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I don't see it as a sign of anything out of the ordinary. I'm in Idaho, right next door, and it is TOTALLY normal and customary for us to have the actual physical check when the contract is written. In fact, for many years, our contract was entitled "Purchase and Sale Contract and Receipt of Earnest Money". In other words, it specifically said that by the buyer signing the contract, they were also handing over earnest money.
By state law, we have to deposit the earnest money check by the end of the business day following acceptance of the contract. So if it gets accepted at 4:00 Monday, we have to deposit by end of business Tuesday. If you work on weekdays and can't get to the bank to get the check until lunchtime Tuesday and then can't bring it to me until after work, we are already in violation of the contract. Plus, you said you live hours away. Could you even get the check to them within 1/2 a day of acceptance? Remember the office has to have time to process the check and get it to the bank.
HOWEVER, our agents can specifically write it in to the contract that EM will not be given until the contract is accepted, or even until a certain point is reached in the process, like a successful appraisal, or acceptable inspection, and some do so, especially on short sales, but that does make for a weaker offer. I also see some that say things like "Earnest Money check to be mailed to selling agent upon acceptance" if the buyer is out of town, but it does complicate things. When we get audited, the auditor wants to look at those contracts to make sure they really say that and that I didn't just forget to deposit the money on time.
My point is that this may be totally normal practice for your state. It is in mine.
I don't see it as a sign of anything out of the ordinary. I'm in Idaho, right next door, and it is TOTALLY normal and customary for us to have the actual physical check when the contract is written. In fact, for many years, our contract was entitled "Purchase and Sale Contract and Receipt of Earnest Money". In other words, it specifically said that by the buyer signing the contract, they were also handing over earnest money.
By state law, we have to deposit the earnest money check by the end of the business day following acceptance of the contract. So if it gets accepted at 4:00 Monday, we have to deposit by end of business Tuesday. If you work on weekdays and can't get to the bank to get the check until lunchtime Tuesday and then can't bring it to me until after work, we are already in violation of the contract. Plus, you said you live hours away. Could you even get the check to them within 1/2 a day of acceptance? Remember the office has to have time to process the check and get it to the bank.
HOWEVER, our agents can specifically write it in to the contract that EM will not be given until the contract is accepted, or even until a certain point is reached in the process, like a successful appraisal, or acceptable inspection, and some do so, especially on short sales, but that does make for a weaker offer. I also see some that say things like "Earnest Money check to be mailed to selling agent upon acceptance" if the buyer is out of town, but it does complicate things. When we get audited, the auditor wants to look at those contracts to make sure they really say that and that I didn't just forget to deposit the money on time.
My point is that this may be totally normal practice for your state. It is in mine.
I'm also in Idaho and what my broker has us do if it isn't to be deposited/cashed until acceptance, is to leave it in a locked file cabinet in the office. The agents are not allowed to carry someone's check around with them. We don't have an issue with lost checks this way. Maybe ask if something like this can be worked out.
I won't be dealing with this agent anymore. I don't think this has anything to do with local state laws or practices as another agent from the same state told me that a copy of the check should suffice, just a matter of distrust towards me. Since it's cashier's check I wouldn't give it to anyone--I can mail it in FedEx to be deposited, as selling bank requires. It's easier to me to mail the check in, then to give to someone without knowing I'm going to be the winning bidder on this property.
Location: When you take flak it means you are on target
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You usually just give a copy of the check. If the Realtor wants an actual check ask why. Las Vegas has a LOT of unscrupulous Realtors. I had one try to charge me $200 per unit on a 5 property deal for "scanning and digital storage." $1,200 - I nixed the deal over that - told them I'd have my secretary scan the docs for free and give them a 10 cent CD.
Las Vegas isn't known as Sin City for nothing. CYA when doing anything there.
We gave the builder a portion of the down payment amount in an email scan followed by an actual check to hold the property we were considering. We ended up backing out and taking some more time to think. They returned the check with no questions asked, I am sure experiences with different builders/states would differ.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Quote:
Originally Posted by alexxiz
I won't be dealing with this agent anymore. I don't think this has anything to do with local state laws or practices as another agent from the same state told me that a copy of the check should suffice, just a matter of distrust towards me. Since it's cashier's check I wouldn't give it to anyone--I can mail it in FedEx to be deposited, as selling bank requires. It's easier to me to mail the check in, then to give to someone without knowing I'm going to be the winning bidder on this property.
I wouldn't even present your offer without having the check in my hand! It's called earnest money for a reason. An offer is not an offer without "consideration", which is your check.
The check is made out to the title company anyway (at least around here as I don't want to have the obligation of maintaining a trust account). Given your apparent reticence to produce earnest money up front, I doubt I would consider you a serious buyer.
I wouldn't even present your offer without having the check in my hand! It's called earnest money for a reason. An offer is not an offer without "consideration", which is your check.
The check is made out to the title company anyway (at least around here as I don't want to have the obligation of maintaining a trust account). Given your apparent reticence to produce earnest money up front, I doubt I would consider you a serious buyer.
Yes. No check, no bona fide offer. Our NCAR standard form says the EMD is included "...with this offer..."
However, we DO have real estate firm trust accounts, and the NCAR Offer/Contract identifies the "Escrow Agent" and the attendant responsibilities and accountability for that role.
It usually is the listing firm, but may be the selling firm, or may be a closing attorney.
In my area, it is the selling brokerage who holds the money about 90% of the time. We occasionally get one that wants the title company to hold it, or who lists the listing broker as the responsible broker, but it is the selling brokerage at least 90% of the time.
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