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Established Member
Keg2012
Posts: 10
Registered: ‎06-29-2008
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Question on earnest money amount in CA

So after stalking the boards and feeling super informed about the process we finally got preamp proved with a direct VA lender. So it's zero down, our closing cost are covered   and we found a home to put an offer on $499k listed. Ten the agent says we need wear nest deposit andd I though ok 1-3 k not too big of a deal but he wanted 10-15k! He said the seller wouldn't even consider it with $3000! I was shocked! 

We told him that's all we could do and the worst the could say was No and asked him to call the selling agent to get a feel on their flexibility with this ( House has been on the market 40 days where they are typically lasting 10) The agent  said they would consider it so we put a full price offer (originally we would have offered 489k) to make the offer stronger SO my question is 10-15k typical of an earnest deposit? I mean I get it if you have to put that money down for a down payment or closing but if you don't is that much necessary?

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Elcid89
Posts: 567
Registered: ‎10-04-2012
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Re: Question on earnest money amount in CA

It depends on the market as to what is typical, but I wouldn't say that it is unusual in California. The seller is free to set whatever deposit requirement he wishes, and in a hot market, they tend to set them higher to weed out marginal buyers. They don't want to be locked into a maybe when they can sideline maybes and lock in a definite.

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Keg2012
Posts: 10
Registered: ‎06-29-2008
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Re: Question on earnest money amount in CA

Ugh. I wish I woulda known maybe I wouldn't have paid so much to the cc's ... What do you think the chances are? The one thing tht looks good for us is that with the house our debt/ income is only 31%....

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Elcid89
Posts: 567
Registered: ‎10-04-2012
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Re: Question on earnest money amount in CA

[ Edited ]

Keg2012 wrote:

Ugh. I wish I woulda known maybe I wouldn't have paid so much to the cc's ... What do you think the chances are? The one thing tht looks good for us is that with the house our debt/ income is only 31%....


It's possible. With the listing being aged, you should have a motivated seller, but if he's jerking you around about the deposit, it doesn't bode well (IMO) for the negotiating process. What are the comps in the area going for?

 

My primary rule with regard to buying real estate has always been that you have to be prepared to walk away. Construct the maximum deal in your head that you are prepared to offer, and try to get below it. If the seller remains incalcitrant and won't at least hit your worst case deal, then walk away. If the house is in good condition, in a desirable area and priced correctly, it should have moved long before now. That it hasn't tells me that either 1) it has problems or 2) it has a problematic seller. In this case, I'm betting on #2.

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Keg2012
Posts: 10
Registered: ‎06-29-2008
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Re: Question on earnest money amount in CA

[ Edited ]

The comps are really right on...  The realtor originally suggested 489.

the house is empty and it's a standard sell, I don't think it was a flip because the last sell recorded was 08/2003 but it has been updated with new floors and carpet,  with all that I would think they would be motivated. the reason the realtor said it might still be on the market is that it's a little ways from the freeway, maybe 5 miles not that  big of a deal to us. Honestly, he kind of scared us into a full price offer because of our deposit But we are comfortable with the price, we won't pay more than that Though.

Homes are starting to go a little faster but There are a lot of homes out there right now that we would be happy in but I'm just worried that we will run into the sames problem on the earnest deposit amount being too insignificant.

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Elcid89
Posts: 567
Registered: ‎10-04-2012
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Re: Question on earnest money amount in CA

That high deposit requirement strategy is the sort of thing that you employ when you expect to be flooded with offers in an overheated market, and you want to winnow out the weaker buyers. The accepted standard for earnest money requirements in a normal market tends to hover around 1%, give or take. This clown is demanding 3%, which is excessive IMO.

 

Given that the market isn't remotely overheated, it sounds to me like the guy either doesn't really want to sell the property (deep down), so he's sabotaging the deal or he's operating in la-la land and thinks he's sitting on Windsor Castle. I'm amazed that his realtor didn't flip out over him mandating that deposit in this market.

 

I wouldn't imagine that you'll run into other sellers in the area wanting that much down. It's a self-defeating strategy for someone who ostensibly wants to work a deal and get the thing sold.

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Established Member
Keg2012
Posts: 10
Registered: ‎06-29-2008
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Re: Question on earnest money amount in CA

We just got a response from the seller, they are now asking 520k! The house has been on the market 50 days, there was no open house over the weekend and they said they got multiple offers, total bs! We are NOT paying more than asking (499). I just can't believe it!
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beb86
Posts: 1,115
Registered: ‎10-31-2011
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Re: Question on earnest money amount in CA


Keg2012 wrote:
We just got a response from the seller, they are now asking 520k! The house has been on the market 50 days, there was no open house over the weekend and they said they got multiple offers, total bs! We are NOT paying more than asking (499). I just can't believe it!

this would be a good situation to walk away if you didnt want to deal with it BUT if you did have the funds and settled on a quick close with 0 money down, seller paying closing cost, and if the accept a reasonable offer you will get the earnest money back at closing

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StartingOver10
Posts: 4,545
Registered: ‎03-06-2010
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Re: Question on earnest money amount in CA

Are they now asking $520k because you asked them to pay your closing costs and pre-paid expenses in the offer?

 

If so, then pay your own closing costs and reduce the price to what you are willing to pay. Some sellers absolutely do not want to pay the buyer's costs, especially when they see their own costs to close.


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