Earnest Money Deposit
After you have come up with
an offer price, the next step is to determine how large a deposit you want to
make with your offer. You want the "earnest money deposit" to be
large enough to show the seller you are serious, but not so large you are
placing significant funds at risk.
One recommendation is to
make sure your deposit is less than two to three percent (depending on your
location) of your offered price. The reason for this is that if your deposit is
larger than that, the lender will pay particular attention to how you came up
with the funds. You might have to provide a copy of a canceled check along with
a bank statement showing you had the money to begin with. Normally, this is not
a problem, but if you have a short escrow period or are barely coming up with
your down payment, it could pose an inconvenience.
Another reason to limit
your deposit is "just in case." Although significant problems are the
exception and not the rule, they do occur. "Just in case" there is a
nasty or prolonged dispute between you and the seller, the less money you have
tied up in a deposit, the fewer funds you have placed at risk.
As with practically
everything in real estate, there are exceptions to this rule, too. During a hot
market there may be multiple offers on the property that interests you. A large
deposit may impress a seller enough so they will accept your offer instead of
someone else’s, even when your unknown competitor is offering the same price or
slightly higher.
Since large deposits do
impress sellers, you may also find that by making a large deposit you can
convince the seller to accept a lower offer. More money up front may save you
money later. Call Dale or Cathy for Homes on the Pinehurst golf courses.
There are also times when
closing can be delayed by weeks, through no fault of your own. Have back-up
plans prepared for such a contingency.
This site was developed to
provide information on Pinehurst real estate including Pinehurst Golf
and Waterfront homes, Pinehurst condos, and Pinehurst and Southern Pines
Commercial real estate.
Coldwell Banker United Realty
Dale
Heck – Realtor/Broker
910-528-4652
Cathy Bason – Realtor/Broker
910-528-5244
