How Much Should I put down for Earnest Money Deposit?

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Real Estate Agent with Century 21 New Millennium

How Much Should I put down for Earnest Money Deposit?

Barequecaba, Sao Sebastiao_By Gabriela Agostinelli 

 This is a very common question. Clients ask me all the time, how much should it be? who will hold the check if the offer is accepted?

Every offer that gets written will have an "earnest" check attached to it. The check referred to as your "earnest money deposit" or "Good faith deposit". Your agent will send your offer to seller's agent (or to the owner if it is a "for sale by owner") with a copy of your earnest money check. It is returned if the offer is rejected.

The "earnest money deposit" or "good faith deposit" is the money you provide to the seller to hold in escrow during the process of buying their home. It shows that you are serious on buying their house.

The amount of the earnest money really depends. If you are looking on a house that has been on the market for a long time versus a "hot buy" that is receiving multiple offers...Customarily starts at $500, the most common amount that I see over there is $1,000 or normally 1% of sales price or close to it. It is really up to you!

The earnest money check is hold in an escrow account, from the real estate office that is handling the sale. If your offer is accepted the amount of your "earnest check" will be applied towards your closing costs. It will show on your HUD-1. So this money will reduce what you need to "bring to the table". Of course that will depend if sellers are paying a portion of the closing costs. Each situation is different. Talk to your agent if you have questions. If you don't have an agent to represent you, I will be more than happy to help you in Maryland or to recommend somebody out of my state.

 

 

 

 

How Much Should I put down for Earnest Money Deposit?

 

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Topic:
Real Estate Industry
Location:
Maryland St Mary's County
Tags:
good faith deposit in maryland
earnest money deposits in maryland

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Ambassador
1,010,201
Harry F. D'Elia
Investor , Mentor, CSSN, Radio Coach, REOs, ABR
Precision Real Estate Inc.

I always advise between $500 to $1000 when it comes to earnest monies. There are times when the banks will ask for 10% of sales price when it comes to earnest money. It is all about negotiating.

January 25, 2011 10:43 AM
Rainer
76,452
Gary De Pury
Bay Vista Realty

I see this all the time, but my favorite was when an agent wrote the amounts in backwards.  They contracted with me to place $150,000 in Escrow. 


I held them to it and made them deposit it......YES I DID!!!!!!!!!

 

We closed!

 

Gary De Pury, SFR

January 25, 2011 10:45 AM
Rainmaker
578,820
Robert Rauf
HomeBridge Financial Services (NJ)

Even in no money down scenarios I like to see $1,000.  I have actually closed a few over the years with $0 or $100 up front with no additional deposit ... and even as a lender I dont think that is fair for  a seller... $1k is enough to hold your typical 0% down buyer, You need something to keep their feet warm!

January 25, 2011 10:49 AM
Rainmaker
274,874
Jeff Craig
Greensboro Realtor/Broker/CSP/CNRS
Allen Tate Realtors/Smith Marketing Inc.

In our area, $1,000 seems to be the average.  More if we are looking at $1,000,000 plus homes.

January 25, 2011 11:00 AM
Rainmaker
437,508
E.J. "Mike" Carlier
Lakeville MN
CENTURY 21 MarketLink Realty

I think there's a psychological advantage in a healthy amount of earnest money.  I advise clients to make their earnest money amount as high as their comfort allows unless the listing is a bank owned or a short sale.

January 25, 2011 11:01 AM
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Rainmaker
302,385

Gabriela Agostinelli

your full time agent!
Relocating to Pax River MD?
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