Don't let your earnest money check blow your transaction!

Real Estate Agent with Keller Williams Realty Coeur d'Alene AB37665

Janna Rankin Scharf, CLHMS, GRI, SFR - Homes for Sale in Coeur d'Alene

I had an interesting conversation the other day with a lender friend.  He mentioned that lately he has seen some purchases fall apart in the 11th hour due to the earnest money check.

Underwriters have long been verifying that the earnest money check written when the purchase contract was presented has cleared the bank. 

What's new is that now they are also verifying that the earnest money check
was actually written on the purchaser's account.  As opposed to a friend or relative's account.

Some mortgages require that buyers NOT receive gift funds.  Or that buyers contribute a specific amount towards the down payment, which would include the earnest money deposit.  When they discover that the earnest money check was not drawn on the buyer's personal account, the deals have imploded.

As underwriters tighten their requirements and crank up their scrutiny of everything, it's smart to pay close attention to the little things that can cause big problems.  There are some surprises that AREN'T fun to receive!

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Janna Rankin Scharf provides a superior level of real estate service to home buyers and sellers in Coeur d'Alene and Kootenai County, Idaho. Visit for area information and to search for all homes in the Coeur d'Alene Multiple Listing Service. 

No matter how grand or modest your real estate dreams may be, you can turn to me in confidence.  Give me a call today so I can  be of service to you!

Janna Rankin Scharf AB, GRI, CLHMS, PMN, SFR  208.651.9700

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Marchel Peterson
Results Realty - Spring, TX
Spring TX Real Estate E-Pro

Janna, I had not heard this before but it is good information to know.  I had a real estate friend who literally took who son's earnest money out of their safe and it almost blew the transaction.

Apr 17, 2011 01:36 PM #1
Robert J. Russell
Robert J Russell Companies - Flower Mound, TX
IRES, ICREA, GMA, LAS, LUTCF, Insurance Broker

Good topic about Earnest money - not alot of posts show up on Active Rain about Earnest Money or even Termination Option Fee - was glad to read this.

Apr 17, 2011 01:36 PM #2
Virginia Hepp - Mesquite NV REALTOR
ERA - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS

Seems like a small thing at the time, but NO.

Not just a check, make sure that a wire transfer comes from the right account, too.

Apr 17, 2011 02:23 PM #3
Robert Smith
Preview Properties, PC - - Brighton, MI
SRES, Search for Homes Brighton-Howell-SE Michigan

Lenders that I've worked with in the last year or so are very picky about EMDs.  I had one client that didn't have a checking account. He did everything by debit card and electronic banking. We needed a bank statement to prove that he withdrew the money for the cashier's check EMD from his own account. 

Apr 18, 2011 02:24 PM #4
Respect Realty LLC
Respect Realty LLC - Milwaukie, OR
Brokers - Oregon / SW Washington Real Estate

I've always told my clients that the earnest money funds have to come from their account for this exact reason. I don't mind if the down payment is a gift as long as it is written in the pre-approval letter and the mortgage person knows about it.

May 03, 2011 07:18 AM #5
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