Is making Escrow with Realty Co. a must while contracting to buy a house (NJ)? how much % of home value?

Question

I am about to make an offer for a home in NJ, USA. I was told by the broker that I need to put down some % of home value as an Escrow before contracting to buy the house. Is that true? What % of home value is Escrow required to be?

Answer 1

The initial deposit is usually $500 to $1,000 in NJ, and you give the broker this money to put in escrow.

The remainder of the deposit is normally due within 10 days of the end of attorney review, but the time is negotiable. It is payable to the sellers attorney and is held in escrow until closing.

The amount of the deposit depend on the mortgage amount and how much cash you will have at closing. There is no "set" dollar amount, but normally runs about 10% of the purchase price. It is negotiable.

"just remember that in the event the deal falls thru, you lose your EMD".

That is absolutely NOT true in NJ. Your contract and rider will have many clauses detailing cancellation without penalty.

Answer 2

Maybe the deposit money needs to be deposited in Escrow.

Usually 2-3% of the cost of the house.

In MD, we call this an earnest money deposit which is kept in the realtor's escrow account until the day of settlement.

Answer 3

in order to have a VALID real estate contract, you must have consideration with the offer. it does not have to be monetary consideration, however, listen to your realtor. it is very standard to put up earnest money. in fact, many sellers will refuse your offer outright, or counteroffer that you include $XX.xx earnest money deposit.

it is a DEPOSIT, and will be applied toward the purchase price of the home when you close. if you put down $5,000 earnest money, and buy a home for $100,000, then at closing you only need $95,000 to buy the house since you already put down $5,000. earnest money can be refunded also, depending on your contract stipulations and state laws. consult with your realtor.

Answer 4

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Answer 5

This is usually referred to as earnest money deposit (EMD) and basically commits buyer and seller to the transaction AND the property comes off the mkt. I have seen it as high as a couple of thousand for larger transactions and as low as $1k for small deals....just remember that in the event the deal falls thru, you lose your EMD......