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  1. #1
    Martin Compton's Avatar
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    Default Escrow Did Not Pay

    I submitted a demand to escrow for payment of a home inspection. Now, two months later they tell us they will not pay. The buyer failed to come up with funding apparently and the deal fell through. It was a bank owned property. Escrow says they have to return so much to the seller, i.e. bank, that there is not enough left to pay my demand. The buyer's agent and the buyer are not returning my calls.

    We do not do a lot of escrows (we charge more for escrows). On the high end business, some buyers do not want to be bothered and want it all lumped through escrow. On the entry level, an occasional buyer wants to lump the inspection payment in escrow to become part of the loan. What is the responsibility of the escrow company? I had heard that they pay all legitimate demands, and then the remainder goes to the seller, but cannot find that anywhere (using Google). Any thoughts on what can be done in this case (other that not submitting demands to escrow)?

    In the short term, I will only accept payment at the time of the inspection for bank owned, repo's, short sales, etc.

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  2. #2
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    Default Re: Escrow Did Not Pay

    If the deal does not go thru then there is no money for you. It is either the sellers money or a Realtors or title company or someones and you are the last and there is none left. I only do that on a rare occasion. When I do I have the realtor sign a paper stating they will pay if the buyer does not. The latest date for payment is either the day the deal falls apart (after the home inspection) or at closing. The buyer signs a paper sating such. The realtor paper is back up in case the buyer does not pay. This way you are not alone in chasing the money. Why would the realtor sign. This is the only time I am asked this is the realtor is calling me and asking if I will do it.

    I charge bottom line, 75.00


    Oh yeah. The only one you can go after is your client if the deal does not go thru with the purchase. Unless the realtor or someone else also signed a back up plan.

    Ted Menelly, Castle Home Inspection Services
    www.inspectmycastle.com
    Fort Worth, Keller, Southlake, Plano, Flower Mound, DFW, TX

  3. #3
    James Duffin's Avatar
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    Default Re: Escrow Did Not Pay

    Take them to small claims court. I have done it once for a bad check and getting ready to it again for none payment. It is very easy and you will win what you are owed plus court cost and interest. The hardest part is collecting the money. If they do not pay, a judgment will be put on their credit reports. When they try to borrow money they will become your friend.


  4. #4
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    Default Re: Escrow Did Not Pay

    Quote Originally Posted by Martin Compton View Post
    I submitted a demand to escrow for payment of a home inspection. Now, two months later they tell us they will not pay. The buyer failed to come up with funding apparently and the deal fell through. It was a bank owned property. Escrow says they have to return so much to the seller, i.e. bank, that there is not enough left to pay my demand. The buyer's agent and the buyer are not returning my calls.

    We do not do a lot of escrows (we charge more for escrows). On the high end business, some buyers do not want to be bothered and want it all lumped through escrow. On the entry level, an occasional buyer wants to lump the inspection payment in escrow to become part of the loan. What is the responsibility of the escrow company? I had heard that they pay all legitimate demands, and then the remainder goes to the seller, but cannot find that anywhere (using Google). Any thoughts on what can be done in this case (other that not submitting demands to escrow)?

    In the short term, I will only accept payment at the time of the inspection for bank owned, repo's, short sales, etc.
    It is a lesson learned.

    This is a perfect example of why home inspectors should take credit cards and not a participate in getting paid at closing. In our profession I can think of no reason that a client should not pay at the time of the inspection, either by credit card, check or cash. If they don't have enough cash on hand to pay for the home inspection, they shurley don't have enough to buy a new home!

    I have heard every excuse of why home inspectors don't take credit cards. The most common is the cost associated with it! This is pure bunk. Every single penny that you pay to the credit card service is deductible as a business expense.

    I just looked at my cc statement (I use Costco's program) and for the month of June I had $980 in charges and the fees were right at $29. The money was in my account two days after I entered the charges on my computer.

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  5. #5
    James Duffin's Avatar
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    Default Re: Escrow Did Not Pay

    Unless you have a real time wireless CC terminal, CC's can bounce just like a check. My pay at escrow has got me more business than what I have lost by doing it. I am currently owed $2700 to be paid at closing. The lawyer check is better than a personal check in my opinion. But I am wrong most of the time!


  6. #6
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    Default Re: Escrow Did Not Pay

    I agree with James about "Small Claims Court." Only once did a title company attempt to stiff me with pretty much the same story they gave you. Two days after they received service their check arrived.
    However, if I where home inspecting today I'd be taking credit cards for those who claim they forgot their check books and add a service fee on for good measure. Once in a while somebody asked if I would take cash? My reply was invariably, “cash is always in good taste.” ***
    For those that may have forgotten please find and read Brian’s "The Cost of Doing business" or some title like that. By and large home inspectors are no better at figuring their overhead then builders. Something about a genetic weakness I've been told.

    *** How many home inspectors maintain a safety deposit box at their local bank?

    Jerry McCarthy
    Building Code/ Construction Consultant

  7. #7
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    Default Re: Escrow Did Not Pay

    Jerry

    "*** How many home inspectors maintain a safety deposit box at their local bank?"

    You did mean a retirement box at the bank, right?

    Ted Menelly, Castle Home Inspection Services
    www.inspectmycastle.com
    Fort Worth, Keller, Southlake, Plano, Flower Mound, DFW, TX

  8. #8
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    Default Re: Escrow Did Not Pay

    Quote Originally Posted by Jerry McCarthy View Post
    *** How many home inspectors maintain a safety deposit box at their local bank?
    So that's where you keep you millions stashed away?

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  9. #9
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    Default Re: Escrow Did Not Pay

    Quote Originally Posted by Martin Compton View Post
    The buyer failed to come up with funding apparently and the deal fell through.
    Billing to escrow only works when the deal goes through. When it does not, there is no escrow to pay the HI out of.

    Should be a lesson learned.

    On the high end business, some buyers do not want to be bothered and want it all lumped through escrow.
    There is no reason "high end" should go to escrow. Simply tell them up front that payment is due at the time of the inspection and report, and then ask for that payment at that time.

    Most of my business was "high end" and never once did any of my clients think about 'bill to escrow'.

    I had heard that they pay all legitimate demands, and then the remainder goes to the seller, but cannot find that anywhere (using Google).
    There is really nothing in escrow until the deal closes, at which time it is divvied up between the bills needing to be paid. When it does not close, the money either goes back to the buyer or the seller (depending on why it did not close and what was in the contract), and, in some cases, the agents may get some it. "It" meaning the earnest money deposit, there is nothing in escrow other than that until the mortgage is made.

    (other that not submitting demands to escrow)?
    Other than not submitting to escrow? That's what we are telling you - you submit to escrow, you take a chance on not getting paid. Get payment at time of inspection. Cash (still accepted, as Ted said), check, credit card (as Scott said). Heck, sometimes even 'the first born' might work.

    In the short term, I will only accept payment at the time of the inspection for bank owned, repo's, short sales, etc.
    "In the short term" - make if for "the long term" too. That is your best best.

    Last edited by Jerry Peck; 07-20-2008 at 03:47 PM. Reason: to fix a quote box
    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  10. #10
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    Default Re: Escrow Did Not Pay

    " Cash is Always Nice. '

    It Might have Choked Artie But it ain't gone'a choke Stymie! Our Gang " The Pooch " (1932)
    Billy J. Stephens HI Service Memphis TN.

  11. #11
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    Default Re: Escrow Did Not Pay

    Only once did I let a client "pay at escrow" and, that client was the sister of a real estate agent that sought me out.
    I did get paid but, until closing, I wondered.
    I set up a PayPal account that accepts all Credit cards and charges me 3% per transaction.
    Even personal checks are iffy.
    When they call for an appointment, I tell them that payment is due at the time of the inspection and, for their conveniance, I accept Credit cards. Just go to my web site, click on "pricing", select the amount, click and pay.
    I'd rather they pay via PayPal. The money is usually in the account a couple of days before the inspection.

    Your mileage may vary......

    Critical Home Inspection Services
    www.Home2Spec.com

  12. #12
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    Default Re: Escrow Did Not Pay

    You know. I never met this guy called Escrow anyway, I am not sure I like the idea of depending on someone I do not know especially when he had nothing to do with the inspection.

    A lot of folks that responded to this and have differing opinions (go figure)

    My opinion is do not trust someone you never met like that guy Escrow. Where is he from anyway Guatemala or some place out of the country. That guy Credit Carde' is not bad either with the exception that I don't take to much money from that guy so by the time a pay the monthly minimum fee and percentage it just doesn't add up.

    Why is it anyway that when it comes to home inspectors people have a hard time finding that cash. They have a starter put in there car and an oil change they seem to come up with the cash quick enough to get there keys back.

    Don't let them fool you. You are inspecting there largest single purchase of their life. They have or can get the cash. Why should you be the one to wait and possibly left holding the bag. If they cannot afford to pay you, they should not be buying a home. They will be out of it faster than they got in.

    Ted Menelly, Castle Home Inspection Services
    www.inspectmycastle.com
    Fort Worth, Keller, Southlake, Plano, Flower Mound, DFW, TX

  13. #13
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    Default Re: Escrow Did Not Pay

    Since they don't want to pay you until closing, I guess that means they shouldn't have a problem waiting until closing to get their inspection reports.

    We commit to getting our clients reports in a timely and definitive manner. We have the right to expect payment in a timely and definitive manner as well............at the end of the inspection.

    I'd sooner not take a job than agree to payment at escrow. There are too many variables that can result in no payment.


  14. #14
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    Default Re: Escrow Did Not Pay

    Escrow payments are not common here.

    I can't imagine not getting paid if the house doesn't close?
    Does that mean you don't get paid if the client backs out due to discovery issues at the inspection??

    That doesn't sound like a very good way to do business and could also be an ethics issue?


  15. #15
    Martin Compton's Avatar
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    Default Re: Escrow Did Not Pay

    Thank you for all of your input. After 1300 inspections, I finally had a payment problem. Lesson learned.


  16. #16
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    Default Re: Escrow Did Not Pay

    Quote Originally Posted by Nick Ostrowski View Post
    Since they don't want to pay you until closing, I guess that means they shouldn't have a problem waiting until closing to get their inspection reports.

    Nick,

    That's an excellent response when someone wants to bill to escrow.

    Client: My agent told me you will bill escrow, you will get paid then.

    HI: Sure, no problem, I will give the report to you at closing too.

    Client: Wait! That's not what I meant.

    HI: It isn't? I already told you that the inspection fee is due at the time of the inspection and report. If you want to wait until closing to read what might cost you an arm and a leg, so be it.

    Client: No, I mean I want the report now, you will get paid at closing.

    HI: No. You don't get it do you. *YOU* do not want to wait for the report, *I* do not want to wait for payment. That's my policy.

    Client: No, you don't understand ...

    HI: I do understand clearly. Thank you, and have a good day. Good Bye. (then hang up the phone - if they have not *gotten it* by then, you are only looking to get screwed by the later, *NO* inspection is worth that much)

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  17. #17
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    Default Re: Escrow Did Not Pay

    What JP is in effect saying in so many words is the age old expression, "no tickee, no laundry."

    Jerry McCarthy
    Building Code/ Construction Consultant

  18. #18
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    Default Re: Escrow Did Not Pay

    I call in my credit card payments and get an authorization number right then. I can do it with a cell phone right at the inspection.

    I will not take payment at escrow - PERIOD!!!!!


  19. #19
    Kevin Barre's Avatar
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    Default Re: Escrow Did Not Pay

    While I sympathize with a brother HI not getting paid, I can only offer advice based on what I do. I run a one-man show. I suspect that a lot of you do also. Literally. I do everything from the inspections and client relations to carrying out the trash. Keeping track of who has paid and who hasn't is not high on my list of favored time-wasting activities.
    I email my reports, so I tell my clients up front that payment is due on-site after the debriefing is completed. Since I send the reports via email AFTER the walk through is done, I won't see the client again. If the client isn't on-site, I tell them to forward a check to their agent to present to me at the time the inspection is done.
    I have no secretary or other helper to chase down payment, and I sure don't want to have to do it myself. In ten years at this, no one has complained enough to matter to me. I have had, on average, maybe 2 calls a year from prospects who apparently reject me since I don't take plastic. Guess what? I suspect that these folks would be likely to have the charges declined anyway. If you can't pony up a few hundred $$$ for an inspection, you probably shouldn't be buying a home.

    My advice? Eliminate the escrow idea and get paid when you do the job if at all possible. That said, it is possible that practices in other areas differ, and maybe collecting at closing is a necessity. If that's the case, add a surcharge to your fees to cover the extra time and aggravation. Also, tighten up the wording on your contract to protect you in the event that the deal falls through.


  20. #20
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    Default Re: Escrow Did Not Pay

    90% of mine is paid at escrow. Been paid om time 99.5 percent of the time. Period!

    Your mileage may vary...


  21. #21
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    Default Re: Escrow Did Not Pay

    Quote Originally Posted by James Duffin View Post
    90% of mine is paid at escrow. Been paid om time 99.5 percent of the time. Period!

    Your mileage may vary...
    Cool James

    Is the truce off yet

    Just kidding

    Seriously that is cool. I have never heard such great percentages of no problems with escrow. You be the man. It has to be a pain in the butt keeping track of all that money outstanding all the time.

    I just have a quiet comfortable policy with my clients that they pay me. I never have questions other than how I want to get paid, cash or check. That is what they offer. I have one in hundreds that asks for check at escrow. Obviously you must be marketing as such. I am happy it works well for you.

    Ted Menelly, Castle Home Inspection Services
    www.inspectmycastle.com
    Fort Worth, Keller, Southlake, Plano, Flower Mound, DFW, TX

  22. #22
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    Default Re: Escrow Did Not Pay

    I started getting more business once I started paying the small fee for accepting plastic.

    Inspection prices were adjusted accordingly.

    No inspection agreement - No inspection.

    No payment - No report.

    Life is much simpler.

    I don't want to spend time being a bill collector or spend time tracking "due at closing".

    To each their own.

    I wish y'all much success.

    Erby Crofutt, Georgetown, KY - Read my Blog here: Erby the Central Kentucky Home Inspector B4 U Close Home Inspections www.b4uclose.com www.kentuckyradon.com
    Find on Facebook at: https://www.facebook.com/B4UCloseInspections

  23. #23
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    Default Re: Escrow Did Not Pay

    Like Erby, I started getting more business when I started taking plastic.
    A lot of my clients are from out of town and are not here during the inspection. While e-mail and fax is fine for contracts, sending a check is not as easy.
    Then there is the business I pick up because I take credit cards. The people that may be cash poor at the time of the inspection. I think a lot of them are stretched to the limit when all this is going down, ernest money, deposits, pay for this and that, etc, and would prefer to put it on a card instead of using their cash reserves.

    My wife uses her debit card almost all the time and rarely writes a check. I can see why lots of people do the same. When someone hands me a card, I don't know if it's a debit card or a credit card, they process the same for me.


  24. #24
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    Default Re: Escrow Did Not Pay

    Quote Originally Posted by James Duffin View Post
    Unless you have a real time wireless CC terminal, CC's can bounce just like a check. My pay at escrow has got me more business than what I have lost by doing it. I am currently owed $2700 to be paid at closing. The lawyer check is better than a personal check in my opinion. But I am wrong most of the time!
    In ten years I have never had a cc bounce back and I have never had a wireless terminal. I use my office computer to input the cc information. About 50% of the time I have the cc information on hand before I go to the inspection. The rest of the time I collect the information from the client at the inspection. Return back to the office, input the information before I start the report. If it does not go through I call the client and ask them for another card, check or whatever. I think this might have happened a couple of times in ten years.

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  25. #25
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    Default Re: Escrow Did Not Pay

    I do CC through Costco just like Scott. Having a credit card get rejected from a homebuyer is almost unheard of. How are they qualifying for a home loan if their cards are getting declined?

    I've had a couple get rejected but it's usually just a clerical thing (wrong number, out of country card, etc). I'd rather not pay the fees but Costco is the best deal you'll find and, as a percentage of the entire fee, it's really not much.

    We will bill to escrow occaisonally but charge $50 to do so... I'm starting to think we should charge more. I've had a couple not go through over the years and had to collect from people.

    The small claims court/judgement route works pretty well. I've never had anyone respond or show up for court. I have three outstanding judgements gaing 9% annual interest. They'll call someday. Once you have a judgement you can also garnish a bank account or wages from an employer if you can find them. That takes a bit more time and effort so I'm happy to sit back and collect the interest for now.

    If/when we do bill to escrow we ALWAYS get a signed contract from the client stating they'll pay. That way if escrow pays, good for them. If not, they're responsible.


  26. #26
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    Default Re: Escrow Did Not Pay

    Quote Originally Posted by Matt Fellman View Post
    I do CC through Costco just like Scott. Having a credit card get rejected from a homebuyer is almost unheard of. How are they qualifying for a home loan if their cards are getting declined?

    I've had a couple get rejected but it's usually just a clerical thing (wrong number, out of country card, etc). I'd rather not pay the fees but Costco is the best deal you'll find and, as a percentage of the entire fee, it's really not much.

    We will bill to escrow occaisonally but charge $50 to do so... I'm starting to think we should charge more. I've had a couple not go through over the years and had to collect from people.

    The small claims court/judgement route works pretty well. I've never had anyone respond or show up for court. I have three outstanding judgements gaing 9% annual interest. They'll call someday. Once you have a judgement you can also garnish a bank account or wages from an employer if you can find them. That takes a bit more time and effort so I'm happy to sit back and collect the interest for now.

    If/when we do bill to escrow we ALWAYS get a signed contract from the client stating they'll pay. That way if escrow pays, good for them. If not, they're responsible.

    If you bill to escrow and you take CC's you might try also getting the CC number and information as a deposit in case it does not close. If the house does not close then charge the card number on file for the amount!

    Scott Patterson, ACI
    Spring Hill, TN
    www.traceinspections.com

  27. #27
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    Default Re: Escrow Did Not Pay

    Your problem is that the Escrow Co. Had no instructions to pay you!
    you were just a bill sent to them.
    If they do not have instruction then escrow is not under contract to pay.

    If every HI Requested instruction to be put into Escrow then every HI would get paid.

    Bottom line. NO INSTRUCTION = NO PAYMENT.

    Always request Escrow instruction.

    Best

    Ron


  28. #28

    Default Re: Escrow Did Not Pay

    I read each and every comment. The most accurate reply you received was the old Chinese philosophy! "No tickee no laundry."

    After running a large operation for years, billing clients when necessary, we had a very large (more than many of you earn in a year) accounts receivable. Collection was a problem. We chose to change to the following: "We REQUIRE payment at the time of the inspection. We take cash, check or money order. If we finish and have not been paid the report will be produced and held until we receive payment."

    This was an overnight change with no advertising or adjustment period. Closed the old way on Friday and started the new way on Monday. Never missed a beat, never had to chase a client again. In the 12 years of that new policy we probably had a dozen bad checks and maybe lost two or three fees. Your client gets paid every week/month. You need to get paid when you do your job as well. Screw escrow. Go to payment at the inspection and you will never look back.


  29. #29
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    Default Re: Escrow Did Not Pay

    John,

    You know the answer to this, I am sure, I remember reading it years ago:

    The cost of money as it ages.

    To my best recollection, the 9% annually mentioned in a post above does not even cover the 'lost value of money' 30 days old. Then you have the cost (lost value) at 60 days, 90 days, 120 days and beyond that there is little value left in that money.

    I just don't remember what the numbers were. Maybe that will open some eyes.

    Jerry Peck, Construction / Litigation Consultant
    Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
    www.AskCodeMan.com

  30. #30
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    Default Re: Escrow Did Not Pay

    I agree John, I used to get paid quite often through the title company in the small town where I started inspecting since it was expected. Only two or three title companies in town and it worked pretty well. I change policy when I moved and have only made a handful of exceptions and guess which fees I have had to run down, spend hours on the phone and some I am still waiting on? Yep, the ones that "needed" to go through escrow or that needed to pay me the next day, etc. Cash, check or Credit card on the barrel head.

    Jim Luttrall
    www.MrInspector.net
    Dallas, Texas

  31. #31
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    Default Re: Escrow Did Not Pay

    Tracked my last 50 inspections, 39 of them paid with credit cards.

    Your mileage may vary as the saying goes.

    rick


  32. #32
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    Default Re: Escrow Did Not Pay

    You know, I took credit cards for a while, a short while. I was curious if it would bring a steadier cash flow in. Business stayed the same, it did not pick up. What happened was I received the same amount of calls and booked the same amount of work. Oh yeah, what also happened was now I had credit card fees. I just did not receive any benefit from it at all. Well, a slight convenience.

    Cash or check, which wood you prefer?

    Ted Menelly, Castle Home Inspection Services
    www.inspectmycastle.com
    Fort Worth, Keller, Southlake, Plano, Flower Mound, DFW, TX

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