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I’m a first time home buyer buying in the Clifton 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.
At risk of what? Are you afraid the attorney might skip town with your money?
At risk of not getting it back or having to go through legal troubles to get it back if the seller refuses to consent to return it? Eg if issues come up during home inspection etc
At risk of not getting it back or having to go through legal troubles to get it back if the seller refuses to consent to return it? Eg if issues come up during home inspection etc
Your post doesn't make sense. An earnest money deposit usually goes into the escrow account of the real estate firm handling the sale for the owner. This deposit accompanies the sales contract to show the owner that the buyer is serious. If the owner accepts the offer, the buyer then arranges for inspection, title search, mortgage, etc. The real estate agent should have already given the buyer an estimate of closing costs. The cash the buyer brings to the table will depend on the mortgage down payment (20% down avoids mortgage insurance), tax settlements and other closing costs.
Your post doesn't make sense. An earnest money deposit usually goes into the escrow account of the real estate firm handling the sale for the owner. This deposit accompanies the sales contract to show the owner that the buyer is serious. If the owner accepts the offer, the buyer then arranges for inspection, title search, mortgage, etc. The real estate agent should have already given the buyer an estimate of closing costs. The cash the buyer brings to the table will depend on the mortgage down payment (20% down avoids mortgage insurance), tax settlements and other closing costs.
But that’s my question. What’s the typical amount to show the owner I’m serious?
Half of downpayment sounds too large to me. But I’m unsure if that’s the typical case in New Jersey
In NJ, it seems customary to give about $1000 with the executed contract (generally not deposited until after acceptance by the seller), and 10% of purchase price (less the $1000 already given) some time (~2 weeks) after attorney review concludes. You might ask if you can put the 10% down sometime after the home inspection so you feel more confident that the house is right. Sometimes the sellers are ok with that (after all, you’ve invested money in the deal by virtue of the inspection(s).
As a buyer, I always ask for the buyer’s attorney to hold the escrow. As a seller, I would want the seller’s attorney to hold the escrow. NEVER let the real estate brokers (either side) hold the escrow funds. [This is customary in PA, but I have the title company hold escrow funds instead.]
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