Becoming a Digital Earnest Money Addict

Anne Ewasko Leave a comment

For the past two decades — yes, decades — I have been using the traditional methods of checks and bank wires for sending and receiving earnest money. Most of us agents have been doing it this way since the beginning of time, as these were our only options. Checks are so time-consuming, with the runaround for “the handoff,” or the hassle for the office drop-off, or the chance of them getting lost or delayed in the mail — not to mention the time it takes to deposit them.

Wires made life a little bit easier, but it took time to explain to clients how to do them. Plus, the whole security issue of keeping the clients protected was always of concern. Then there was all the paper-pushing needed to provide receipts to show what was paid and by whom, and when it was received and by whom. It could turn into a real time killer and sometimes even a nightmare that could potentially jeopardize a transaction if there were delays.

Well, I am happy to say those days are over for me now. If you haven’t gone digital yet, you should really consider it. Digital earnest money deposits (EMDs) have been around for less than a year, and at first, I was reluctant to jump on board. Why? I am a security freak. There’s something that I am just not comfortable with in using an app for large banking transactions. And in this case, it’s not my money but my client’s! So an even bigger liability, and if I am not comfortable, how could I expect my clients to be, as well?

Then one day not too long ago, I was sitting at an inspection. The listing agent was sitting across from me in the living room while the inspector was doing his thing. We had just put the deal together the day before, and my buyers needed to get their initial earnest money in. So, she had mentioned that she just finished a companywide webinar that morning, as her firm was rolling out a new program for their agents to collect the earnest digitally. We both were newbies at it, so we decided to download the app on our phones and give it a whirl. It took her about five minutes to input the details of the transaction, and then she sent me the invitation. When I accepted it, all I needed to do was input my client’s information and hit “Send.” Within 10 minutes, the listing agent and I simultaneously received confirmation of payment (including receipt) that the earnest money was in — all while still sitting there in the living room! From start to finish, the request for the earnest money went out, was received and was documented all within 15 minutes! Voila! I was hooked.

Yes, it’s super easy and convenient, but was it safe? Remember, I’m a security freak, so I did a little digging and found out some interesting things that I would like to share. The digital app we used was Earnnest. There are other EMD apps out there, but I am going to focus on Earnnest. First of all, these are Automated Clearing House transfers (ACHs), not “wire transfers.” What is the difference? Both ACH payments and “wire transfers” electronically move money from one financial institution to another, but wire transfers are initiated and processed by banks, while ACH payments are processed automatically through a clearinghouse. Because of clearinghouse rules, ACH payments are often more secure than wire transfers.

So, why haven’t we used ACH payments in the past for earnest money deposits? Because there was no protection on reversals. One could do an ACH payment but could “claw” it back if they wanted to, and as this is going into an escrow account, that would be a big no-no — but almost impossible to prevent if the payee decided to reverse it. The app protects the payment from these reversals.

What about the security of my client’s personal and banking information? Who sees it? Where is it stored? How does it get protected? These were all serious concerns of mine, and it turns out that Earnnest is partnered with two companies that gave me some peace of mind. The first one is Plaid, a fintech company that connects banks to apps and allows for instant verification for use of those bank accounts. It’s the same system used by Venmo, Robinhood and many other apps. They currently have about 93% of all banks and credit unions in their system. The second one is Dwolla, the leading payment processor in the nation. Their role is to set up a secure connection between the payee and their bank using “tokenization,” a fancy banking term for the removal of all sensitive financial data from transactions. This includes multiple levels of encryption between Earnnest and the client’s bank information, bank account details or routing information, they cannot store it, share it or have it hacked — which was a relief to hear. The app itself is also protected by AES 256-bit encryption, the highest standard used by financial institutions, as it’s the most advanced and secure encryption algorithm.

With a sigh of relief, I’ve had my security concerns satisfied and am now comfortable providing my clients the ability to send earnest money digitally. It’s going to be a real game changer not only for me, but for my clients. Checks seem so archaic now, and while wiring is still an option, I have to say that most people haven’t had much experience with bank wires. But they have with banking apps, so using an EMD app isn’t too far of a stretch. Wire transfers are more costly and start around $30 and up, depending upon the amount, and the Earnnest app, which I use, charges the client a flat fee of $15 with a minimum transfer of $30, up to a maximum of $100,000. At the end of the day, it’s about being efficient and making life easier for my clients. More time means more money, and happier clients means more referrals.

Anne Ewasko is a veteran Realtor in the Chicago area and a longtime techie. Visit her at anne.luxhomechicago.com.

For more about real estate tech, check out AgentEDU’s course on the tech you need to manage a team.

5 areas agents focus on when getting a home ready to market

Liz Hughes Leave a comment

Agents helping clients get their homes ready to sell, focus on several key areas to help them get the most out of the home selling process. From paint colors to flooring and everything in between, we spoke with some agents to find out what they tell clients when getting their homes ready to market. 

Paint Color 

Paint color is important because dark colors can make a home feel smaller and it’s too personal, according to Mona DeRosby real estate broker at LAER Realty Partners. DeRosby, who also has a bachelor’s degree in fine arts, says she tries to have her clients use neutral grey beiges from Pale Oak by Benjamin Moore to Edgecomb Grey and Light Pewter — she says these are her go-to colors for light grey beiges. 

“Paint and floors in general change an entire house when deciding whether to update or not to update because it gives you a sense the house is clean and you can move right into it,” she says. 

DeRosby says new paint and flooring are inexpensive ways to transform an entire house. 

“Most people looking at single-family homes are families and they don’t want to move into their house and paint the walls, plus they’re usually moving from another house and need to move right in,” she said. “Doing floors and walls are the two biggest things you must do before you sell. With neutral colors, they can later paint the bedrooms the color they want. At least for now it looks good.”

Dark wood is also not in unless it’s an antique home, she says. “Painting everything white for trim is the way to go,” she says. 

DeRosby says wallpaper is also making a comeback, but only as an accent wall in a bedroom behind a headboard or in a bathroom on the sink wall. People are also using paintable wallpaper to add texture. 

Tracy Spaniol, Realtor with RE/MAX Encore also believes neutral colors are best and that a fresh coat of paint is important for getting your client’s home ready to market. 

“Bright or specific colors can be very off-putting to a potential buyer because it immediately makes them feel that they have to move in and do work,” she says. “Bold colors may look nice in the seller’s eyes but be hated by potential buyers. A seller’s best option is to stick with a basic tone, we are seeing lots of light gray tones right now. Keeping it light and neutral gives the buyers the ability to picture the home as a blank canvas. A fresh coat of paint goes a long way in making a home feel fresh and clean.”

Declutter and Depersonalize

If a client does nothing else, they need to declutter to enable potential buyers to envision themselves in the home rather than envisioning the sellers living there, Spaniol says. 

“I always tell sellers that they need to make their home look and feel like no one lives there,” Spaniol says. “This is not an easy task but I always recommend that they start to pack up and either put their things in storage or find a spot in the basement or attic where they can keep it.” 

Spaniol also suggests her clients take all personal pictures and belongings off the walls and furniture.

“Less is more, again giving buyers a blank canvas to work with,” she says. “If a buyer is walking through a house loaded with furniture and tripping over things they are going to feel like the home has less space than it actually does.”

Curb Appeal

It’s not just the inside of the house that agents recommend cleaning up before putting a home on the market. The outside of a home is its first impression to a potential buyer. DeRosby recommends mowing the lawn, trimming the bushes and mulching because it can go a long way. 

“When you have a yard that‘s not well kept, it stresses people out,” DeRosby says. “They haven’t made it to the house and are already thinking about how they’re going to clean up this yard.”

Minor Repairs and Fixes 

Both DeRosby and Spaniol say making sure all the little things are handled is also important. Both say walking through the entire property with their client is key to finding anything that needs to be fixed before putting it on the market. 

“I typically go through the entire property with people to see if anything stands out, things like deferred maintenance, if there’s a leak, if there’s rotted wood,” DeRosby says. “These are cheap fixes for people. People who live in their homes don’t realize the things that stick out, like outlet covers, light bulbs, etc.”

Spaniol has the same philosophy that sellers should make minor repairs and fixes. “For example, I think there is nothing worse than when I walk through a home with buyers and there are missing electrical outlet covers or light switch covers. That shows me that a seller does not take pride in their home,” she says. “If a seller wants top dollar for their home, they need to make buyers feel like it is worth it. If they can’t put out a few dollars for an obvious inexpensive repair, what other big repairs did they not do?”

Spaniol says sellers should also be careful not to spend too much money on big-ticket items right before listing their homes. 

“In most cases, they will not get back dollar for dollar,” she says. “I like to walk through a potential seller’s home with them and make suggestions on a case-by-case or item-by-item basis, discussing the pros and cons of any work they are considering doing to get their home ready to list. For example, if a roof is on the older side but still has some life left in it, that would be a different conversation than a roof that has an active water leak in it.”

Pet Areas 

For her clients with pets, Spaniol suggests keeping litter boxes, dog beds and animal cages in an area where they are not going to be smelled. “Pet smells can be an immediate turn-off to buyers walking through a home,” she says.

Further Reading

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