When making an offer, a buyer must deposit a lump sum of money (Usually 3% of the purchase price) to show the seller that the offer is legitimate. It is known as the “earnest money deposit” or EMD.
Once the seller accepts an offer, EMD should be delivered to escrow within 24 to 72 hours. The money is held by an escrow company until the deal is finalized. The buyer’s agent will inform the buyer how to make the deposit, and wiring instructions from an escrow company will be sent to the buyer by an email.
In a hot market with multiple offers on a property, buyers are usually really happy when their offer is accepted. But WATCH OUT! I want to warn you about a scam going around regarding EMD.
At a weekly meeting at our La Canada Dilbeck Real Estate office, an agent reported a chilling story. The agent submitted an offer to a property on behalf of her buyer client. The offer was accepted by the seller. While the agent was preparing paperwork, she received a call from the client. The buyer told the agent that she received an email from the agent informing that her offer was accepted and instructing her to wire earnest money deposit immediately. Wire instructions are attached to the email. The buyer was “about to send a wire” but decided to call the agent just in case.
The agent had not sent any email to the buyer after the offer was accepted. It was a fake email! If the buyer sent a wire, she probably lost the money. According to the buyer, the email looked very authentic with the agent’s photo and signature lines.
Please don’t fall to this type of scam. Always, always CALL YOUR AGENT and talk to her personally before sending any money. Your agent should CALL the escrow company and will make sure that the account number is correct.
Please ask if your agent has done business with the escrow company before. If she does not know about the escrow company, please ask her to check the license number of the company and find another agent who did business with the company. It is important.