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Old 02-16-2009, 12:40 AM
 
Location: Denver
1,082 posts, read 4,218,405 times
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my brother is trying to sell a house in Colorado and said his realtor said they took the earnest money forfeiture language out of the standard contract. This varies by state law and custom but it's a contract and personally why would you take your house off the market for anyone if they didn't care enough to put some amount of money down? The old ones in Colorado had an "out" that if the buyer could not get financing at or below certain terms then they could get out. I'm not sure I would believe a realtor anywhere anymore without checking around. They have associations to police realtors everywhere.
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Old 02-16-2009, 01:58 AM
 
25,895 posts, read 49,846,036 times
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Quote:
Originally Posted by esya View Post
my brother is trying to sell a house in Colorado and said his realtor said they took the earnest money forfeiture language out of the standard contract. This varies by state law and custom but it's a contract and personally why would you take your house off the market for anyone if they didn't care enough to put some amount of money down? The old ones in Colorado had an "out" that if the buyer could not get financing at or below certain terms then they could get out. I'm not sure I would believe a realtor anywhere anymore without checking around. They have associations to police realtors everywhere.
The standard forms have as much to do with keeping the Broker out of trouble as well as facilitating the sale.

I cross out language I don't agree with and add an addendum page for clauses important too me.

Of course, anything contrary to public policy/state law isn't enforceable.

Just make sure you understand the contract before you sign and make darn sure you know what your outs are... like subject to securing financing, approval of pest control report... etc.
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Old 02-16-2009, 06:27 PM
 
739 posts, read 2,698,411 times
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I can see putting some earnest money down, but not that much. If you are buying in California, any seller should be happy to have someone interested. I wouldn't want to risk tying up cash if a sale falls through.
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Old 02-17-2009, 07:07 AM
 
Location: Bay Area
2,406 posts, read 6,808,449 times
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We are in the same boat, we are making an offer and the seller wants $12,000 earnest money. We generally were told to only put down 1% which would be $6,000 but they won't back down on this, I suppose they need to be reassured that we are serious about the offer.
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Old 02-17-2009, 12:31 PM
 
25,895 posts, read 49,846,036 times
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Make sure you fully understand the ways your deposit can be lost and realize it can be difficult to get back without the cooperation of all parties...
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Old 02-19-2009, 05:27 PM
 
69,372 posts, read 53,676,773 times
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Originally Posted by haroldong View Post
I'm putting an offer for $300,000 for a house near Monterey. I'm new to the area but my realtor says I should put $10,000 earnest money to show my real interest. That sounds like a large amount to me. Is that the norm in California?
The amount really is not important because most offers come with an out, such as "contingent upon financing".. All that matters is that the seller accepts the amount and you agree to pay it.. I'd offer $2500 and go from there..
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Old 02-19-2009, 09:37 PM
 
Location: Cary NC
553 posts, read 2,084,367 times
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I have to say that in a sellers market it would be acceptable to make your offer more attractive. If it is your first offer to purchase then i would not offer more than 1%. See if they take it. If there is dispute between you and the seller and you end up in mediation (in the CAR CA purchase agreement) the deposit will be held until judgement is awarded or agreement is reached. If it fails mediation and goes to arbitration it could be over 1 year before you see your money, if you win.
Since it is now a buyers market not a sellers, I personally would start with $1,500. If they don't like the offer or if it becomes a multiple offer situation and I really want the home then I might up it by a few thousand more. You can offer whatever you want but I wouldn't show your full hand at the first offer.
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Old 03-22-2009, 10:06 PM
 
Location: Sandpoint, Idaho
2,880 posts, read 5,083,554 times
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OP, for our purchases in Idaho, EM were all $1000.
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Old 03-23-2009, 08:53 AM
 
9,807 posts, read 12,932,089 times
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I guess I just don't get it.

I always thought putting earnest money down was to ensure that the house could not be sold to anyone else.

Thus, by putting money down, you are----in effect-- putting a "hold" on it.

Why should you expect to get your money back if you don't buy it?
( I am referring to dmccauley)
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Old 03-23-2009, 09:27 AM
 
Location: Sandpoint, Idaho
2,880 posts, read 5,083,554 times
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marmac,
good question. given the stories I have read about, there are at least two kinds of "earnest monies". One is to enter into a good faith negotiation. The other functions as a deposit to secure a place in the queue in new building or development.

For the purposes of good faith negotiation, the EM that accompanies the offer should be based on full disclosure and satisfactory inspection and agreed upon rules with regards to financing.

I agree with dueterdu, in a fast seller's market, a month burned on someone who is skittish from the get go would be killer, esp if it happened late in the selling season. In a down market, I don't see how the buyer needs to put huge EM especially since financing is so insane. Rather I think the seller needs to due some preliminary due diligence on the creditworthiness of the buyer.

In four homes and one additional short sale that fell through, I never put more than $1K as EM (.25-.50% of bid price). TO put up $12K, $60K, $10K, etc. in EM in my first purchase would have made me very nervous.
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