with an abundance of demand as attractive. Long-time readers know I have no reservations calling it the other way if or when I see it.
I heard Bob Iger of Disney say this past week that he is not concerned with any impact from Zika fears to their Florida businesses. Maybe they're immune but I have lost $795 so far from Zika concerns. A pregnant guest cancelled a reservation on advice from her doctor not to travel to "anywhere in Florida". I agree with his "safer than sorry" caution and hope the few number of cases will be confined to the small area in Miami where the only Florida cases have shown up. Luckily we don't see many if any mosquitoes of any kind oceanfront in Cocoa Beach. The sea breeze does more than cool us off on hot days.
Two weeks until snook season opens and, on an unknown date but soon, the mullet run begins. Get the surf fishing gear ready for the best beach fishing of the year.
What's the deal?
Spin the wheel
If the dice are hot...take a shot
Play your cards. Show us what you got
What you're holding
If the cards are cold
Don't go folding
Lady Luck is golden
She favors the bold.
__________________Roll the Bones by Rush