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Ying, Home Buyer in Newton Center, MA

How much deposit (Earnest Money) should I put for a $625,000 house in Lexington?

Asked by Ying, Newton Center, MA Sun May 1, 2011

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Ying,

you should talk to your Realtor and ask him/her this question. The amount buyers put with an offer can vary, example 500- 1000. Sometimes a buyer may make a larger deposit to convince the seller that their offer is stronger than the others but as I mentioned you should talk to your Realtor who will help you structure the offer.
Web Reference: http://www.wenrealty.com
1 vote Thank Flag Link Sun May 1, 2011
Ying...I agree with the others that typically a deposit of $ 1000.00 with the offer and then 5% of the purchase price with the signing of the P&S (minus the $ 1000.00 initial deposit with the offer).
There are dates to be adhered to and if necessary your buyer's agent should help you with asking for an extension if needing more time. I am sorry you have lost money. If I can be of further help to you in purchasing a home if you are not working under contract with an agent, you may call me at 508 648-0393.

Lynne Hagopian
Hammond Residential
0 votes Thank Flag Link Sun May 20, 2012
$1000 with offer and 5%(minus the $1000) with purchase and sales but your buyer's agent should be able to answer any of your questions.
0 votes Thank Flag Link Sun May 20, 2012
How much of a deposit should I put down to sign offer paper with Realtor on a house listing?
0 votes Thank Flag Link Sun May 20, 2012
Typically 5 %. With FHA 3.5. The bigger the deposit the stronger the offer because you have more to lose. If you are buying conventional you have to bring 20% to the table anyway that would be my max.
0 votes Thank Flag Link Tue May 3, 2011
Ying- I also just read further down the comments where you stated you lost 40K on a previous transaction. You should be minimally working with a buyers agent and/or attorney to protect your interest. There are contingencies to help protect your deposit monies but there are dates that need to be tracked and met.

You should not get involved in a contract until you fully understand your rights in the contract and you have your deposit money adequately protected.
0 votes Thank Flag Link Mon May 2, 2011
Hi Ying,

There are several opinions being provided here. What may be unclear is that real estate practices differ from state to state...so you might consider focusing your attention on the responses that come from Massachusetts agents. Judy Boyle and Heidi Zizza said it best. In Lexington, MA, if you're writing an offer for $625k, you'll provide $1,000 with the offer and then perform your inspections. If everything checks out, you'll proceed to the Purchase & Sale Agreement and write another check for $30,250 ($1,000+$30,250=5% of the purchase price). These deposits are 100% protected provided you adhere the deadlines laid out in your offer and P&S. Part of a buyer agent's job is to keep you aware of upcoming deadlines so your deposit isn't in jeopardy.

99% of the time buyer agents are paid by the seller. It is free representation for you so you should definitely take advantage of it for such an important purchase.

I hope this is helpful. Best of luck with your offer. Lexington is a great town...you can't go wrong. :-)

Best,

Jay Allen
Coldwell Banker
Web Reference: http://www.josiahrallen.com
0 votes Thank Flag Link Mon May 2, 2011
Ying- Standard and typical for serious buyers in our area is a total of 5% of the purchase price by the time the purchase and sale is signed.

With that said it is entirely up to you what you want to put down for a deposit, there is no set amount. The considerations are you want to put enough money down to be considered a serious buyer and that you have skin in the game but as little as possible to limit your financial liability if something should happen.

Good Luck.
0 votes Thank Flag Link Mon May 2, 2011
The rule of thumb is 1% of the selling price. If you have more, put down more to show you are a serious buyer and ready to buy.
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Mon May 2, 2011
Hi Ying,

Based on your comment below, you have a 20% downpayment. That should be reflected in your preapproval letter which needs to accompany your offer. When you write your offer you should provide an initial $1,000 earnest deposit to express your serious intent to enter into negotiations. If the offer is not accepted, you get that deposit back.

Also in your initial offer, you should indicate that you will supply a supplemental earnest deposit when you sign a Purchase and Sale Agreement (this typically takes place after you have conducted your home inspection). In our area, sellers like to have 5% of the sales price held in escrow. Your initial $1,000 deposit counts towards this 5%. To put it another way, based on a sale price of $625,000, you entire earnest monies held in escrow total $31,250. If any of the contingencies set forth in the original offer are not met you reserve the right to terminate the offer and receive a return of your deposits.

What concerns me about your comment below is that you already have "lost" $40,000 in a prior transaction. This tells me that you are not being properly counseled and/or represented. If you are not already using a buyer agent, it is HIGHLY recommended that you do. You do not pay any fee and you could ultimately SAVE money....and certainly not LOSE any more! If you are following the terms of your contract, you should NEVER lose any money!!

Good luck!

Judy Boyle
RE/MAX Signature Properties
0 votes Thank Flag Link Mon May 2, 2011
YIng,
Usually we do $1000 with offer and 5% with the p&s (which includes that $1000). Good luck with your purchase, I'm sorry you already lost money on a previous deal!
0 votes Thank Flag Link Mon May 2, 2011
Ying in this area we typically see 1,000 with the offer. 500 is weak and does not show serious intent. In addition we typically see 5% of the purchase price with P&S. hope that helps.
0 votes Thank Flag Link Mon May 2, 2011
so for a $625,000.00 I would say $3,125.00, If they do not like that amount, then just make an offer on the home without Escrow and request that the Realtor bring this offer to the seller and get back to you within 24 hours with a response or counter offer. State in the ofer that upon acceptance you will put .5% into escrow until closing.
0 votes Thank Flag Link Sun May 1, 2011
I suggest that you put down a token amount for the enest money, I often tell people that a deposit of $500 is more than enough to show your interest, yet not to much to lose if a deal falls through. Obviously the listing agen t is hoping or asking for more, this way if the deal sours and the enest money is kept, there is commission money in it the agent as well as money for the seller. However Ernest amounts are your amount to choose, remember this is moeny that is put up to say I am a serious buyer, we're not trying to put up as much as we can until we have inspected, seen disclosures, and fully understand the conditions of the contract! So little as possible yet big enough to say I'm a serious buyer. Rule of thumb is .5% if you asked me and I was your buying agent. why put more money at risk than you have to.
0 votes Thank Flag Link Sun May 1, 2011
I am ok to put $1000 as deposit and pay 20% down payment. However, I have question for the additional deposit upon executing the Purchase And Sale Agreement (Earnest Money). what is normal percentage of house price to put? 1% or 2% or 5%? I already lost $40,000 for an unsuccessful purchase. It make me very worry so that I ask your help here.
0 votes Thank Flag Link Sun May 1, 2011
You can put down any amount you wish, however an amount of $500 - $5000 would show that you are a commited buyer and the offer would be taken more seriously than an offer with lower or no down payment. As far as the amount necessary to satisfy the bank making your loan, that may be 5% - 20% requirement at time of Closing.
0 votes Thank Flag Link Sun May 1, 2011
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