Earnest Money on Home Purchase?

[usabassin]

What's a fair earnest amount on a home purchase? Thanks

Looks like we are going to have two offers. One with better terms except 500 earnest and a little less terms offer has 1000 earnest. Based on that is there a difference?

[grout-scout]

Edit, I was thinking option period money: my wifey said 1% is normal, but that it’s negotiable.

[rickdb1]

Depends on the price of the house. $150,000 house-$1000.00-$1500.00 $500,000 house-$15,000.00-$20,000.00

[Rkammer]

I'm a Broker in Central Florida. Earnest deposits are always negotiable but, an offer for a median price home should be at least $1000 and preferably $2,000-$3000. On homes above $300K a $5,000 deposit is frequently made.

[Keystonekiller]

$500, you get it back so really what's the damn point?

[wildturkey]

Not sure about the answer, but wouldn’t how long it is held have a factor. Holding a long time may cost a sell.

[Captain Chunk]

Depends on the price of the house. $150,000 house-$1000.00-$1500.00 $500,000 house-$15,000.00-$20,000.00

I’m in the mortgage biz and have never seen a $20K earnest deposit on a $500K house. 1% of the sales price is a good rule of thumb but as mentioned above it’s a negotiable fee.

[weim hunter]

Most houses we sale are in the 100-250k price range. 95%+ put up $500 for earnest money.

[Doorman1]

1 to 1.5% of asking price new construction custom builds 15 to 20% down.

[Rkammer]

Not sure about the answer, but wouldn’t how long it is held have a factor. Holding a long time may cost a sell.

How long the deposit is held has no bearing on the amount of the deposit. Most residential home sales are closed within 30 to 45 days from the date of the contract signing and the deposit goes towards the purchase price at closing.

[Rkammer]

$500, you get it back so really what's the damn point?

The point is that the earnest money deposit is meant to show "good faith". A buyer is much more likely to walk away from a $500 deposit than a $2000 deposit if he/she gets cold feet or just changes their mind. The only time the deposit is returned to the buyer is if the lender doesn't approve the loan or the seller defaults on one of the conditions in the contract.

[OkobojiEagle]

$500, you get it back so really what's the damn point?

You back out of the deal... you lose the deposit.

[n2ratfishin]

I imagine every region is different. We sold our old house last year for 269,000. We had three offers in a week. Not one of them put more than a thousand dollar deposit. Funny enough, writing letters back and forth about why we were selling and why potential buyers wanted the house seemed to be all the rage. I told my realtor I didn’t get that? She told me I paid her to sell the house and recommended doing so. I can’t argue with it working.

Back in the day I would put 5K down on a 100,000 dollar house. I was told earnest money really didn’t amount to much anymore because there were so many ways out if someone really wanted out.

We bought our current house without a realtor, FSBO. It was for sell for an hour and a contingency on our old house selling. We agreed to terms and started the process on a handshake and signed contract. Both parties knew the house would sell in a week if something fell through on our end....market plays a role.

[Duece22]

What's a fair earnest amount on a home purchase? Thanks

In my part of Ohio, we typically don't do earnest money unless it's a REO property.

[cowtrimmer]

We had three offers in a week. Not one of them put more than a thousand dollar deposit.

You took deposits from three sellers in a week ?

[Duece22]

I imagine every region is different. We sold our old house last year for 269,000. We had three offers in a week. Not one of them put more than a thousand dollar deposit. Funny enough, writing letters back and forth about why we were selling and why potential buyers wanted the house seemed to be all the rage. I told my realtor I didn’t get that? She told me I paid her to sell the house and recommended doing so. I can’t argue with it working.

On the seller side, I dont get the letters. I have had buyers send my sellers letters regarding how much they like the home and that little Johnny loved the back yard and can run free type crap.

I always tell people to let their offer do all the talking, 9/10 times the seller wants the most money for the home as possible and doesnt care who gets it.

[n2ratfishin]

You took deposits from three sellers in a week ?

Not me personally, the realtor handled all that through contracts and escrow accounts. Two were contingency offers with 24 hour right of refusals. The person that bought was a renter, full offer no contingency and didn’t ask for any closing cost. In a military town like this you can expect the seller to pay closing cost.

[csurp]

The point is that the earnest money deposit is meant to show "good faith". A buyer is much more likely to walk away from a $500 deposit than a $2000 deposit if he/she gets cold feet or just changes their mind. The only time the deposit is returned to the buyer is if the lender doesn't approve the loan or the seller defaults on one of the conditions in the contract.

I bought a house in FL last year. The realtor said he was able to sell my offer to the owner by pointing out the higher than average earnest deposit I put down. Well, telling the guy I was headed back to KY within the week helped a little, too.

[old373guy]

I just bought a house two months ago and we were asked to put $2500 up as earnest money on a $419K home we made an offer on. We got the house and was refunded the $2500 at closing.

[Rkammer]

I just bought a house two months ago and we were asked to put $2500 up as earnest money on a $419K home we made an offer on. We got the house and was refunded the $2500 at closing.

By "refunded" do you mean they put the $2500 towards your closing amount or, you paid the full amount at closing and they gave you back a check for $2500? That would be rare in my experience.