But I Didn't Bring the Checkbook!
It happens. I counsel my buyers to go to a lender, have their pre-approval letter ready, and bring the checkbook when they view homes. Why? Because if you find one that you like and you want to submit an offer, I need to have the earnest money check in my possession. Now, understand that the check stays with me until there is an accepted offer. And I will let a buyer know when I provide the check to the listing agent so that if they need to move money around in their account, they are aware.
There is a situation that came up recently on one of my new listings where a buyer submitted an offer, it was accepted and the buyer's agent had not yet received the earnest check or the lender letter from the buyer. It was promised that the buyer would meet to give her the check in the afternoon the next day and that the lender would send me the letter. I knew something was going south when I could not reach the agent by phone and the only text I received was that she was meeting them at 3:00 to get it. But it was now 5:45 and radio silence.
Never again. At 6:15, I received a tear-filled call from the agent that the parents of the buyers told them that they were not buying the house and instructed the buyers to cancel the contract and refuse to provide the earnest check. The parents had yelled at the buyer's agent in the front yard of my listing, telling her that the buyers offered too much because the sellers accepted it and didn't counter. Huh? These buyers viewed the home and wrote a good offer on the spot during their showing. They had competed and lost other homes and they offered a solid offer, not full price, and the seller accepted more because of the closing date because it worked for them. It was the worst case of buyer's remorse (not from a buyer) that I had ever seen.
The buyer's agent sent me a release of the contract, but there was no earnest money to refund as it had never been received by the buyer's agent or by me as the listing agent. The sellers refused to sign. I let the buyer's agent know that I could not force the sellers to sign and that maybe once another accepted offer was received, I would try again. But I was not going to pressure my client to sign the release. Unlike her, I still needed to work with my client. Her buyers were moving on to another house.....and another agent.
So what do you do as a listing agent? I am now requiring all offers to be accompanied with a copy of the earnest check to show that it is in the possession of the buyer's agent submitting the offer. In Iowa, the earnest money must be present at the time of the offer, but we are all a little lax in heeding that warning. We allow buyers to give us the check later, after the offer is accepted. If the buyers are out of state, we have no choice. But I ask that the buyer take a picture and send it to me so that I can show that it has been written and it is being sent in the mail. (Most of the time, this is not an issue, most buyers that write an offer fully intend to follow through with the purchase barring something horrible discovery during the inspections.)
As a buyer's agent, I will write the offer, but I will not submit it to the listing agent until they drop off the check to me. When you offer on a home, it is a legal binding contract. The good faith (earnest check) is part of the contract and I am not going to be in a compromising position by needing to admit that I don't have it. It is part of my buyer process that they have their checkbook with them, now I have this story to share on why it is so important!