earnest money before contract

The seller of a condo and I agreed on a final price today, but his real estate agent told me she needed a check for $1,ooo in "earnest money" to be handed over upon signing the binder. I was advised by my attorney NOT to give anyone any money, so I refused. My agent, in turn, said that I could write a check for 1/2 of the amount to my agent's Real Estate Co. and they will photocopy it only. Then, I take the check back and void it out. No actual exchange of money takes place - it just looks to the seller's agent that it did.

It sounded fishy to me, but since I wasn't handing over the check - I went ahead and did it anyway. Does anyone have any thoughts/experience with this?

Re: earnest money before contract

I had to do this as well and my good friend was my realtor so I dont think she would do anything fishy.

How it was explained to me was that it goes towards your closing and if you get the sellers to pay your closing then you get the money back.

We ended up putting it towards buying down out interest rate since we got the sellers to pay our closing.

From past experience, I dont think you have anything to worry about.

Re: earnest money before contract

I think it’s pretty standard to put some good faith money down to show it is a serious offer—we put $1000. It goes into the escrow account I believe, and goes towards your down payment (at least ours did).

Re: earnest money before contract

Its pretty standard- just shows that it is a serious offer. Most actually take the check and escrow it- thats what my agency did- so it sounds like you have nothing to worry about if they are returning the check to you.

Re: earnest money before contract

Is that like a Binder? We had to do that both times we bought a house.

Re: earnest money before contract

my lawyer advises against it as well, but said if you have to, make sure you write something like "contigent upon inspection report" on the binder.