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It is customary in many areas for the listing Brokerage ( not the agent) to hold earnest monies in an escrow account on behalf of the buyer and seller. All the big box brokerage companies do this in those areas where it is customary. These brokers are routinely audited by their states. They are also required to carry fidelity insurance to cover the potential exposure.
In Arizona, the broker can deposit the em check in a trust account, or have it go to the title company. Most that I know prefer it to go to the title company. I don't hold it. I prefer to have the buyer deliver it to the title company, and then I don't have any reliability of holding the check, plus the buyer gets the deposit receipt right away.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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I had a bank demand a 5% earnest money from a client. CA law says no matter what the amount of earnest money, the maximum a seller can claim in the event of a default by the buyer is 3% of the value of the contracted price.
Cartus is very good about detailing what they want from prospective buyers in their listings. I've seen $5000 for under $500,000 homes. Perhaps $500,000 is the next level requiring more.
Here in California, 3% is expected. The amount should be enough to deter frivolous buyers from tying up your home and make it hurt if the buyer chooses to break the contract while you have already done major things like put an offer on your next home or move out of your home.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
6,957 posts, read 22,311,234 times
Reputation: 6471
Quote:
Originally Posted by PureHapa
Here in California, 3% is expected.
This is not true. It may also vary by local custom. We typically ask for and get 1% in a private transaction. I just had a buyer offer $5000 for an $80,000 house because we wanted the bank to take our offer seriously.
The big question that hasn't been answered here is: what's typical in NJ for EM? Also, any chance this is a type-o and the amount is really $1K?
I know in MA we usually put down $1K in EM with the offer. Later, when we go to a purchase contract the deposit is brought up to a total equal to 5% of the purchase price. Of course, this is the norm in my area. In other parts of the state, it might be different. Certainly, I've made offers where the numbers were different but I would classify these numbers as a minimum amount needed to be perceived as a qualified buyer.
Anyway, in the end, you are dealing with a relocation company. They set the rules and if you want what they've got you have to play by them.
If the offer is contingent on your getting financing, then a larger deposit is in order. After all, you are asking them to take the house off the market for 45-days and go through all the process of preparing to sell the house ... with no assurance that you will be successfully financed. They want to ensure that you are a serious buyer and not simply going through a process from which you can easily walk-away, at no expense to you, if you change your mind before inspection time.
The real question is 'How serious are you about completing this transaction?' ... and 'What might cause you to back-out in mid-transaction?' When you answer these questions, you can move forward to close, while protecting your own interests (You can deal with those by adding notes to the contract/escrow agreement). If you are not really serious enough to put down $5-$10K on a $520K house, then you have answered your questions ... and theirs!
The big question that hasn't been answered here is: what's typical in NJ for EM? Also, any chance this is a type-o and the amount is really $1K?
I know in MA we usually put down $1K in EM with the offer. Later, when we go to a purchase contract the deposit is brought up to a total equal to 5% of the purchase price. Of course, this is the norm in my area. In other parts of the state, it might be different. Certainly, I've made offers where the numbers were different but I would classify these numbers as a minimum amount needed to be perceived as a qualified buyer.
Anyway, in the end, you are dealing with a relocation company. They set the rules and if you want what they've got you have to play by them.
Not a chance it's a typo with Cartus regardless of state. They don't like wasting time.
1K in your neck of the woods in MA - even on a $1 million property? Wow!!
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