Submit check with offer on house?

I want to make an offer on a house. My agent–who works for herself–said I need to write a check for $1000 to the owner of the house for him to consider my offer as valid. I never heard of submitting a check with an offer. I’ll ask my lawyer on Monday but wanted to see if others have encountered this. Thank you.

stephanie

in Real Estate - General 12 years and 10 months ago

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mortgagepro | 12 years and 10 months ago

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It would be good to get some feedback from a Brooklyn Realtor regarding deposits on offers.  In all of New York State the attorneys draw up the contracts and handle the EMD escrow, but if I am generalizing my observation  based the 12 States I process loans in and in Brooklyn it is not considered common for any Good Faith check upon a Realtor writing up an offer then I do apologize for creating any confusion.  Back to the OP, no matter what, a check should never be written to the seller; and, if anything, should always go into an escrow account. -Adam

Bklnite | 12 years and 10 months ago

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mortgagepro may be talking about what’s common practice in Lindenhurst, or in Long Island in general. OP is presumably talking about (and this blog is primarily about) Brooklyn, and I’ve never heard of it here in NYC and would be interested in hearing if it’s becoming more common here, not in Long Island or other parts of the country.

mortgagepro | 12 years and 10 months ago

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Yes, the Contract is written up by the Attorneys, where up to a 10% earnest money deposit at contract is commonplace, however, there are also Real Estate Companies, from Manhattan to Montauk, where they request a Good Faith Deposit on offer to substantiate the validity of the offer. For someone to tell bklyngirl that “Nothing goes to the realtor.  You were fleeced,” is misinformed.  That is all I am saying. Aside from not knowing where this house is located, now that I reread bklyngirl’s post, she stated that her Realtor asked for the check to be written to the owner of the house.  THAT is not correct and it should be written to an escrow account if at all.

brokelin | 12 years and 10 months ago

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NYC has no real MLS, so your experience is somewhere that does.  Places with an MLS, and real estae brokers who do the contracts instead of lawyers do good faith deposits, also called earnest money, with offers.  Never heard of it in NYC.  Wonder if anyone ever has?  A much larger deposit, larger than a good faith deposit or earnest money, gets deposited in escrow when the contract for sale is signed.   (I don’t think this large deposit is made in places where good faith deposits or earnest money is used.)  Is your broker not from NYC perchance?  If the property is in NYC, listen to your lawyer, not your broker.

mortgagepro | 12 years and 10 months ago

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Making an offer without a Good Faith Deposit is irresponsible on the Realtor’s part and opens up the seller to a variety of prospects who are really just fishing and not ready to commit.  It is absolutely customary, especially on MLS listings where offers can come in from various offices.  Whether a $100,000 or a $1,000,000 property I often see documentation including a Good Faith Deposit made upon offer.  The Realtor does not get the money.  It is held in escrow and is always the purchasers money until it is credited to the seller or refunded upon offer being rejected and nothing moves forward. -Adam

curiositykilledthecat | 12 years and 10 months ago

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We’ve purchased 3 properties in NYC, and have never encountered this.  That’s not to say it’s fully illegitmate, but it is far from customary.

rh | 12 years and 10 months ago

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Yeah, it’s legit. Kind of old school, I think. You don’t see it done too much anymore, but like Mortgage Pro said, it’s a good faith deposit.

daveinbedstuy | 12 years and 10 months ago

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Nothing goes to the realtor.  You were fleeced, bklyngirl.

mortgagepro | 12 years and 10 months ago

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I respectfully disagree with the previous comment.  Nothing fishy.  As a mortgage broker based in NY with my company licensed in 12 States, based on my 19 years experience, a $1000 Good Faith Deposit is the most common and customary in order to properly define a bonafide offer for Real Estate.  The check goes into escrow and is either applied to the agreed upon terms of the purchase agreement, or fully refunded if no agreement is made. Making an offer without a Good Faith Deposit not only devalues the validity of the offer, but also exposes the sellers and Realtors to tire kickers who may not be fully ready to commit.  Adam Roberts  South Shore Mortgage  631-956-0111 x218

bklyngirl | 12 years and 10 months ago

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Something fishy.  When we purchased all we put down was $100 bucks and that went to the realtor.  Upon the siging of and offer.  If the offer was declined the $100 was used on the next one.  Thats a lot of chabbo to blow for an offer.