Sunday, February 24, 2013

As a seller how much should I expect a buyer to put down? As a buyer how much should I put down?

The subject of earnest money always comes up when you are ready to prepare a purchase offer on a house or condo.

What is earnest money?

Basically it is an amount submitted as a deposit on real estate you want to purchase.  The definition tells it all – deep sincerity, serious, not made lightly.

When working with buyers I usually suggest this as a guideline.  Put down  enough to let the seller know you are serious but not so much that you would not be afraid to walk from if something strange happens.  [I have never had a buyer lose their earnest money but still you never know!]

When working with sellers I usually suggest this as a rule.  Expect enough to make sure the buyer is serious and an amount that would make them think twice about walking away for no reason.

So what is an appropriate amount?

If there is financing involved I believe about 1-2% of the offer price is an appropriate amount (as well as a mortgage pre-approval letter).

If it is a cash offer I believe a buyer should expect to provide a higher amount (as well as a proof of funds letter).

Buying or selling a house in Viera, Rockledge, or Melbourne, Florida?  Call me if I can help in any way!