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Billybob, Home Buyer in 11209

How much is earnest money in Long Island? Is 10% the norm?

Asked by Billybob, 11209 Mon Apr 21, 2008

How much is earnest money in Long Island, NY? Specifically in the Hamptons. Is 10% the Norm?

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On the North Fork of Long Island, the 10% is the normal earnest money.
1 vote Thank Flag Link Thu Dec 22, 2011
I may have been confusing the two actually, since the downpayment was due at contract signing, not closing and I was thinking it may have been earnest money. My bad billybob, I believe Wes' answer to be more accurate although I've heard much higher numbers than 1 to 2% for earnest money in westchester area.
1 vote Thank Flag Link Tue Apr 22, 2008
I can see that EMD ( earnest money deposits ) are done differently everywhere. Here in Michigan, EMD is typically 1% to 2 % of the purchase price with a minimum of $1,000.

EMD is NOT the down payment on the property ... it's the good faith deposit. 1% is very normal here with 2% being very generous. The Buyers Broker holds the EMD funds in escrow at least until the offer is accepted, then it MAY be transferred to the listing broker if required by the purchase agreement.

The EMD can be used toward the down payment or in any other way that funds may need to be directed during the closing. They can be directed toward the closing costs, down payment, or even refunded to the buyer if there are seller concessions to cover closing costs and no other funds are required from the buyer.

I have often seen the EMD or at least a portion of them go back to the buyer at closing.
1 vote Thank Flag Link Tue Apr 22, 2008
Is it usual for the sellers attorney to hold the money in an escrow account?
1 vote Thank Flag Link Tue Apr 22, 2008
As mentioned, legally speaking, EMD is actually not required by law, but HIGHLY suggested. In Michigan, approximately 65% of all purchases are zero to 6% down (at closing). Many of the sales here are either FHA 203B, FHA 203K or Rural Development loans. Few are actually conventional loans any more ( about 20%) that require the 10%-20% down at closing, with the balance being land contracts, purchase money mortgages or cash transactions. I’m not sure why anyone could expect more in EMD than the buyer will be paying at the closing table.
The EMD is paid PRIOR acceptance but can be negotiated to any level (that both parties accept) once the offer is placed. Any more than 1% in EMD to start the process would be overly generous. I recently had a $435,000 cash transaction where the seller requested 10% down upon acceptance but only 1% was placed in EMD to submit the offer prior acceptance. The 10% was paid into the buyers brokerage escrow account within 24 hours of the acceptance and held there until the closing. Higher than 1% to 2% in EMD, is overly generous while placing the original offer. Often, on short sales and bank owned properties, I see in the purchase agreements that that the EMD is payable upon acceptance, with nothing paid at the time of the offer.
Keeping in mind, that until the offer is accepted, nothing is binding. Any requirements attempting to bind either party to anything, simply do not exist. As long as nothing in the agreement conflicts with the law, anything that both parties accept is fine. The only true requirement is; all disclosures must precede the offer documents. All Seller Disclosures, Lead Based Paint Disclosures and Agency Disclosures must be signed PRIOR to either party signing the purchase agreement.
EMD can be any amount or item of value for offer consideration. I even know of one sale a couple of years go that a boat was held as EMD. I do not ever recommend such an EMD, but it is a legal consideration if both parties agree to it.

Wes Brooks - Full Time Professional Realtor
0 votes Thank Flag Link Thu Oct 28, 2010
The common earnest money upon signing a contract to purchase is 10% on the East End. If you are purchasing with a mortgage the typical purchase is 20% down and 80% financing. The earnest money can be applied to the 20% down.
0 votes Thank Flag Link Wed Oct 27, 2010
The question is about EMD, not the down payment and not about the financing. I have never seen a lawyer hold the EMD when the buyer is being represented by a licensed Realtor. The representing Brokerage holds the EMD in an Escrow account. Any other method would be inappropriate. The true minimum EMD required by law is ZERO but it is rarely zero. If the seller requires more EMD ... it can be more. If the seller requires less ... then it can be less. However, the normal is 1% of the purchase price. A $200,000 purchase agreement would then have a $2,000 EMD. These are only the dollars submitted in order to PLACE the offer on the property. These funds have nothing to do with the financing or any other consideration. However the EMD does apply to the purchase at the closing table.

Wes Brooks
Agent 48371
0 votes Thank Flag Link Wed Oct 27, 2010
good morning,
it certainly depends on your credit score and if it is a primary residence or second/investment property.
0 votes Thank Flag Link Wed Oct 27, 2010
Billybob, if you're still out there - you asked this question back in April, 2008........hopefully by now you have given your earnets money......moved in..... and are settled into you new home!

Best wishes........
0 votes Thank Flag Link Fri Jan 22, 2010
Once a price agreement and home inspections have been completed most transactions look for 10% of the purchase price to be deposited in an escrow account at the time of signing a contract to purchase.
0 votes Thank Flag Link Thu Jan 21, 2010
Out here in the Hamptons there is a 10% deposit at contract signing.
0 votes Thank Flag Link Wed Dec 16, 2009
When we purchased our co-op it was. Also, it was an interest bearing account which the seller received the interest. We were told this was odd, usually the buyer receives the interest, but considering it was like 2 month of interest, we didn't care much.
0 votes Thank Flag Link Tue Apr 22, 2008
The minimum earnest money (or down payment) should be decided by your mortgage loan officer...what can you afford and still get a mortgage. There is no "norm."

Put the most down at contract signing that you can so the seller will no your are invested in purchasing the property.
Web Reference: http://GailGladstone.com
0 votes Thank Flag Link Mon Apr 21, 2008
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