How much of a binder should I place on a $400,000 house?

Question

This is my first house so I'm not sure what's normal.

Hey--thanks for all the helpful answers. I'll probably place a $4,000 binder.

Answer 1

Each area differs. In Eastern Massachusetts, we ask a customer to write a check for $500-$10000 as earnest money with an offer to buy. Once the offer is accepted, a minimum of 5% must be put down on the day the Purchase & Sale Agreement is signed which is normally within 10-15 days after the offer is accepted and all inspections have been completed. The checks are written to the listing broker's office and are placed in a special escrow account.

Answer 2

What is a Binder? It is money held in escrow for the purchase and sale of property. Binders are also called Earnest Money Deposit.
Heard the saying, "Put your money where your mouth is"? That's exactly what a binder/earnest money deposit's purpose. Money given to the Seller from the Buyer to show Buyer is serious about owning the property. In the event Buyer neglects to fulfill the their contractual obligations the Seller could be entitled to keep the binder/earnest money deposit.
There is not a exact # to the is question. A very good question.
Regardless of what you offer the Seller the Seller could ask for more. So I recommend keeping the # low just in case the Seller ask for more money. This will keep your negotiations in a favorable position.
Some will tell you 10% of the sales prices, but if you are borrowing 97% of the sales price you have too much money in the pot.
I typically recommend 1% of the sales price, but not less than $500. If you are working with an agent I would follow their advise. In summary there's no specific rule, except to have a binding contract there must be consideration ($$$). You'll notice in a Seller's Market the binders are higher than they are in a Buyer's Market.
Good Luck!

Answer 3

It really all depends, typcially it was at least 10% of the home but in this buyers market I have seen that change. I have made offers for clients in that price range with only $1000-$2000 as a binder. Your agent should be able to advice you on what will be best. The truth is the binder is not as important if you present a soild offer to the seller, full price, with pre-approvals & a quick closing. The seller is only going to need the binder in the event that you don't fullfill your end of the agreement, with that said the more the binder the more serious the buyer appears to be. In a sellers market it was good to make and offer with a higher binder when you were in a "bidding war" but those days are prettty much over. If you need a good agent please let me know the area and I can reffer you to one. I work for a National Company and we have offices pretty much every where. Email me at [e-mail] if you are intrested. Best of luck!

Answer 4

If your not using a Realtor you should be. Ask the Realtor, but I would say $1,000 minimum earnest money, up to 3 or 4,000 if you have that much cash on hand. Remember, the cash will stay in the Realty office until you close, then be applied toward the down payment. So make sure you can live without the cash...

Answer 5

What is a binder? Sorry, but this is the first time I heard of this word having to do with first time homeowner of a house. Are you doing a presentation for who? Can you reword your question so that i could learn from it too? I appreciate it. Thanks a lot.

Answer 6

For deposit? 1% of the sales price should suffice.

$4,000

Answer 7

the cost approach ( if the house was destroyed this is how mush the appraiser estimates it would cost to re build)amount or the loan amount whateve is less..

Answer 8

wait till the novelty wares off, wait till you hear of a housing bubble meltdown, and interest hikes. you'll thinking different

Answer 9

10% of the selling price.

Answer 10

a binder?