Fee for making an offer?

[Anonymous]

Is it normal to have to put in a 3% fee with your offer on a home?  It's my understanding that I'll get it back if they don't accept my offer or at closing if they do.  Anyone ever heard of this?  Is this normal or should I walk away?  Having the money in my pocket feels much better than someone else issuing me a check later; hopefully.

[DallasLoanGuy]

depends.

this does happen in some markets.

however.... if you are using a buyer's agent.... they should be able to negotiate that down.

the inclusion of an 'earnest money check' with your offer just makes it look stronger. and in some competitive markets(yes, they are still out there..... it isnt all a bubble) these 'strong offers' are a must.

i hope you have a bulldog for a realtor and not a 'yes man'

[Anonymous]

Thank you for your response Dallas! 

I'm really confused.  Agent wants me to provide a certified check for 3% of a 196000 purchase ($5,880) made payable to Epic Realty who apparently is handling the sale of the home for the bank (foreclosure).  My agent works for Remax.  Also, I still haven't locked in interest rates and do not want to pay more than 6.50% (FHA) for budget reasons.  Should I put something in the PA like "offer contingent upon inspection of property, approval of loan and loan interest rate not to exceed 6.5%"?  Will I get my money back if the loan papers come back to be signed and the interest rate is more than 6.5%?  I'm really concerned about forking over this kind of money without any real assurances.   

[Anonymous]

You can always counter offer that 3% with something else...we purchased a bank owned and they asked for $5900 in earnest. We said no way in hecko and offered $3k and it was accepted.

The thing about it though is...earnest money in some instances isn't refundable so be careful and read your contract. At the end of the deal that money is applied towards whatever you want it to be (closing, principal, etc).

Most contracts include a contingency clause but when dealing with bank owned properties you have to be sure that you include the right wording b/c they are more than likely selling the property "as is".

Hope this helps a little.

p.s. You can put anything in the contract you want, the kicker is getting them to accept that wording.

Message Edited by OurHouse404 on 07-11-2008 08:50 PM

[DallasLoanGuy]

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SuzieQuzie wrote:

Thank you for your response Dallas! 

I'm really confused.  Agent wants me to provide a certified check for 3% of a 196000 purchase ($5,880) made payable to Epic Realty who apparently is handling the sale of the home for the bank (foreclosure).  My agent works for Remax.  Also, I still haven't locked in interest rates and do not want to pay more than 6.50% (FHA) for budget reasons.  Should I put something in the PA like "offer contingent upon inspection of property, approval of loan and loan interest rate not to exceed 6.5%"?  Will I get my money back if the loan papers come back to be signed and the interest rate is more than 6.5%?  I'm really concerned about forking over this kind of money without any real assurances.   

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ask your realtor.

[ShanetheMortgageMan]

The amount of earnest money should be what is usual and customary for your neck of the woods.  Most places accept 1% of the sales price as earnest money... however in a transaction I'm doing in Charlotte the buyer only put down $750 on a $150k sales price, that's just 1/2%.

Suzie, if that "contingency" language is not already in your contact (which I think it should be by default) then feel free to add it in and see what the seller says.