Including a check with the offer. - Posted by ChrisG

Posted by JoeKaiser on May 26, 1999 at 13:36:53:

I don’t spend any time tracking down $100. What gave you that idea?

Joe

Including a check with the offer. - Posted by ChrisG

Posted by ChrisG on May 26, 1999 at 08:09:27:

In a couple of books I have read I saw mention about getting very good deals by including a cashiers/bank check along with the offer. Since it puts the money in the sellers hand many times they will sign your contract even if it was below their expectations.

How should one go about including a check with the offer? How do you protect yourself from the sellar just taking it with out signing your contract? What do I need to do to ensure that the seller can only get the money if they sign my contract, when including the chack with the offer.

Thanks,

Chris
Columbus, Ohio

Re: Including a check with the offer. - Posted by Bud Branstetter

Posted by Bud Branstetter on May 26, 1999 at 16:11:36:

Have you seen insurance checks that have a a statement on the back that by endosing the check you agree to relieve them of all future liability? You can write a similar phrase -by endorsing this check endorser accepts the contract date so and so for the purchase of the property at 123 Main.

I have also had bank checks made out to the seller for the purchase price I want when I negotiate I can show them what they will get if they sign and title clears. You could probably send a copy of a full amount check like the ads do to get their attention. I would not reccommend without previous contact and you are just trying to get their acquiecence to your price.

I once made a personal check out to an individual to sign a quit claim deed. He did not sign but the bank cashed the check anyway. He was already in the pen for 20 years so what good would it do to sue.

Re: Including a check with the offer. - Posted by B.L. Renfrow

Posted by B.L. Renfrow on May 26, 1999 at 10:48:48:

“How should one go about including a check with the offer? How do you protect yourself from the sellar just taking it with out signing your contract? What do I need to do to ensure that the seller can only get the money if they sign my contract, when including the chack with the offer.”

Chris,

If you’re dealing with truly motivated sellers, they won’t require a deposit. And keep in mind that if you go this route, there’s NOTHING you can do to prevent them from cashing the check and using your offer to make paper airplanes. If you feel compelled to do this, make sure you are not paying more than you can afford to give away.

If you feel a deposit is a necessity, I would suggest paying AFTER they sign the purchase agreement, and make certain you specify in your agreement where it’s to be applied. In addition, make sure you include a liquidated damages clause, so if for any reason you are unable to complete the deal, that’s the extent of your loss.

Personally, I don’t like deposits. When I bought my personal residence (before I knew anything about CRE) I only made a $50 deposit on a $92K offer - which was accepted notwithstanding the small deposit. Of course, I guess it depends on a number of factors, the market, etc. There were some posts here a few days ago regarding the necessity of deposits. Depends on your state, but where I am, “consideration received” does not have to be $$.

Brian (in NY)

Re: Including a check with the offer. - Posted by Mark (SDCA)

Posted by Mark (SDCA) on May 26, 1999 at 10:37:16:

Never, never, NEVER give the seller a check made payable to them. Make it payable to the Title or Escrow company.
What this technique does is give the selle faith in your ability to close. At the very least, you are showing the seller that you have the earnest money (so you aren’t some seminar grad without 2 nickels to rub together.) But a cashier’s check (instead of a personal check) wouldn’t impress me that much. And frankly, unless the earnest money was sizeable (ie 3%+ of purcahse price), I would consider earnest money just a given. Not a plus or minus for the buyer.

Re: Including a check with the offer. - Posted by B.L. Renfrow

Posted by B.L. Renfrow on May 26, 1999 at 17:15:04:

“Have you seen insurance checks that have a a statement on the back that by endosing the check you agree to relieve them of all future liability? You can write a similar phrase -by endorsing this check endorser accepts the contract date so and so for the purchase of the property at 123 Main.”

Good point, but is that legally binding? My recollection - and this is based on what I’ve read, not actual experience - is that it probably is not. And it would no doubt be expensive to pursue legal action for breach of contract if they cashed it and failed to follow through (assuming they’re not in the slammer for 20 years, like your guy).

Regarding sending a copy of a voided check as the advertisers do…excellent attention-getter. I’ve actually thought about doing that, but have not yet.

Brian

Re: Including a check with the offer. - Posted by Joe Kaiser

Posted by Joe Kaiser on May 26, 1999 at 11:41:14:

I always always ALWAYS send along a personal check, made payable to the sellers, for $100, on any offers I’m forced to mail out. I put a little note on it that says they may cash it once they’ve okay’d the agreement and sent it back to me.

It’s often all the incentive they need to get that thing signed off.

And if they just decide to take the money and run, well, I ain’t going to sweat it because (1) I’m way ahead here on this particular technique, and (2) cashing my check, argueably, has in fact accomplished something with regard to the property. What, I won’t know until the judge tells me, but hey, it’s a foot in the door.

So far, I’ve only been stiffed once, and even then that fellow got the stuff to me months later . . .

Joe

Re: Including a check with the offer. - Posted by JohnBoy

Posted by JohnBoy on May 26, 1999 at 20:10:44:

From my understanding this would be binding if it’s written on the back of the check where the person endorses it. If it’s written on the front of the check on the memo line than it’s worthless.

Here’s a true story that happened on small claims case. It’s not related to real estate but it is related to signing the back of a check to cash.

A woman sued in small claims for a garment she had dry cleaned at a cleaners. The dry cleaner showed up to defend the case claiming it wasn’t his fault. The dry cleaner lost the case. After the dry cleaner got the judgement in the mail to pay the woman he sent her a company check. On the back of the check the dry cleaner typed in “By signing the back of this check Mrs. so & so hereby acknowledges and agrees that the her blouse was not the fault of the dry cleaner”.

The woman signed the back and cashed the check. When the dry cleaner got the check back he took the woman back to small claims and sued for his money back. He won! The woman had to pay back the money because she signed to the fact that she new it wasn’t the dry cleaners fault that her blouse was ruined. True story. :slight_smile:

I am confused why you spend so much time tracking down $100 - Posted by Lynne

Posted by Lynne on May 26, 1999 at 11:58:23:

It seems you spend a lot of time suing over $100 or if a tenant stiffs you. I read a thread that said your time is valuable and you have better things to do, ie:phone calls. (that is the only thread that I have read about your time concerns).

Why spend so much time chasing a bad tenant when you can pay them off and why chase down $100 when sending a check. It also seems like an accounting nitemare to send hundreds if not thousands of checks with your offers.

Thanks for your response. By the way, this is not meant as a slam, so please do not be course with me.

DBlee

Re: Including a check with the offer. - Posted by Joseph Turner

Posted by Joseph Turner on May 27, 1999 at 01:08:14:

That was a funny story.

As to the original question, seek legal advice before you do anything. However, to back up some earlier comments, I know that AT&T, MCI and SPrint send checks out in the mail to solicit new business. On the checks it states to the effect: “By signing and cashing this check, you give ATT permission to switch your long distance phone service…blah blah blah.”

As far as the story regarding the guy in jail, it would seem to me that the investor writing the check could sue the bank for negligence (ie no signature). Whether or not you can sue for damages and legal fees I dont know.

Moreover, it may not be economically beneficial to pursue a matter regarding a 100 dollar check…but if someone failed to live up to their side of the bargain after they cashed the check…i would venture to say that there are grounds for CRIMINAL PROSECUTION as well…in terms of fraud or theft or something…i know there has to be some recourse…

granted, it wont matter ifthe guy is already in prison…but how many are :slight_smile:

warmest regards,

Joe

No no no…it’s not hundreds, let alone thousands of checks. - Posted by ccreed50

Posted by ccreed50 on May 26, 1999 at 13:57:54:

To understand when and where to use this technique you need to put it in its proper context, which is Joe’s Abandoned Properties course, (available on this site).

It’s a technique used in specific situations–you don’t just paper the solar system with uncashed checks. And, under some interpretation of the implied contract doctrine, if someone cashed the check and failed to perform you could have at least a colorable claim to a cloud on the title. Possibly the opening to a possession by adverse action suit. That’s what Joe was referring to by not knowing exactly what it would mean until in front of a particular judge.

–CR

Re: I am confused why you spend so much time tracking down $100 - Posted by phil fernandez

Posted by phil fernandez on May 26, 1999 at 13:40:00:

Lynne,

You’re missing the picture here. Joe is not talking about tenants here, he is talking about sending a seller a check for $100 along with an offer to purchase. .

I believe Joe is saying that if the seller cashes his check that went along with the offer, then Joe may have the courts construe the cashing of that check as an acceptance of the offer. The Court at that point could force the seller into selling the place to Joe.