James T. Morrison R(S)
Be Careful with Money in Escrow
When buying a property, it is important for the buyer to put the least amount of funds into escrow as possible before closing. This is because there is a significant risk of losing that money if the deal falls through, and it can be difficult to get it back.
One of the main risks of putting a large amount of money into escrow before closing is that the deal may not go through for any number of reasons. For example, the seller may change their mind about selling the property, the property may not pass inspection, or the lender may not approve the loan. In any of these cases, the buyer would lose the money that they put into escrow.
Even if the deal does go through, there is still a risk of losing the money in escrow. For example, if the seller is unable to close on the property due to financial difficulties, they may keep the money that was put into escrow. Additionally, if the buyer decides to back out of the deal, they may lose the money that they put into escrow as well.
Furthermore, getting the money back if the deal falls through can be difficult. The process of getting the money back can be time-consuming and complicated. In some cases, it may require legal action. This can be a major inconvenience for the buyer and can add additional stress to an already difficult process.
In light of these risks, it is important for buyers to put as little money into escrow as possible before closing. One way to minimize the risk of losing money is to put no more than $10,000 in earnest money at any given time. This is a significant amount of money, but it is not so large that it would be devastating to lose. Additionally, it is a good idea to keep the money in an escrow account that is separate from the seller's account, so that the buyer can be sure that the money is safe and secure.
In conclusion, as a buyer, it is important to put the least amount of funds into escrow as possible before closing a property purchase. The risk of losing the money, and the difficulties in getting it back if the deal falls through, are significant. Therefore, it is suggested trying to put in no more than $10,000 in earnest money at any given time to minimize the risk of losing your hard-earned money.