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Deposit With Purchase Contract

I'm putting in my third offer in to buy a home and this seller is asking for a 10% earnest money deposit on a $535,000 home. Is there any standard or rule of thumb - I thought it was around 5% and $53,000 seems like a lot of money. What will happen if I only offer a 5% deposit?
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Jon Griffith
Jon Griffith
Real Estate Professional
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A seller has the right to ask for whatever they wish. The earnest deposit is the amount that you are willing to put up to show that you're serious about buying the house, because at one point during the transaction, you may be at risk of losing it if you cannot perform.

Rule of thumb changes with the market. Currently, we see somewhere between 1-2% on homes. I'd say for a half-million, you're probably going to put up about $10-15K. It's completely up to the seller whether or not they'll accept an offer with a lower earnest deposit.

Marci is right about representation. You need an agent. The seller pays your agent, so short of closing costs, you aren't out of pocket all for professional representation.

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That really seems like a lot of money for a deposit. A lot of people don't even have a down payment that large, let alone offer that much in earnest money. Things may be different where you live, but my understanding is that Earnest Money should be just enough to show that you are in earnest about wanting to buy the house. It doesn't have to be a particular amount. (Remember, you can lose your earnest money if you cancel the contract after your inspection period.) I recently put in an offer on a $150,000 house, and my realtor suggested $1,000 in earnest money. Maybe the seller has been screwed over in the past by someone who couldn't get funding? Or maybe they're hoping you'll cancel the contract so they can keep your earnest money?

The first thing you should do is get pre-approved for your loan. Your lender will give you documentation that you can show to the seller. The second thing you should do is get your own realtor. It won't cost you any more (your realtor will split the commission with the seller's realtor) and you really need someone to protect your interests. Your realtor will know what is customary in your area, and can give you the best advice regarding your deposit.

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