-
Quick Tour
Connect. Share. Learn.Welcome to ActiveRain, the #1 social community for real estate professionals.- Explore the world's largest storehouse of real estate knowledge
- Access free training on ActiveRain University
- Share the experience of life in the real estate industry
- Grow your business through real estate blogging
- Blogs
-
Resources
Product Reviews Curious as to what others in your profession think about a certain product or tool? AR's community takes the time to leave honest and transparent reviews of their experiences so you can be a bit wiser about your purchase.
- Broken down by categories and subcategories for easy finds
- Get an unfiltered look at what real users are saying
- Leave a review yourself for others to benefit from
- Add new products as you use them and gain points for doing so
|
There are still a lot of listings in the MLS with the instructions to include a copy of the earnest deposit check with an offer.
Posted by 
;)
;)
;)
Find CA real estate agents and Los Angeles real estate on ActiveRain.
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
© 2013 ActiveRain Corp. All Rights Reserved
116 Comments on Include a Copy of The Earnest Money Deposit with Offer - WHY?!
John - "Negotiations take place in order to reach an accepted offer." OK - but the negotiations would take place in writing in the form of counter offers, no? An agent requesting the check is not sending a counter offer, yet asking for a change in terms of the offer.
Michael - On the listing side I request proof of funds and a prepproval letter. I then contact the lenders if I require additional information about the buyer. The other option is also to ask buyer's to preapprove with a lender that you know and trust. Do you still request a check even when the offer is written that the buyer is going to deposit funds directly to escrow?
Personally, I don't care one way or the other. It's better then those Promissory Notes we used to use and them "redeem." I like #54 response of it being proof that a check was drafted payable to escrow in the said amount. I also like to get the check upfront when I write up the offer. Once the EM check is drafted and handed to me I don't have to follow-up getting it from the client when their offer is received. Write it out now, let me put it in the transaction file, I'll send a photocopy of it with the offer and when the offer is accepted, I'll call for a escrow pick-up.
Carla - I used to find out what escrow company it was going to be and have the buyer write a check to escrow. Those checks would have to be logged into the trust register, which was fine. The main problem with REO's is that they don't tell you who the check is supposed to be written to anyway so buyer's just write "escrow". I really don't want them written to my brokerage and have to put them into a trust account, knowing full well that my client will wire funds to escrow after acceptance IF the offer is accepted. Does OR not have rules that once you take a check from your client you have to deposit into a trust account within a certain number of days? In a normal market where you are not competing with a zillion other buyers for the same few available properties it might make sense to have the buyer write a check and hand it to me. In the current L.A. market it just turns into a lot of busy work since the ratio of offers written to offers accepted is sooooo high. (apparently this is not an issue for Leslie #48 - as ALL of her offers get accepted) Me thinks our markets are a weeeee bit different!
First, the seller gets to decide the parameters of the offer so with REOs and short sales, fine, provide a copy as pointless as that is. Maybe this great post and all of the helpful comments will help educate Old School listing agents on the revised RPA in CA, and why this practice is obsolete.
Second, and this is my own pet peeve on this topic, in the CA RPA, it is a defined term called the "Initial Deposit", not the Earnest Money Deposit. In my opinion, the term EMD should not be used by CA REALTORS because it is a loose, generic term with no referenc under the RPA, yet I hear it everyday. I know other states use EMD, but when talking about the funds a buyer is required to deliver within 3 days of Acceptance, we should all start using the defined term "Initial Deposit".
Jenny, I agree with you and many others here that providing proof of funds (a/k/a "Verification of Down Payment and Closing Costs" in the RPA) is much more powerful and meaningful, which every buyer should provide with every offer, even though the RPA allows for deliver in 7 days. That said, if the buyer's agent checks the box on page 1 stating that buyer will deliver a check to escrow, then it makes some sense to write that check out and deliver a photo copy. What makes no sense is forcing a buyer to deliver a check copy when they indicate that they will wire their Initial Deposit.
Kevin - good point about the contract wording "initial deposit". I think we are stuck with atiquated 'send a copy of EMD" for some time to come though. I guess it's no surprise that banks want copies of checks. They are so living in the past that they also dont' accept electronic signatures.
Hi, Jenny ~ Earnest money is not required to be in contract, but it's common practice in my area to have this consideration. During negotiation, the original stays in the clients' folder. Since I scan the offer anyway to be e-mailed, including a copy of the check is not a problem. When there's a contract, I then drop the original off or snail mail it soonest to the listing agent and vice versa.
This isn't the only really stupid request from banks. Many of the things they request are useless and wastes tons of trees. I am ashamed of all of the paper I have to use and then destroy. I have said many times the tree industry must lobby the Real Estate Industry.
Yolanda- I've heard many people say they 'put the check in the file" - in CA we have to deposit checks into a trust account, which is likely one reason most of us prefer to have the client deliver the deposit directly to escrow.
Nan- aint that the truth!!
Jenny:
As a listing agent I like to see a copy of a check and proof of funds. Makes me and and my clients more disposed to accept that offer that includes a copy of the check and proof of funds.
I agree with you Jenny and believe it is a complete waste of time. Anybody can write anything down on a check without having a dime to their name so there isn't much point IMHO. :-)
That being said, when an offer gets accepted, bank owned or not, then yes it makes sense to send one since it is actually going to be deposited somewhere. No qualms there other than I wish more people would get on board with wiring and save the whole check writing thing or running around to overnight it when they are e-mailing the rest or driving halfway across town to deliver it (the worst).
E-mail and wires when it matters. The easiet transactions for everyone. It just works!
Actually, a copy of a check can be deposited, if it contains the account number, etc.
See comment 63 for an explanation of how that works, it, in fact, does not even need to be a copy of a check, it can be anything you can write the info on.
It has happened to my dad more than once.
Most checks never go to a bank, the information is sent electronically from the merchant to the bank and the money transferred from your account to theirs.
It's my understanding that a real estate contract is not valid unless bound by some money. (A property gifted to another will often "sell" for $1.) Thus the term "earnest money deposit." Shows that the buyer is indeed making an earnest offer and took the time to write the check to back it up.
On another note, I recently received an offer with copies of the $20 bills the buyer gave to his agent for his EMD. First time for that!
What is even worse than this to me is dealing with Lenders who do not allow documents to be sent in a scanned and emailed version but REQUIRE that I fax it. Really? What difference does it make to them? If there are any lenders out there who work with short sales on the selling end, please explain this to me. I don't use a fax, but do use scanning and emailing. Crazy stuff in this day and age of technology.
LOL! Scanned $20's?! That's a riot! As far a consideration necessary for a contract, it was pointed out in another comment that it's the purchase price that is the consideration, not the depost.
Mary - Yes, that's another rediculous requirement. I don't see that often but I do get "all documents must be sent together in one single PDF". I guess we are simply stuck playing by their rules until they knock off the silliness. Why anyone would prefer a fax over an email is beyond me. Faxes get illegible pretty quicklly!
I always collect escrow and preferably more than 1,000. I do deposit it into my escrow account per FREC Law. This ties the buyer in. On our contracts we can make the escrow due after acceptance but at least I have it, I am holding it and we can use it for multiple offers as we only attach it to the contract upon acceptance. But, I know I have a buyer who is not just going down the street the next day to another realtor. I shows me I have a relationship till the end with they buyer. If they won't give me an EMD while making offers what do I really have? How can I best represent my client if I don't feel they are my client. Anyone who is serious about buying a house should have no problem placing and escrow deposit with their one and only realtor. Short sales should have EMD due at time of acceptance and not bank approval.
Our contracts state how we are handling the EMD and we sign it stating we collected it. There's no reason for them to have a copy.
Any listing or buyer's agent needs to see the EMD. We all need to know that the check has been written and is in the possession of whom it meeds to be. A broker a LOOOONG time ago said that the agent that did n't get the check as specified in the purchase agreement was liable for the money if submitting an offer when they didn't have the check that the offer purported to have already written and in their possession if the offer was accepted and the buyer decided to not write the check after all.
In Silicon Valley, we've found that it actually helps the buyer to psychologically recognize they are offering to buy the home. I've had buyers literally interpret the "3 days to deposit check" language as "I have 3 days to change my mind." No, it's not like buying a dress from Macy's and returning it the next day after wearing it at the party.
Michelle- I actually had a friend in college that wore a dress to a party (left the tag on) and returned it! I wonder how common that is?! It's fine to get a check from the buyer if that is their payment method of choice. I've not had any clients to date think of it as 3 days to change their mind. They've all come through with the deposit, no problem.