earnest money (sale, real estate, loan)

[docMI]

hi folks,
i am in the process of looking into some houses and came to know of earnest money amounts. 5yrs ago, if i remember, i have given a check for $1000 (in another state ofcourse). my friend here said he paid $1500 for his house in 2003 for a house of 230k.

i came to know that orleans charges an amount higher than the rest ?20,000 dollars for 450k house. i dont know if this is true or if some is pulling my leg.

i am looking for some advice on this from the folks who have recently bought a house in south charlote area or the real estate pro on the forum. i want to know of your experience on this when writing a contract.

thanks in advance

[Plan R]

We did 1% of our initial offer (below listing price by a few %) a few weeks ago on an existing home. $200,000 = $2,000, $300,000 = $3,000, etc. Not sure how standard this is.

[Charlottean]

There is not a standard, it is completely negotiable.

However, most agents like to see around 1% on re-sales. Merchant or Production Builders are a different story. Some of them ask for more, but it is still negotiable.

UNLESS it is a true custom build. Then you are making scheduled deposits as working capital and they typically can be around 10% of the purchase price.

[docMI]

thanks folks.
charlottean your expertise is invaluable.
that is what i thought and sounds more appropriate.

[nancymom4]

Originally Posted by docMI

hi folks,
i am in the process of looking into some houses and came to know of earnest money amounts. 5yrs ago, if i remember, i have given a check for $1000 (in another state ofcourse). my friend here said he paid $1500 for his house in 2003 for a house of 230k.

i came to know that orleans charges an amount higher than the rest ?20,000 dollars for 450k house. i dont know if this is true or if some is pulling my leg.

i am looking for some advice on this from the folks who have recently bought a house in south charlote area or the real estate pro on the forum. i want to know of your experience on this when writing a contract.

thanks in advance

Earnest money deposits show good faith in your attempt to qualify and purchase the home. The new NAR contracts have tried to make the refunding of these monies, if the sale does not go through (if it does, this EM is deducted off the loan amount),to the appropriate party-seller or buyer-a little clearer but they can always go to arbitration if both parties do not agree and this can be a lengthy process. As far as Orleans, I assume you are speaking of new construction. BE careful, especially if you have no Buyer Representation, as to the stipulation of the "deposit" and how this will be dispursed. I had a post in regards to this in a past thread. I'll see if I can locate it and send by DM. Usual rate is 1-3% and may vary according to the conditions-multiple offers, contingencies, etc. Some forclosures stipulate the amt. the EM needs to be. Hope this helped answer some of your questions.