He said we would get it back at closing. We arranged for 100%+ financing with our lender, so what would this 5 grand really be for?
2006-08-26 07:36:15 · 14 answers · asked by bopbo 3 in Business & Finance ➔ Renting & Real Estate
Is this a "new" construction house? If so and you are making custom changes that is why. It keeps your interest in the property moving to close. And some changes are so specific that likely no other buyer will want them, thus the seller incurs more expense because of it. As for a typical house, usually what ever you want to put down is what you do.
The risk is that if you put a large sum down and then fail to close because you decide you like another house better and break the contract you forfeit the earnest money. $500.00 usually is fine, unless you are low balling a property in which case you may need to impress the seller with your deposit. Also in a situation where you really want a home and are bidding a larger down will get the seller attention, even if the other offer is slightly greater.
So you put down the deposit, at closing if your deposit is excess to the total needed to buy and close it will be returned to you there.
2006-08-26 07:45:03 · answer #1 · answered by hithere2ya 5 · 0⤊ 0⤋
The request for earnest money has come from the seller. There should be a clause in the contract that says if the house fails inspection you can get the money back, but if you walk away for any other reason the sellers can keep it. This protects the sellers from buyers who find a house they like better a few weeks after they have stopped showing the house or have turned down other offers.
A typical amount is 1% of the purchase price of the home. You can counter that $5000 request, but your agent has to present that in writing to the sellers agent. That amount will be applied at closing to fees.
2006-08-26 15:24:17 · answer #2 · answered by Sharingan 6 · 2⤊ 0⤋
It is a good faith deposit. It means that you want to buy and are willing to put down some money to hold the property. If you back out, you will not get your deposit back. You will not "get the money back" if you buy. You will get a 5000 dollar credit toward your purchase price.
Here is the kicker, a good faith deposit can be any amount. It can be a dollar. Your agent wants enough money for a deposit to scare you into buying if you decide to not buy. It is also not required. If the property is a popular site and you do want it, you may want to put down the deposit. If the property is not the property of your dreams or you just don't want to put that much down, DON"T do it!
All your agent wants is a guaranteed payoff for HIM. If you back out, he gets your 5 grand. If you buy the house, he gets his commission. Remember: It is YOUR money. He is working for YOU. If you are uncomfortable in any way, Pass. Another house will come along. If he said he NEEDS a good faith deposit, offer him a dollar for the deposit. Tell him if it is not enough then the deal is off. He will relent because he then faces the risk of losing his commission. Don't let ANYONE force your decision.
Good luck.
2006-08-26 14:48:07 · answer #3 · answered by damndirtyape212 5 · 0⤊ 0⤋
Not an expert, but my real estate agent asked me to to put down $3000 as a show of good faith in my offer on the house I own. The $3000 went towards the deal. I guess from the Owner's point of view, they don't want to take their property off the market unless they see that you are serious. Your not serious until you put down some money. If I had backed out of the deal, I think I would have lost the $3k
2006-08-26 14:47:29 · answer #4 · answered by khcs89120 2 · 0⤊ 0⤋
Any time you tender an offer in where you will be providing a certain amount of money to be escrowed into the trust account of the licensee or of the lender or title company; the offer to purchase contract must be specific in the identification of what that money is for (how it will be or not be applied to the purchase), who gets it, and how you can get it back or loose it.
Your answer lies in reviewing the offer to purchase agreement with your licensee, prior to signing and giving the money, as it relates to the amount of money they are asking you to tender with the offer. Have the licensee show you.
2006-08-26 16:06:21 · answer #5 · answered by newmexicorealestateforms 6 · 0⤊ 0⤋
It is a "good faith" measure or "security" measure. This --sort of--tells the buyer that you are interested.You are not going to hand over $5000 and walk away. Otherwise, you could say "Yes, I want this house" and 1 year later the seller has not heard from you. This put him at a disadvantage. It is put into the purchase price.
2006-08-26 14:50:08 · answer #6 · answered by old_woman_84 7 · 0⤊ 0⤋
It's called earnest money, and it's a bunch of baloney. He's just trying to get as much as he can... afterall, if you violate the contract, he gets to keep that earnest money. Putting a $1000 for earnest money is plenty... and at least in Illinois, if he refuses to do it, he's breaking the law. I know... I worked real estate.
2006-08-26 15:26:38 · answer #7 · answered by Mike S 7 · 0⤊ 0⤋
If it's your deposit to the escrow company, it doesn't have to be 5000. I just sold my house and negotiated in the offer for the buyer to put 1000 down which will then be applied to closing costs at close
2006-08-26 14:41:22 · answer #8 · answered by mel 4 · 0⤊ 0⤋
He's talking about earnest money. At closing it will be applied toward your closing costs and prepaids due since you are getting 100% financing.
2006-08-26 14:54:47 · answer #9 · answered by Karen R 3 · 1⤊ 0⤋
I think it's earnest money. You put money down so that the sellers don't take another offer. Essentially, you are putting a deposit down to keep the house from getting sold to someone else while you get everything in line. However, if you change your mind, you would lose that money.
2006-08-26 14:43:13 · answer #10 · answered by Misty T 2 · 0⤊ 1⤋