Strong financial package

[Anonymous]

Anonymous wrote:

Anonymous wrote:

cb21 wrote:For earnest deposit, the seller will look at the size but only up to a point. On a $900k house you'll have to put at least $15k or $20k. More than that doesn't really convey any stronger message -- if the deal goes sour this deposit is at risk, but with a $50k deposit or so it's unlikely the seller will get to keep the whole amount and they know it.

Higher downpayment of course shows that you are financially stable and not someone who is stretching.

I would never accept a $15k deposit on a $900k house.

Can I ask why not?

On a side note - do all these people putting $50-100K in earnest money just keep this money in their checking accounts while looking? We have the money, but do not have it ready and waiting to write a check on when we have to make an offer 24 hours after seeing a house in this market. What do other people do?

I literally scanned the check for our offers and I ended up wiring the med a few days later once the contract was ratified. So plenty of time to move some money around. But, yes, if you're serious, than you should have the cash ready in my book. The more cash you show up front is a sure sign that you will have less problems coming to the table with the rest of it at the end.

[Anonymous]

Of course you should have the cash. But between writing the offer and the time the check gets deposited, there is usually several days. Your agent can help control that also.

Also, the check will only get deposited when you get the offer, obviously.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

cb21 wrote:For earnest deposit, the seller will look at the size but only up to a point. On a $900k house you'll have to put at least $15k or $20k. More than that doesn't really convey any stronger message -- if the deal goes sour this deposit is at risk, but with a $50k deposit or so it's unlikely the seller will get to keep the whole amount and they know it.

Higher downpayment of course shows that you are financially stable and not someone who is stretching.

I would never accept a $15k deposit on a $900k house.

Can I ask why not?

On a side note - do all these people putting $50-100K in earnest money just keep this money in their checking accounts while looking? We have the money, but do not have it ready and waiting to write a check on when we have to make an offer 24 hours after seeing a house in this market. What do other people do?

I literally scanned the check for our offers and I ended up wiring the med a few days later once the contract was ratified. So plenty of time to move some money around. But, yes, if you're serious, than you should have the cash ready in my book. The more cash you show up front is a sure sign that you will have less problems coming to the table with the rest of it at the end.

This still makes no sense to me. What's the difference between writing a check and saying you have the money for a down payment? Neither is no more proof that you actually have the money than the other.

[Anonymous]

Anonymous wrote:

This still makes no sense to me. What's the difference between writing a check and saying you have the money for a down payment? Neither is no more proof that you actually have the money than the other.

Well for most people, a large emd, says (a) person has plenty of cash liquid ready to do the transaction and (b) is very serious about following through on the deal... I've known people to get cold feat and back out of a deal after their offer was accepted, so wouldn't you want the person that seems to really want the house and also can show they've got the cash to buy it. pre-approval letters from lenders are not golden, I could have so easily lied to the guy doing ours, since he didn't ask for any backup at all, just pulled our credit report, and trusted me as to some of my balances in my accounts.

But hey, if you want to do business with people that want to shop on layaway be my guest... I'll pick the person with the most cash tied up in the deal anyday.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

cb21 wrote:For earnest deposit, the seller will look at the size but only up to a point. On a $900k house you'll have to put at least $15k or $20k. More than that doesn't really convey any stronger message -- if the deal goes sour this deposit is at risk, but with a $50k deposit or so it's unlikely the seller will get to keep the whole amount and they know it.

Higher downpayment of course shows that you are financially stable and not someone who is stretching.

I would never accept a $15k deposit on a $900k house.

Can I ask why not?

On a side note - do all these people putting $50-100K in earnest money just keep this money in their checking accounts while looking? We have the money, but do not have it ready and waiting to write a check on when we have to make an offer 24 hours after seeing a house in this market. What do other people do?

I literally scanned the check for our offers and I ended up wiring the med a few days later once the contract was ratified. So plenty of time to move some money around. But, yes, if you're serious, than you should have the cash ready in my book. The more cash you show up front is a sure sign that you will have less problems coming to the table with the rest of it at the end.

This still makes no sense to me. What's the difference between writing a check and saying you have the money for a down payment? Neither is no more proof that you actually have the money than the other.

The EMD check is cashed in kept in escrow by the agents. It is credited to you at the settlement table.

The EMD is usually not equal to the down payment amount.

As others say, it just telegraphs intent by putting money at risk if the deal goes south.

If you were selling a house and there were three offers, one with $1,000 EMD, one with $5,000 EMD and one with $20,000 EMD, which one are you going to pay most attention to?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:What is the difference between earnest money and a down payment and under what circumstances does the seller get to keep it if the deal goes sour?

Sellers can keep the earnest money if buyers backout after the seller has accepted their offer. But if buyers retract offer before seller accepts than buyers get their earnest money back.

That is not correct with the standard realtor contract. It is a common misconception, bu completely wrong.

What does it say? We didn't use the standard contract (I drafted our contract) and the seller accepted my provision that we would get it back if we didn't close for any reason other than we (buyer) just changed our mind. So if the financing fell through or appraisal/inspection wasn't good, we could walk and get it back. We had a $100k emd and I wasn't taking any chances.

[Anonymous]

Anonymous wrote:

This still makes no sense to me. What's the difference between writing a check and saying you have the money for a down payment? Neither is no more proof that you actually have the money than the other.

It's been awhile since I purchased a house but I was under the impression the earnest money was actually deposited in an account that was overseen by a 3rd party and if the deal falls thru both the buyer and seller have to sign off for the buyer to get the money back. I think my realtor gave me a receipt of some sort of the deposit when my contract was accepted for this house.

To me there is a difference between the buyer putting X amount in a bank account that I as the seller may be entitled to if the deal goes south for certain reasons, that will be a pain for the buyer to get back if the deal goes south, that could have minor cancellation fees that the buyer pays should the deal not happen, that the buyer can afford to live without while we are waiting to get to closing versus telling me they will have x amount that they will bring to the table in 30 days and a letter from a bank that says they can afford it. As people say, money talks and bs walks. Think about anything you sign up for when you have to put down a substantial deposit ..it make you think twice, am I sure I'm going to go thru with it, can I afford paying that deposit money now, can I afford and am willing to risk possibly losing that money or possibly a portion of that money etc. it really commits you more to whatever you signed up for.

So yes, earnest money is important to me as a seller. As far as the downpayment amount, as a seller, I am taking someone else's word that the money really exists but my thought is someone with a bigger downpayment will have less risk of the financing falling thru at the last minute and will have room to compromise with things found in the inspection or the appraisal. Everyone of course wants to negotiate the best deal but if you can just afford the house barely, finding out the roof likely need to be replaced in 2 years might cause you to walk away or argue for me as the seller to do more because you cannot afford the house otherwise.

http://www.realestateabc.com/insights/deposit.htm

[Anonymous]

How much EMD would you do on 500k houses?

[Anonymous]

Anonymous wrote:How much EMD would you do on 500k houses?

We put $10k EMD on the $490k property we purchased last month -- in a hot neighborhood. Our offer was accepted before the place was even shown to anyone else. Open house canceled.

[Anonymous]

Anonymous wrote:

Anonymous wrote:How much EMD would you do on 500k houses?

We put $10k EMD on the $490k property we purchased last month -- in a hot neighborhood. Our offer was accepted before the place was even shown to anyone else. Open house canceled.

I'd say $10k would probably be on the lower band of what would be acceptable, too. Probably push to $20,000 if you can.

[Anonymous]

This is a disturbing thread insofar as people are buying 900K houses without a clue as to how a transaction works.

Earnest money indicates just that - earnesty in an offer. A full downpayment is the cash you bring to the closing table. 5% earnest money is plenty. What matters is buyer's ability to demonstrate to seller the ability to close the deal - a financial statement handed over is sufficient.

And you want a "liquidated damages" clause in your contract offer. If you fail to perform on the contract, the earnest money is all the seller is entitlted to - he can't come after you for more.

Please consult a RE lawyer before spending a million freaking dollars on a house!