EARNEST MONEY, OR AN “ESCROW DEPOSIT”, AS IT’S OFTEN CALLED, CAN SEND A MESSAGE TO THE SELLER AS TO JUST HOW SERIOUS A BUYER ARE YOU… OR AREN’T. YOUR FIRST AND SECOND ESCROW DEPOSITS MAKE A STATEMENT. JUST HOW SERIOUSLY DO YOU WANT THE SELLER TO ENTERTAIN YOUR OFFER? HOW AGRESSIVELY (OR GINGERLY) DO YOU WANT HIM OR HER TO COUNTER? … CAN YOU ENTICE THE SELLER INTO ACCEPTING YOUR OFFER OUTRIGHT?
I WISH THERE WERE A STANDARD (ACROSS THE BOARD) RESPONSE, BUT THERE ISN’T. EVERY TRANSACTION IS UNIQUE. THE QUESTION AS TO ERNEST MONEY IS SO FREQUENTLY ASKED BY BUYERS THOUGH, I’LL GIVE YOU MY GENERALIZED OBSERVATIONS:
ON A SHORT SALE, I GENERALLY RECOMMEND A RATHER BARE MINIMUM AS A FIRST DEPOSIT. TYING UP MONEY ON A TRANSACTION THAT’S ‘IFFY’ AND MAY TAKE MONTHS TO CLOSE (4-8 MONTHS ON A SHORT SALE), IS NOT IN THE BEST INTERESTS OF THE BUYER.
HOWEVER, A ‘BARE MINIMUM’ DEPOSIT WILL BE TAKEN FAR LESS SERIOUSLY ON “REGULARLY-LISTED” HOMES FOR SALE.
FIRST AND SECOND DEPOSITS SHOULD BE BASED ON YOUR OWN PERSONAL FINANCES AND LIQUIDITY, THE PROPOSED CLOSING DATE, THE PRICE OF THE PROEPRTY, AND THE SPECIFICS OF THE TRANSACTION. YOUR DEPOSIT WILL BE PARTLY INFLUENCED BY THE AMOUNT OF CASH YOU WILL ULTIMATELY BE BRINGING TO THE CLOSING TABLE … AND/OR THE AMOUNT OF LOAN YOU ARE ASKING FOR. TYPICALLY BANKS REQUIRE A 20 PERCENT DOWNPAYMENT (UNLESS IT’S AN FHA LOAN, WHICH IS APPLICABLE TO A PRIMARY RESIDENCE ONLY).
HEFTY EARNEST MONEY DEPOSITS ON A PROPERTY THAT WILL CLOSE ON IN 21 DAYS IS ONE THING … BUT YOU MAY PREFER NOT TO TIE UP A LARGE CHUNK OF CHANGE ON A PROPERTY THAT WON’T CLOSE FOR SEVERAL MONTHS. THAT SAID, IF YOU’VE GOT LIQUID FUNDS, YOU CAN MAKE YOUR OFFER STAND OUT BY PUTTING DOWN A SOLID ESCROW DEPOSIT … SHOWING THAT YOU ARE SERIOUS. THE MORE YOU PUT DOWN, THE MORE SERIOUSLY A SELLER IS LIKELY TO PERCEIVE YOUR OFFER.
WHATEVER YOU OFFER, SUBMIT IT ALONG WITH A PRE-APPROVAL LETTER.
IF YOUR’S IS A CASH PURCHASE, SUBSTANTIATE THE OFFER WITH A LETTER FROM YOUR BANKING INSTITUTION (INDICATING THAT YOU HAVE SUFFICIENT FUNDS TO CLOSE).
MAKE SURE THAT YOUR EARNEST MONEY DEPOSIT IS IN NO WAY AT RISK. FOLLOW THE TIMEFRAMES IN YOUR CONTRACT – CAREFULLY. RELY ON A EXPERIENCED REALTOR AND OR REAL ESTATE ATTORNEY TO OVERSEE YOUR TRANSACTION . IF YOU OR SOMEONE YOU KNOW IS IN THE MARKET TO BUY OR SELL REAL ESTATE , PLEASE GIVE US A CALL. CELL: 305 793-1365 OR 305 632-0164 … OR JUST SEND US A NOTE HERE. WE’LL BE DELIGHTED TO HELP. WE SPECIALIZE IN MIAMI … BUT HANDLE RELOCATION REFERRALS INTERNATIONALLY. THE RESTIVO TEAM. WWW.MIAMIREALESTATECAFE.COM
