The Binder – Check Presented with the Offer
“The binder” is the name used to describe the check which is presented by the buyer at the time the offer is made.
In the Cambridge and Somerville marketplace, the binder is usually a check for $1,000. Generally speaking, the check is made out to the listing broker office for the property, as the listing broker office generally serves as the escrow agent in the transaction – which is to say that they hold the money until closing.
If the offer presented is not accepted, the binder check is returned or destroyed.
If the offer presented is accepted but the buyer later exits the transacation based on one of the contingencies in the offer, the binder check amount in escrow is, as a rule, returned to the buyer. Buyer and Seller typically sign an escrow deposit release form to allow for this to happen.
A buyer who gets cold feet and simply decides not to continue in the transaction may not necessarily receive the binder amount back. Instead, it may end up in the hands of the seller.
In certain instances, the binder check may be for more than $1,000. For example, some buyers make the binder check out for $5,000. This can make one’s offer stand out, especially in a multiple offer situation. It signals the seller that the buyer is serious about his or her intent to purchase the property.
On several occasions over the last ten years, I have received the binder in cash from buyers without a check on hand. I once had a buyer who wished to purchase the entire property on his American Express Card (No limit!). As a rule, checks are always best in a real estate transaction, even in so-called cash deals.
The Cambridge Real Estate Blog.
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