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Hi everyone I am under contract to buy a $1.7 mil property. I alwasy thought earnest money was 3%, but my agent says no its 5-10% so we settled on $75,000. Seller wants to make this earnest money non refundable after 30 days which gives us 30 days to get a loan. Well, the 30 days is up, the seller in not motivated to really sell anymore, they will extend for another week, but after that the earnest money is non refundable. The bank says they can issue a loan committment within that time, but with the instability of banks I really dont feel comfortable making my earnest money non refundable espcially in that I am doing a stated loan with 40% down. My agent tells me its normal for earnest money to be non refundable, but $75,000 and in this loan environment??? In most bank approval letter Ive gotten in the past the conditons clearly state that banks are allowed to cancel, or withdraw their approval anytime they see fit during now and close of escrow. Does anyone know is this is the norm in this market???Would this be a risk you would be willing to take? I mean its not abnormal that a bank decideds they non longer want to do a loan program, or chagne their guidelines on a whim, or even go out of business.Is my agent acting on behalf of my best interest to ask that I make my earnest money non refundable? She ssays the laon officer is 99% sure of this loan, but to this day nothing in writing and even when I do get it in writing anything in writing from a bank these days may be all for nothing.
Yes.
It is common to put a deadline on a contingency, and where I work, in Raleigh/Cary, NC, the financing contingency nearly always has a deadline wherein the EMD may not be returned after that date.
Our standard Offer to Purchase and Contract also warns the client and agent to ensure that the lender will be able to make loan commitment within the deadline period.
"Nothing in writing?" Not acceptable. You are talking about more than order for a ham sandwich with chips here.
There is no standard for earnest money. The seller wants as much as possible. The buyer wants to put the least amount, at risk. It's all negotiated.
10%, especially on a high end home, is not unusual, in my area.
I do not know the language, in your contract, as it relates to a loan commitment. It is not uncommon for a loan commitment to have contingencies that depend on buyer performance, such as bringing the remainder of the down payment to the closing table. You don't and minimally, you will forfeit the escrow monies unless something else is agreed upon.
A loan commitment based upon the whim of the lender is not worth the paper it's written on.
What troubles me here is that it appears your agent is the intermediary between you and your lender. I do not understand this. It's your loan and you need to talk directly with the lender and impress upon them how much money you have at risk, here.
Hi everyone I am under contract to buy a $1.7 mil property. I alwasy thought earnest money was 3%, but my agent says no its 5-10% so we settled on $75,000. Seller wants to make this earnest money non refundable after 30 days which gives us 30 days to get a loan. Well, the 30 days is up, the seller in not motivated to really sell anymore, they will extend for another week, but after that the earnest money is non refundable. The bank says they can issue a loan committment within that time, but with the instability of banks I really dont feel comfortable making my earnest money non refundable espcially in that I am doing a stated loan with 40% down. My agent tells me its normal for earnest money to be non refundable, but $75,000 and in this loan environment??? In most bank approval letter Ive gotten in the past the conditons clearly state that banks are allowed to cancel, or withdraw their approval anytime they see fit during now and close of escrow. Does anyone know is this is the norm in this market???Would this be a risk you would be willing to take? I mean its not abnormal that a bank decideds they non longer want to do a loan program, or chagne their guidelines on a whim, or even go out of business.Is my agent acting on behalf of my best interest to ask that I make my earnest money non refundable? She ssays the laon officer is 99% sure of this loan, but to this day nothing in writing and even when I do get it in writing anything in writing from a bank these days may be all for nothing.
The deposit is normal obviously but usually (not always) they are refundable based upon continencies (such as failure to obtain financing). As always, everything is open to negoations but I have never heard "non refundable" being standard.
I wouldnt sign unless the $75K was refundable, I mean what if you get into something beyond your control, say the owner wont provide reasonable access for an appraisal or home inspection. Non-refundable actually provides an incentive to delay under some situations (say the seller needs $50K to cover past due mortgage payments)
I have done a non-refundable deposit once, but it started out refundable and converted to non-refundable when I needed an extension..
Hi everyone I am under contract to buy a $1.7 mil property. I alwasy thought earnest money was 3%, but my agent says no its 5-10% so we settled on $75,000. Seller wants to make this earnest money non refundable after 30 days which gives us 30 days to get a loan. Well, the 30 days is up, the seller in not motivated to really sell anymore, they will extend for another week, but after that the earnest money is non refundable. The bank says they can issue a loan committment within that time, but with the instability of banks I really dont feel comfortable making my earnest money non refundable espcially in that I am doing a stated loan with 40% down. My agent tells me its normal for earnest money to be non refundable, but $75,000 and in this loan environment??? In most bank approval letter Ive gotten in the past the conditons clearly state that banks are allowed to cancel, or withdraw their approval anytime they see fit during now and close of escrow. Does anyone know is this is the norm in this market???Would this be a risk you would be willing to take? I mean its not abnormal that a bank decideds they non longer want to do a loan program, or chagne their guidelines on a whim, or even go out of business.Is my agent acting on behalf of my best interest to ask that I make my earnest money non refundable? She ssays the laon officer is 99% sure of this loan, but to this day nothing in writing and even when I do get it in writing anything in writing from a bank these days may be all for nothing.
Every single aspect of a real estate contract is negotiable. There is no set percentage for earnest money. There are no hard-fast rules that says earnest money is non-refundable.
You need to get a realtor who is on your side and will negotiate the terms of your purchase in your best favor.
I would think that someone who is purchasing a house in this price range would know this.
Let's face it, you are in the pilots seat here and I would certainly make these people bend to YOUR wishes, and not the other way around. You MUST maintain control of every aspect of this transaction or they will eat you alive.
75K sounds like a hefty amount of EM to me... Around here we usually give 1% even on luxury properties so I would think that 20-25K would certainly show you are proceeding in earnest. There are not that many people who would walk from 20K these days just to waste a few weeks of a sellers time.
You should have a third party financing addendum as part of your contract that states you have to a certain date to terminate if you are unable to obtain financing. Your lender should know without hesitation whether they're going to be able to get you money within a week or two (usually the time frame on the third party financing addendum). If they can't tell you within a few weeks in no uncertain terms whether they can get you bought somewhere find another lender.
Also remember; it's a buyers market, even on luxury properties these days; you can negotiate this a lot better than you would have been able to do 4 or 5 years ago.
What's the seller going to do if you won't put the 75K up for earnest money? Let the property sit for another year? Or will they take the gamble of a few weeks off the market to get a deal done...
Again; if I'm a seller in this market I don't fight you on the earnest money that hard... I'll take my property off the market with a contract for a month in hopes of getting the deal; worst case scenario is I walk with 20-25K for a month of lost marketing time.
I am confused by the tense ( past/present/future) in this situation. Is there a contract in place or are you considering making an offer and your agent is advising you?
Every state does its real estate contracts differently. Out here our financing clause runs until closing. Sometimes people get laid off a week before close, which means they can no longer get a loan. Out here they get the earnest money back.
There are no standards, but there are local customs. It might be in the area you are talking about that is the local custom.
I personally would never agree to non-refundable earnest money unless it was a really low amount.
Risking large sums of earnest money, on a stated income loan sounds --- well risky. In my area I heavily advise my clients to hire an attorney to iron out details when that large of a sum is at stake. Non-refundable verbiage can get complicated especially if seller could be a "cold feet" risk. What if they back out?
I'm confused by the past/present tense in the op also.
You already signed a contract or addendum that made the deposit non-refundable and you are past the 30 days? And they are allowing another week...? I'm not understanding.
I do understand one thing... there is NO set amount for escrow and I'm surprised an agent would tell you such a thing. I have never recommended a buyer put their escrow as non-refundable. We were asked by one seller once to do non-refundable after a certain amount of time but we didn't release the whole thing...we released a small portion of the escrow to 'cover' the seller for having taken the property off the market and working with us to cover extra time necessary to get the loan through. But put up $75K non-refundable? That's nuts, IMO.
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I am under contract to buy a $1.7 mil property. I alwasy thought earnest money was 3%, but my agent says no its 5-10% so we settled on $75,000. Seller wants to make this earnest money non refundable after 30 days which gives us 30 days to get a loan. Well, the 30 days is up, the seller in not motivated to really sell anymore, they will extend for another week, but after that the earnest money is non refundable. The bank says they can issue a loan committment within that time, but with the instability of banks I really dont feel comfortable making my earnest money non refundable espcially in that I am doing a stated loan with 40% down. My agent tells me its normal for earnest money to be non refundable, but $75,000 and in this loan environment??? In most bank approval letter Ive gotten in the past the conditons clearly state that banks are allowed to cancel, or withdraw their approval anytime they see fit during now and close of escrow. Does anyone know is this is the norm in this market???Would this be a risk you would be willing to take? I mean its not abnormal that a bank decideds they non longer want to do a loan program, or chagne their guidelines on a whim, or even go out of business.Is my agent acting on behalf of my best interest to ask that I make my earnest money non refundable? She ssays the laon officer is 99% sure of this loan, but to this day nothing in writing and even when I do get it in writing anything in writing from a bank these days may be all for nothing.
