Expert: David Beckett - 2/24/2004

Question
Hi,

I have three questions.

1.  We're making an offer on a property in Moretown, Vermont.  Earlier, when we spoke to some agents about other properties, we were told that written offers usually go with a "good-faith" deposit of $1,000.  The broker here is asking us to send him a check for $20,000 with the written offer.  We will be closing quickly and can pay all cash (we can then get a mortgage later).  He says when it's an all-cash deal, more money is required and that $20,000 is appropriate.  I'm confused about the disparity between what we were told before and what we're being told now.  Is $20,000 a reasonable amount to send with a written offer, prior to lawyer review?

2.  Back in January (we were considering a property in Monkton), I asked you for recommendations of real estate lawyers in the Burlington area.  You were kind enough to send me a great response, which I thought I saved, but it's no longer available on AllExperts.  Could you possibly send me that information again--this could broaden also to lawyers in the Montpelier area.

3.  Can you recommend good housing inspectors in the area?

Thank you so much.

Vivien

Answer
Hi Vivien -

First, Attorneys:
You'll want to use a LOCAL attorney who won't need to charge you extra to travel to do the title search etc. Somebody who really knows his/her way around the Town offices in the town you're buying the home in. I called the VT Bar association who referred me to either David Grayck at 223 4000x305 or Mary Just Skinner at 229 0200 for Montpelier.
For Monkton and the greater Burlington area, I'd use Susan Buchanan at 879 6323, or I'd use Don Maddocks at 872 8200.

I always tell people to ask if they can offer you a package price (policies change at companies from time to time...so please call) - you don't want to pay by the hour for this!

Now - Inspectors: Call Jim Murphy at 897 2672.  Call Bill and Edie Carnright at 1 800 660 9951. Call Greg Kelsey at 655 1600. Ask what they'd charge for an inspection in the town you settle on, and ask exactly what they'll do and what they'll charge.

Now - the interesting part: You may be getting varying guidance because you're asking various real estate people, who may have different roles to play. If the guy asking for $20,000 contract deposit is the listing agent, he's legally representing the SELLER, not you. If he knows you're cash buyers, he's simply trying to procure the most advantageous offer for his sellers. Just keep in mind who represents who.
There's another reason for the huge disparity: It's because there's no "usual" contract deposit. But the more money the prospective purchaser offers to place in escrow, the more serious the buyer looks. Hence the phrase that's often used for a contract deposit: "earnest money".
I've been at closings at which the initial contract deposit was as little as $500. and at many more in the 1-5 thousand dollar range.
The agent says "When it's an all cash deal, more money is required..."? Oh really...? "Required by who"? would be my response. This makes no sense to me, because a cash offer makes YOUR offer much more valuable to the sellers (because you're not asking for the right to terminate the contract if you're denied financing). Why should YOU let the sellers hold more of your cash if you're not asking them to hold thier breaths waiting to see if you're finally approved by the bank? ...and keep in mind that it's the seller, not the Realtor who decides on a response to your offer. It's the seller who decides "what's required" before he/she is willing to enter into a contract for purchase and sale!

Will you permit me to make a suggestion? Pick a Realtor and stick with the agent through the process.  You'll get better service and you'll get CLIENT level service if you want it. In the MLS, properties are offered with a commission split that can be accepted by the Realtor who works with you - no matter who the Realtor represents ...YOU, or the seller, or the Broker. At the very least, when you sit down with an agent to write an offer, insist on writing "purchaser to have 48 hours from acceptance of offer for attorney review and approval".

Best of luck to you!
David Beckett