Earnest deposit check -- how to do it

Wow pretty simple! Thanks for the great info.

Hope it helped

Yuri , so how much do you put on this check? Can they cash this "copy"?

No way they can cash it. Since we are both in Pa, I will explain how it works in out neck of the woods.

When the realtor submits the written offer, he/she has to submit a COPY of the earnest money deposit check since everything is done by fax. My realtor has a blank copy of the check for $1000.00 with only my signature. Say, for example, she puts in a written offer on 2 properties. One is held by Remax RE Agency and another one by Century 21 RE Agency. She takes my blank copy of the check, makes 2 copies and fills in the dates, the payable to info and the notes fields. After that is done, she is attaching that to the paperwork (probably makes ANOTHER CIOPY LOL) and sends the fax.

That's the whole trick. If you have any more questions, fell free to ask me.

Yuri
Another way to do this is to take a check to the title company and have them to hold it in escrow. They will in return write a letter stating that you have $1000 in escrow when a deal is made. That way your realtor can just attach the letter from the title company to each offer. They will know the $1000 is immediatly available upon acceptance. The acceptance has to be OK'ed by you to the title company before they release the check to anyone.
Sissy

In my area, it is not always necessary to send a copy of the check. In some cases the seller requires a copy of the check. If they don't require a copy, I don't send it. We just put in the offer what the amount will be and, in the additional comments section, say that the check will be presented to the title company when we open escrow.

Al

Do you have your agent write up offers on all the properties you target? I just have my agent make verbals and I don't inspect the home until I get an offer accepted. I guess I am following Mr. Larson's strategy all the way. I get what you are saying there with regards to earnest money but my question is this; if you offer gets accepted, when do you pay the earnest money or do you have your buyer pay it? I sure don't have that type of money to pay. I feel like I should already know this but I try to learn so much that sometimes I forget the small details. I think I need memory pills or something like that .. lol Thanks!

If the offer gets accepted, then the agent sends the check over which doesn't get cashed anyway. They hold it in case you decide to leave the contract, then they cash it (leaving meaning without merit).

Yuri

Thanks. I haven't thought of doing that. Hmmm... Sounds like a nice alternative.

Yes...it is much safer for you and easier for your realtor to just attach a letter from the title company letting each person know that the money is there and ready upon acceptance.

Title companies here do cash the check and deposit it into an escrow account.

Al

so one person says yes , the other says no . I just signed my first contract( nerve wrecking) and gave a 100$ deposit to by agent. I had intended to put in the contract "earnest money to be paid within 14 days" but my agent told that is illegal in PA or is not a formal offer. He then said that he would give the $100 to the listing agent who would put it in an escrow account. Doesn't it need to be cashed to be put in escrow? I am going to call coaching and sort this out once and for all. Thanks!

If you could post your coaches response, that would great! I am also wondering how to do this. I don't have the money to give, so if there isn't a legal contingency, how can I do this?

Thanks!
-Mike

Maybe it's just me but I find giving a signed blank check to anyone is a risky move. Who's to say you're agent can't put whatever number he/she wants close shop and get out of town? Not to mention if he/she works in an office with other people and they happen to find a blank check lying around they can just fill it and cash it for themselves...I think the title company idea is better and safer. It could be my paranoia talking since a couple of years ago somebody walked into H&R block with my name and asked for my tax refund and cashed it at a western union. It took months for them to give me another.

The escrow acct. is the way to go for doing a deal but when you are making offers at 100:1 then i think the copy of a check works best.Optimus brought up a good point on someone taking advantage, Still it is a copy of a check...And i mean giving your agent a copy of one of your checks signed.Like Yuri said,It will be faxed over!

Yuri said she would give an actual check to the realtor and then he/she would make copies of it when submitting offers...I couldn't do that. Can the same be done by having a signed "proof of funds" letter?

I have been reading posts and replys on this site since the first week of Jan.09 and there is one thing i have learned...There is always a way to get over the hurdle,Then again REI just will walk around because of our info!Alot of the time the greatest hurdle can be ourself. If i am going to fax anything,The end result will be a copy.I say use a copy if it is going to be a copy after that when you truly have too come up original,Then use many of the methods available on this site thru peoples action as REI's!

He said that escrow does cash the check and holds the cash until closing. He added that it was a good idea to give a check of $100 to make the contract legal and add to that section, "$1000 to be paid within 14 days of acceptance". This means that I have to come out with $100 out of my own pocket and hopefully find a buyer within 14 days to pay $1000.

I want to say that this is what I am doing after my offer gets accepted. My agent has no problem making low ball offers verbal or by email. If your agent wants to write up offers for each offer you make , then I would just have him use copies of the same check.

Thanks for the response. So, this means that we cannot clause earnest money to be due at closing? Also, is the check returned if deal doesn't reach closing?

Thanks and good luck!
-Mike

I would double check with your state to see if you can make the contract binding if you delay the earnest money. Yes you get your money back if you have a valid clause that allows you to cancel contract.

Yes the check gets returned. However, if you break the contract, the check will not be returned to you. So be careful the way you word your contract.

Yuri

Sorry, my friend. I just read my response and I was kinda off. It was past midnight so... my apologies. What I meant to say was that my agent sends a copy with an offer. When the offer gets accepted, she calls me and I send her the real thing and she forwards it to the listing agent who deposits it into the escrow...

Sorry for being unclear. By the way, congratulations on your first deal!!! And you were afraid you couldn't do it.

Yuri

You have to trust your realtor for one small reason. If he/she screws you over, she/he has alot to lose.

On top of that, the check that she has only has about 2K in it so IF and that's a big IF, she choses to take that route, good luck!!! LOL

Yuri

Thank you both Martini and Yuri, your input is appreciated.

Where can I find out whether or not a contract would be legally binding, while delaying earnest money?

Thanks and good luck!
-Mike

Yuri,
The earnest money that you are talking, you said they never cashed in. Is this what they call "show off money"?

If you are talking about proof of funds, then no. This is not what that is. I misspoke. They do cash it and put it in the escrow until the closing, unless you put different stipulations in the contract.

Yuri

It has finally dawned on me, If i bring the better system of buying and selling property i will win the game!The money just comes with the winning way to buy and sell property,Simple is always the best way.DG ways are very good,I just will not limit myself!I truly think the game is moving forward and my stepping stone was buying a DG RE book.I am the type of person that will give what i get...I get something worth sharing,You can count on it!
I feel the way to do any deal in any market climate...Is to bring the on known! The key is in the people.