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A Promissory Note Was Submitted With Your Offer . . . REALLY?!?

By
Industry Observer with RETIRED / State License is Inactive Inactive License Oregon

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A Promissory Note Was Submitted With Your Offer . . . REALLY?!?

I haven't written a Promissory Note on behalf of my clients in . . . over 10 years!

You want to know why?

Because they make the OTHER OFFERS look good!

As an Exclusive Buyers Agent my job is to get my clients the best possible terms and conditions possible. In a tight (oh, how it pains me to say this) sellers' market the BEST POSSIBLE terms and conditions just might be . . . 

HAVING MY CLIENTS OFFER ACCEPTED!

And since that's the case, I want to advise them accordingly.

I've just returned from a consultation with a potential client.  He's unhappy with his agent.  I didn't get into the whys, but during our conversation the topic came up of getting the Earnest Money in to escrow. He asked me how I handeled that.  

I explained how our Sales Agreement covers that and after the offer is mutually accepted, I have 3 business days to deposit the check.

He asked:  "Check?"

Apparently, the agent he's not thrilled with submitted his offers (two of them which were NOT accepted) supported by a Promissory Note.

HA HA HA

That's funny . . . sad . . . and pathetic all at once.  Is there a word that covers those three concepts??

I said, "Look, if you were the seller and the listing agent is talking to you about which offer to accept in a mulitply offer situation and all things being equal, the offers were the same . . . EXCEPT for the Earnest Money . . . "

1.  One offer was backed up with a $10,000 earnest money

2.  Another offer was back up with a $2,500 earnest money

3.  The third offer was backed up by . . . a Promissory Note

 

What would you, the Listing Agent, be advising your client?

EXACTLY!

While Promisssory Notes are an acceped method in making an offer . . . IT'S NOT THE BEST METHOD!

As I've said . . . I've not written a Promissory Note in over 10 years!

My methods are the BEST!  I work in the BEST INTERESTS of my clients -- the Buyers!

 

Posted by

 

 

Carla Muss-Jacobs has RETIRED effective May 1, 2018

Representing Buyers in the Portland Metro Real Estate Market | Clackamas Multnomah and Washington Counties | Since 1999

Carla Muss-Jacobs, REALTOR®, ABR, CEBA, ePro
Principal Broker/Owner ~~ INACTIVE

Carla Muss-Jacobs' retirement became effective May 1, 2018

Direct: 503-810-7192 

 

All Rights Reserved © 

Sham Reddy CRS
Howard Hanna RE Services, Dayton, OH - Dayton, OH
CRS

Agreed 100%.  I have been asked by smart investors that attended a weekend boot camp by Gurus, to submit an offer with promissory note.  But I advise them the seller has the ultimate say in how much and in what form!!!

May 31, 2015 08:57 PM
Debbie Gartner
The Flooring Girl - White Plains, NY
The Flooring Girl & Blog Stylist -Dynamo Marketers

Oh yes, I can see how this would be a big disadvantage in a multiple bid situation.

It was great talking to you the other evening.

May 31, 2015 09:05 PM
Janis Borgueta
Newburgh, NY
Retired RE Salesperson

Not seen in these parts. Most interesting how we all live in the same country but do things so differently. Not something I've even heard of around here.

May 31, 2015 09:39 PM
1~Judi Barrett
Integrity Real Estate Services 116 SE AVE N, Idabel, OK 74745 - Idabel, OK
BS Ed, Integrity Real Estate Services -IDABEL OK

This is a new one for me, I have NEVER seen a promissory note as part of an offer to purchase.  Our standard forms either have the earnest funds being submitted with the offer or within a certain number of days after contract.  

May 31, 2015 09:47 PM
Michael Blue
Home Smart Realty West - Encinitas, CA
REALTOR - 760-889-8877, Encinitas/Carlsbad

It was common back when Jimmy Carter was President and interest rates were 17-21%. Creative financing was the play of the day including wraps, AITD's and more. Doing it today....as you said, not in the best interest

May 31, 2015 10:12 PM
Michael Blue
Home Smart Realty West - Encinitas, CA
REALTOR - 760-889-8877, Encinitas/Carlsbad

I wonder though, aren't checks a form of a promissory note?

May 31, 2015 10:14 PM
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

In poker it is called table stakes. ...You play with the money on the table.

May 31, 2015 11:28 PM
Anna "Banana" Kruchten
HomeSmart Real Estate - Phoenix, AZ
602-380-4886

hahaha is right Carla!  I've never - not ever - taken a promisory note when it concerns an offer on a property.  What seller would chose that over - customary funds offered up front.

Jun 01, 2015 01:26 AM
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

Geez. No consideration = no consideration.

Jun 01, 2015 01:56 AM
Wanda Kubat-Nerdin - Wanda Can!
Red Rock Real Estate (435) 632-9374 - St. George, UT
St. George Utah Area Residential Sales Agent

Unusal approach Carla. Glad I'm not the only one that has not submitted a promissory note with an offer but a client once wanted me to offer a gold nugget as part of a down payment though!

Jun 01, 2015 01:56 AM
Dr. Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

This would totally be a new one for me as well!  I don't think people here would have a clue of what to do with this either!

Jun 01, 2015 05:38 AM
Praful Thakkar
LAER Realty Partners - Burlington, MA
Metro Boston Homes For Sale

Carla Muss-Jacobs, Principal Broker/Owner - what? Promissory Note? come on! Give me a break! (And can't believe it someone can even think of doing it.)

Jun 01, 2015 01:54 PM
Yolanda Cordova-Gilbert
Richmond, TX

Carla, That is nuts I would not be happy with my agent either! Take care and sorry about your market!

Jun 02, 2015 09:48 AM
Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

No can do. I buy, renovate and sell a lot of real estate, I would not accept a promissory note as a deposit.

Jun 02, 2015 10:08 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

I think it's interesting to know how, when and why a practice CAME into play, and then is no longer the method.  Promissory Notes used to be the way to go, and I think that was because without one, the offer was backed by a check deposit . . . either into escrow (as we use here), or either the brokerages' office trust -- selling or listing brokerage.  Rather than tie up a deposited check on an offer, I think Promissory Notes were used.  NOW . . . with the modern day conveniences of photocopy, the tendering of a check written as Earnest Money and the proper language of when the check is to be deposited makes more sense.  I've redeemed a few Promissory Notes in my day.  But, not in over 10 years.

 

Jun 03, 2015 04:42 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Carla

A customers knows that when their buying a home they will need a deposit . . . . In all my years in real estate we have never excepted a promissory note. We have taken assignment (in writing) of stock . . . . and 401K.

Good luck and success.

Lou Ludwig

Jun 05, 2015 10:52 AM
Kristin Hamilton CA REALTOR
Berkshire Hathaway California Realty - Beaumont, CA
(909) 557-6966- Specialize 55+ Communties Banning

The escrow companies here in CA require an EMD to open escrow. Not sure what that other agent was thinking. Did he/she represent the buyer as well?

Jun 11, 2015 05:02 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Kristin Hamilton CA Realtor this wasn't about opening escrow.  This was about submitting an offer backed by a Promissory Note.  Two seperate topics altogether.

Jun 11, 2015 06:39 AM
Kristin Hamilton CA REALTOR
Berkshire Hathaway California Realty - Beaumont, CA
(909) 557-6966- Specialize 55+ Communties Banning

Hi Carla Muss-Jacobs, Principal Broker/Owner ,

I understand it was about the offer but normally a check is written and then taken to escrow if that offer is eventually accepted. Without a POF statement and a check, no way to verify they even have a bank account in their names. Our new state Residential Purchase Agreement has several boxes to check and 'Promisary Note' is not one of the options. I have never had anyone offer me a promisary note and I wouldn't take it if they did. I would consider it a weak offer. Glad the clients got in touch with you.

Jun 11, 2015 06:58 AM
Larry Johnston
Broker, Friends & Neighbors Real Estate and Elkhart County Subdivisions, LLC - Elkhart, IN
Broker,Friends & Neighbors Real Estate, Elkhart,IN

Hi Carla Muss-Jacobs, Principal Broker/Owner , I haven't even heard of a promisary note being used, since I was in RE School.

Jun 15, 2015 12:55 PM