Opinions on earnest money depost amount (Fairfax: real estate, lease, credit)

[jillabean]

I am curious what the average/typical earnest money deposit is in Fairfax County. I am looking in the $300k-$380K range and have enough easy access, liquid cash (in my checking account) to put down 2% if I find a place. But I read typical (nationwide) is 1-3%. What is typical for this area specifically? Will my 2% (around $8000k) be enough for a house in the range I am looking at?

Thanks!

By the way, I found a thread from 2 years ago about this subject, but that was then and I am wondering if things changed for today's market. Thanks!

[CaVa2011]

We close mid-April and we put down 2.7% to show seller we were serious with our below asking price offer.

[persnicketygal]

I'm sure somebody will correct me if I'm misreading this, but ...

The earnest money deposit is what you write a check for when you and your real estate agent (if there is one) submit your offer for the house, correct? So the real estate agent will advise you what it should be. It's really only an amount that tells the seller whether you're serious about your offer and just an indication of whether you have the money to really be able to afford the property, and it helps the seller determine the risk of you bailing (say, if you're not a great credit risk and can't get your financing together) once it comes time to go to settlement.

The deposit is only one of several variables that will determine whether your offer is accepted (like contingencies, lease-backs for a homeowner who needs extra time in the house because his next house isn't ready for him, etc.), so I wouldn't sweat that detail -- altho for a home in your price range, $8K seems quite acceptable.

When I bought (during the height of craziness), mine was around $5 or $6K for a bid of around $300K.

[FCNova]

Originally Posted by jillabean

I am curious what the average/typical earnest money deposit is in Fairfax County. I am looking in the $300k-$380K range and have enough easy access, liquid cash (in my checking account) to put down 2% if I find a place. But I read typical (nationwide) is 1-3%. What is typical for this area specifically? Will my 2% (around $8000k) be enough for a house in the range I am looking at?

Thanks!

By the way, I found a thread from 2 years ago about this subject, but that was then and I am wondering if things changed for today's market. Thanks!

Does that mean that is all you have for the entire down payment? 2% should be fine for your earnest money deposit, but I think the lowest downpayment possible right now is probably an FHA loan which requires 3.5% down.

[jillabean]

Cool, thanks!

I am looking at just two contingencies on whatever house I find (finance and home inspection). I think those are typical. I don't think finance should be too hard though, I've been pre-approved for up to $425 (but I like the range I gave above because I can put 20% down). The 20% down isn't easy access though and my financial adviser said it could take 2-3 weeks to move the money from where it is to something easy access like my checking account. So it's not "good" earnest money deposit cash.

[jillabean]

Originally Posted by FCNova

Does that mean that is all you have for the entire down payment? 2% should be fine for your earnest money deposit, but I think the lowest downpayment possible right now is probably an FHA loan which requires 3.5% down.

Sorry, I know that I was as clear as mud. I have 20% down so long as the house isn't anymore more than $380k. But that money is in an account that will take a while to liquidate. I have 2% floating around in my checking account if I see something and want to make an offer.

[Margery]

Originally Posted by jillabean

Cool, thanks!

I am looking at just two contingencies on whatever house I find (finance and home inspection). I think those are typical. I don't think finance should be too hard though, I've been pre-approved for up to $425 (but I like the range I gave above because I can put 20% down). The 20% down isn't easy access though and my financial adviser said it could take 2-3 weeks to move the money from where it is to something easy access like my checking account. So it's not "good" earnest money deposit cash.

You might want to add an appraisal contingency (ask your agent). That will ensure that if the house appraises at lower than your agreed upon purchase price you do not have to proceed with the purchase unless your seller agrees to lower the purchase price to match the appraised price.

As far as earnest money goes, 1 or 2% is fine, listen to your agent's recommendations on this. The fact that you can put 20% down will greatly impress the seller.

[CaVa2011]

Yep, bringing 25%, when I wrote 2.7% I was referring to amount of earnest deposit.

[boyd888]

1% is fine. 2% isn't really any different. Other than your actual bid, your chances of getting an accepted offer is based more on your contingencies and loan (down payment, type).

I.e. if one person puts in an offer with 3% earnest money, but FHA with 3.5% down and a bunch of contingencies, they may lose out to an offer of 1% earnest money 20% down conventional loan.

[djmont]

When we bought a house recently, our agent said that 1% deposit was typical. We put a little more, because we were making a contingent offer and wanted to show we were serious. But when we sold our house, I really didn't consider the deposit as a factor. If they'd put down less, I wouldn't have cared.