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I’m retiring and moving to Florida in a few weeks. We signed a contract on our home in Oklahoma a few weeks ago and will close near the end of April. Everything’s looking good on this sale. I will receive roughly $214,000 in equity money and have been approved for an $80,000 loan to purchase a house in the $285k range. I called our realtor in Florida who has worked with us for over a year now to tell let her know we’re coming down next week to make an offer on a home. All’s great until she tells me besides the earnest money that we’d also need to put 5% down. I just don't have $14,000 laying around but could have had it had she let me know sooner. She says there’s nothing in writing but it's just a practice in Florida. Well I would think maybe in a “hot” market! Can any Florida realtors reading this tell me what this is all about?
Ok, I'm in Florida and I'm not sure what she's talking about. The only thing that 5% might come into play with would be your financing, but that's up to you, your bank and or mortgage broker and the type of loan you get. *unless* you are going to purchase a foreclosure where the contract stipulations require that you put down 5% escrow. Other than that, I can't think of what she's talking about.
I think you should call her and find out what she means.. let us know.
OK, I had to call her again to find out exactly what it was she's talking about. Now she seems to be back pedaling somewhat. She said I'd have a better negotiating posture if I put more earnest money down, but now is saying maybe $5,000 would do. She says the Homosassa area hasn't been hit as hard as other areas of Florida. However, just this past week, two house I've been watching on the net have dropped their asking price. One from $279 to $259 and another from $267 to $243. It may not be as bad there, but it isn't what she's implying. I told her I have the 5K but I still didn't think more than $2k for earnest money would be required and left it at that. She's making me a little suspicious about her motives. I've been down there twice in the past 18 months and she always went out of her way to show us around and even some houses when we weren't even ready to buy. But the last couple time's I've talked to her when I mentioned that many there were still asking 2006 prices, she got a little short with me. Maybe she's worried about her commission? I'll let you all know how it went in a few days..thanks for the replies.
By the way, I sold my house FSBO here in Oklahoma City (no real estate boom so no bust) in under three weeks. I sold my last house ten years ago FSBO in one week. Now I realize there was a lot of luck involved both times but I'm no stranger to the process. I had a realtor give me a free market analysis and told him up front I would probably go FSBO, did some of my own recent home sales searches and sold within 2% of asking price.
When putting an offer in that is competeing with other offers or even just a stand alone offer it of course looks better with a sizeable deposit.
In the Homosassa area if you are looking at $285K range a deposit of $3,000-$5,000 should be more than adequate. In fact That may be on the high side for this area.
When you make the offer it is up to you to decide how much earnest money to put down. If the seller wants a higher amount they can request it but it is up to you to decide if you will.
Homosassa has seen a big drop just like most of the state. $285,000 will get you a very nice home.
One thing to think about... I never want a buyer to put any money in play until there is an excepted offer, ie you have a contract.
I like to structure the offer so that the earnest money, what ever the amount, is secured x number of days (typically 3 days) after the seller as agreed to terms.
Also, if you are attempting to make a stronger offer by putting up a sizable amount of earnest money, I recommend doing it in stages. Some on acceptance, some after inspections, the rest upon completion of any repairs.
Sounds to me like she's trying to get you to put enough down that you won't walk. Or perhaps because of your situation you will be doing a conditional, that you won't close unless your own home actually closes and she's trying to show that you are really serious. Something to remember is that here in Florida if the escrow is held by the title company you can't get it released without BOTH parties agreeing to it.
I think FLBOB's advice is excellent. Personally, I would put $1K -$2K (unless you are in a bidding situation) and let the seller counter with you putting more escrow down, how and when if they are concerned about it.
I am always fasinated by the differences in local markets.
$X upfront and $Y more dollars, at the end of the attorney review/home inspection period is common, here.
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