Sometimes You Have to Get Out of Dodge – Even in Orange County

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Sometimes You Have to Get Out of Dodge – Even in Orange County

As Much as Orange County Home Buyers Hate to do it – Cancelling Escrow May Be the Best Option

Why in the world would an Orange County Realtor like me even broach the topic of cancelling your escrow?  Because the truth is, sometimes it is the best option for you.  Here are a couple of secnarios where my clients cancelled their escrow rather than buy the house.  As gut-wrenching as the decision is – check this out to see what you would have done if you were in their shoes.

Some Reasons Orange County Home Buyers Have Cancelled This Year

The Soaking Wet, Moldy, Stinky Money Pit.  Slab leak sprung up in a vacant REO home.  It happened between the offer and the home inspection.  Carpets soaked.  Dry wall soaked.  Mold everywhere. No credit from seller – buyer says “Hasta la Vista, baby.”

Measured Smaller Than the Listed Square Footage.  This house was listed as 3200 square feet estimated by the seller.  Appraiser measured it precisely, twice – just to make sure.  Actual, physical size accouding to the tape measure was 2637 – off by about 20%.  Buyers asked for a pretty significant price reduction.  Seller said no.  Buyer said “On to the next.”

Listed as a Short Sale, Actually an A-B B-C.  B Seller demanded concurrent closes.  C Buyer’s lender cried fraud.  C Buyers said “We’re not playing along.”

Short Sale Never Approved.  Buyer has to open escrow and deposit funds in order to begin the Short Sale process.  Five months and 23 offers later, the buyer gets an accepted offer on a Standard Sale.  Cancelled the Short Sale escrow saying, “Bye Bye, now.”

What to Expect If You Have to Cancel Your Escrow

1. All parties must agree to cancel in writing.  Of course, there’s a standard California Association of Realtors (CAR) cancellation form.  With most every possible cancellation reason included.  Your Realtor will guide you (meaning, fill it out for you) in completing the form.  And all buyers and sellers on the original purchase agreement must sign.

2. The cancellation agreement stipulates the disposition of the buyer’s initial deposit.  That means the cancellation says what happens to the buyer’s money.  Whether all or part of the money is refunded to the buyer or all or part of the money is kept by the seller.  Pretty important point to agree on, wouldn’t you say?

3 Once all parties have agreed and signed, the cancellation must be delivered to escrow.  Escrow is the only party at this point who can close out the transaction properly.  (Without involving lawyers, mediators, or traffic cops.)

4. Once escrow verifies the proper authorization has been received and the disposition of funds is appropriate, they will balance out the file.  This is really important to understand.  Some escrow companies charge a cancellation fee.  Yep.  It’s true.  And sometimes the buyer’s money has been spent on Home Owner’s Association documents.  That money is gone.  In some cases, the HOA will refund the fees if the documents are returned.  Sometimes.  Other times the money has been refunded to the buyer who cancelled once the new buyer’s deposit has been received and the HOA docs have been returned – to be given to the replacement buyer.  Kind of a pay it forward move.

5. Finally, once the math is done, escrow will request a check.  Then the requested check has to be approved.  Then the check has to be printed.  Then the check has to be signed.  Then the check has to be mailed.  To the correct address.  Or not.  Then if it is sent to the wrong address, a new check has to be requested, approved, printed, signed and mailed.  All this to say, be patient if you are waiting for your refunded deposit from a cancelled escrow.  It can take a couple of days.  Or more.  Seriously.

So, there you have it.  Some reasons escrows get cancelled.  And how logisticx work out.  Not the end of the world.  Just a little bump in the road, right?

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