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I’m a first time home buyer buying in the Clifton,New Jersey area. My real estate attorney suggested to put half of my down payment as earnest money due week after Attorney review. That number seems very high to me (40k in my case). Is half of downpayment typical? I know there are contingencies in the contract that would protect me but I still am uncomfortable putting that much money at risk.
I would never put that much, no matter what the contract says that money is at risk or you may have to pay for legal fees to get it back. I would never put more than the minimum, speak to your RE agent. Unless it's a really hot market and the seller demands this and I know there is no risk I would entertain the idea. And only if they tell you that the seller requests this, never ask becuase the answer may be "yes" and a lie.
There aren’t any rules, laws or requirements that specify how much you should deposit. In fact, there’s no rule saying that you have to provide earnest money at all. It’s more of a custom, really. And the customary amount can vary depending on market conditions, location, and other factors.
In New Jersey, there is sometimes a two-step process for the earnest money on a home purchase. There might be an initial “good faith deposit” for a specific and customary amount, such as $1,000. The rest of the deposit is then paid a few days later, at a time that is specified within the purchase agreement. This secondary amount might be anywhere from 5% to 10% of the home’s selling price. But it can vary due to a number of factors.
This is where an experienced real estate agent can be helpful. A market-savvy agent can tell you how much earnest money you might want to deposit, based on localtrends and customs. The goal here is to be competitive with the majority of other buyers, by making an earnest money deposit that’s at least on par with — or even higher — than the majority of competing buyers.
Ask your agent what if you only want to put $1K down initially and then only $5k more. Ask the attorney too if that can be done, why or why not. Find out who will hold the money and google them to make sure they are legit.
I’m a first time home buyer buying in the Clifton,New Jersey area. My real estate attorney suggested to put half of my down payment as earnest money due week after Attorney review. That number seems very high to me (40k in my case). Is half of downpayment typical? I know there are contingencies in the contract that would protect me but I still am uncomfortable putting that much money at risk.
Did you laugh really hard? Did the agent say it with a straight face? He’s just trying to get you to the top of the pile
I’m a first time home buyer buying in the Clifton,New Jersey area. My real estate attorney suggested to put half of my down payment as earnest money due week after Attorney review. That number seems very high to me (40k in my case). Is half of downpayment typical? I know there are contingencies in the contract that would protect me but I still am uncomfortable putting that much money at risk.
Depends on how much you want a property I suppose. Market conditions may dictate you put that much. However that seems super high. The highest I've ever collected personally was 50k and that was for a 2.5 million dollar property. The buyer couldn't come up with the rest of the cash due to an asset seizure on his property and lost that 50k by the way.
Typically here's my range for earnest deposits in my market:
250k and under $500-1000
250-500k $1000-2500
500k and up $5000-10000
It's up to you to decide how badly you want a how and how much skin to put in the game.
Also, if you trust your Realtor, they may be advising you put this much due to market conditions or competition you're going to be facing. It might not hurt to get a second opinion from your Realtor's broker to gauge if this is warranted due to conditions or if the agent is an idiot...
I’m a first time home buyer buying in the Clifton,New Jersey area. My real estate attorney suggested to put half of my down payment as earnest money due week after Attorney review. That number seems very high to me (40k in my case). Is half of downpayment typical? I know there are contingencies in the contract that would protect me but I still am uncomfortable putting that much money at risk.
Your real estate attorney has one person they are looking out for and it's not you it himself. Typical, no, not, never in general, locally it may be, but doubt means don't.
I’m a first time home buyer buying in the Clifton,New Jersey area. My real estate attorney suggested to put half of my down payment as earnest money due week after Attorney review. That number seems very high to me (40k in my case). Is half of downpayment typical? I know there are contingencies in the contract that would protect me but I still am uncomfortable putting that much money at risk.
Then don't. There is no set amount. The bigger deposit is supposed to show the seller that you are serious. How much you put down is also dependent on the market conditions.
Could be anywhere from 1% in a slow market to 10% or more in a hot seller's market.
Being a first time buyer seek more advice about your local market from your RE's broker.
I just bought a place. What I put down was 2% for earnest money. It was a cash offer and I could have put down 90% if I chose. But I took the long view on it...earnest money is money that has the chance to be lost and given to the seller. And it's money you put down at the start before you do any type of investigation/inspection/counters.
So I took the view that whatever I put down as earnest money is money I could afford to lose.
is it OK to say I'm not surprised at the answers that:
1. think it's your Realtor, and not the attorney as you clearly said, that's suggesting this figure?
2. willing to tell you how they'd do it in their completely unrelated market, with different contract rules and earnest money customs?
Ask your Realtor what they think about your attorney's suggestion, and how common that is. Your attorney supposedly represents YOU. There should be some sensible/market reason that they'd suggest you have that amount of earnest money.
I’m sorry there was a typo in my original post. . It’s my realtor suggesting to put half down.
It's in his best interest, find out if it's in yours.
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