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When listing a home for sale, there are obviously many things to consider. In the last installment of this series on Understanding the Listing Contract, I will touch on how the deposit money a seller receives is handled by the Broker.

A good faith deposit is often given to the seller by the buyer in a real estate transaction. One of the main duties of a real estate Broker is to properly handle the deposit money. Paragraph 11 of the listing contract outlines how the deposit money will be handled.

The Broker for the seller will keep the buyer’s deposit in an escrow account. The money will not be released unless one of the following things happens; A) The sale is completed; B) An agreement is terminated, and the buyer and seller agree on how the deposit will be distributed, in writing; C) No action is taken by either party within a predetermined time designated to dispute the agreement; D) A court order.

The end of a defunct deal may not be the end of the trail for the deposit. The seller may be awarded the deposit but not be entitled to the whole amount. Paragraph 6 of the Listing Contract outlines how that deposit may be split between the Broker and seller. The question is whether or not the Broker is entitled to any part of the acquired deposit if the property does not settle. There are good arguments on both sides of this discussion. Deposit money distribution is something that should be agreed upon between the seller and the Broker at the signing of the listing contract.

Unfortunately not every real estate transaction ends happily. When a real estate transaction goes south, the deposit money conversation begins. In many cases, litigation and/or mediation are necessary to solve a dispute. Sellers need to be aware that if they name Broker or Broker’s Licensee(s) in litigation regarding deposit monies, the attorneys’ fees and costs of the Broker(s) and licensee(s) will be paid by Seller.

As you can see the deposit money discussion starts with the listing contract, is an integral part of the agreement of sale and can further find itself in more detailed discussions if things do not go well. I will restate, discuss how deposit money is handled before things go south. There is plenty of opportunities to do so.

I hope you enjoyed this five-part series on Understanding the Listing Contract. My goal is to help home buyers and seller make good real estate decisions. Many times that decision can be to hire the best and brightest real estate agent you can find. Trust me; they are out there.

Stay tuned for my next article which has to do with a hot topic right now, seller credit to buyers and what would happen to home prices if it did not exist?

To read parts One, through Four of this series on Understanding the Listing Contract, visit my website at

Knowledge is Power!

Jeffrey C. Hogue

Click links to read the other articles in this series:

Understanding the Real Estate Listing Contract Part 1 ~ Representation

Understanding the Real Estate Listing Contract Part 2 ~ Broker Compensation

Understanding the Real Estate Listing Contract Part 3 ~ Broker Cooperation

Understanding the Real Estate Listing Contract Part 4 ~ Marketing Property