Buy Alexandria Real Estate: Bring Your Checkbook With You on Your Househunt

Alexandria Virginia Real Estate Blog

Bring Your Checkbook With You on Your Househunt

With the advent of online payments, credit card transactions, wire transfers and Paypal, very few carry checkbooks with them any more.  However, in the world of real estate, I suggest that you bring your checkbook with you on your house hunt. 

Can't Buy a Home with a Credit Card

 

As much as you'd like to receive miles, hotel points, or other perks, the fact of the matter is that you just can'tuy a house with a credit card.

When you find the house you'd like to purchase and you're ready to make an offer, it's time for something called an Earnest Money Deposit or Good Faith Deposit.

Webster's Dictionary defines "earnest" as

1. a serious and intent mental state; or 

2. a considerable or impressive degree or amount 

 

 

You'll write a check for the earnest money deposit and submit that with your purchase offer.  This money is distinct from your down payment.  It's a "good faith deposit" to show your intent to move forward with the purchase.  It displays your seriousness to the seller of the home.  This check is typically made payable to the real estate brokerage that's assisting you with the purchase or to the title company.  The check will not be deposited until your offer is accepted by the seller(s).  If your offer is not accepted, the check will be returned to you or held until your next offer on another property.

The Earnest Money Deposit gets held in escrow in a trust account and at settlement on the property will be applied towards your down payment and/or closing costs.

Earnest Money Deposit -- How Much?

 

How much is the Earnest Money Deposit?

 

This common question does not have an exact answer.  It's customary to put a deposit of at least 1% of the sales price of the home.  Thus, on a $500,000 purchase, you'd be looking at writing a check for $5000 to be submitted with the offer.  You can have a deposit of less or more, but just remember that the higher the amount, the more attractive your offer will be to the seller.  This is another negotiating tool available in the sales process.

 

Dust off that checkbook and bring it with you when you go searching for homes.

 

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Comment balloon 14 commentsBrian Block • April 25 2008 05:37PM

Comments

That's a great point.  Nothing can melt down a transaction faster than someone putting an EMD on a credit card
Posted by Jonathan Osman, Charlotte House Hunter Group (Jonathan and Associates, Inc) about 10 years ago
Brian, This is so true.  Today with almost all people using debit cards and online payments, do they know what a checkbook is?  One of my clients just totally spaced the idea of a check for the initial deposit on a property.  They thought they could wire it.  I guess I know have to inform everyone that this "old school" form of payment is necessary.
Posted by Valerie Osterhoudt, ABR, Cromwell, CT Real Estate ~ 860.883.8889 (Johnson Real Estate, Inc.) about 10 years ago
This is very true thanks for the post and the great info keep up the good work
Posted by Richard Perkins (R PERKINS REALTY) about 10 years ago
In the last few months I have had nearly all my buyers have to run and get cashiers check because they dont carry a checkbook.  Soon I guess brokers will except a credit card payment..
Posted by DeAndrea "Dee Dee" Jones, The NorthernVARealEstateLady & DMVRealEstateChick (Home Buyers Marketing II, Inc.) about 10 years ago
Most of our contracts are written with a promissory note.... but you have a valid point
Posted by Thesa Chambers, Principal Broker - Licensed in Oregon (Fred Real Estate Group) about 10 years ago

Great Post Brian - Jeff says jokingly to prepare our Buyers - Going to a Showing without your checkbook is like going through the checkout lane at the grocery and finding out you left your wallet at home - think the cashier is going to take your offer or promise to return with it seriously ? NOT  LOL

Sincerely,

Grace

Posted by Jeff&Grace Safrin, SpousesSellingHousesTM (F.C.Tucker 1st Team Real Estate) about 10 years ago
I had a Client in town over the weekend a few years ago.  He did not bring his checkbook.  But, an ATM was right across the street.......he went to the ATM and gave me cash!
Posted by Rick Tourgee, Provincetown and Cape Cod (Robert Paul Properties, Inc.) about 10 years ago
JONATHAN:  Thanks for your comment.  I've never seen an EMD on a credit card before.
Posted by Brian Block, Northern Virginia & D.C. Real Estate (RE/MAX Allegiance, Managing Broker/Branch Vice President) about 10 years ago
VALERIE:  I do know some people these days who don't even possess a checkbook!
Posted by Brian Block, Northern Virginia & D.C. Real Estate (RE/MAX Allegiance, Managing Broker/Branch Vice President) about 10 years ago
RICHARD:  Thanks for your comment.
Posted by Brian Block, Northern Virginia & D.C. Real Estate (RE/MAX Allegiance, Managing Broker/Branch Vice President) about 10 years ago
THESA:  While our contract has a space for "check" or "promissory note" -- I've very rarely seen the promissory note option used.
Posted by Brian Block, Northern Virginia & D.C. Real Estate (RE/MAX Allegiance, Managing Broker/Branch Vice President) about 10 years ago
DEE DEE:  I'm sure that at some point most brokerages will accept credit cards.
Posted by Brian Block, Northern Virginia & D.C. Real Estate (RE/MAX Allegiance, Managing Broker/Branch Vice President) about 10 years ago
GRACE:  Thanks for your comment and that's good advice that Jeff gives!
Posted by Brian Block, Northern Virginia & D.C. Real Estate (RE/MAX Allegiance, Managing Broker/Branch Vice President) about 10 years ago
RICK:  How much cash did he give you for the Earnest Money Deposit?  Isn't there a limit on withdrawals?
Posted by Brian Block, Northern Virginia & D.C. Real Estate (RE/MAX Allegiance, Managing Broker/Branch Vice President) about 10 years ago

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