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Big_shot2k, Home Buyer in San Jose, CA

What is "Good Faith Deposit" ?, Is it required by law while buying foreclosure or shortsale home?

Asked by Big_shot2k, San Jose, CA Wed Oct 7, 2009

What is "Good Faith Deposit" ?,
Is it required by law while buying foreclosure or shortsale home?, If so, is it 3% of the home price ?
Also, Is it true that a buyer will lose this deposit if his lender doesn't approve the loan with in 21 days after the seller has accepted the offer ?
Can somebody please provide details on this deposit?

Thanks very much in advance.

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Answers

5
Hello,

While it's not required by law, a good rule of thumb is to keep the good faith deposit at 1% of the purchase price. It's only to show the sellers how serious you are about your purchase, nothing more then that. However, when you make out a check for the good faith deposit, make sure you have the funds as escrow companies usually cash the checks soon as they receive them. Good luck!

Kamal Randhawa
Broker
510-932-1066
"Straight answers all the time"
1 vote Thank Flag Link Thu Oct 8, 2009
hello Bigshot2K,
A good faith deposit is just that: showing good faith that you are serious to buy the property. The good faith deposit can be as low as $1 and as high as 3 % of the purchase price. It is not required by law, but if no good faith deposit is made, the seller may not take take the offer as serious and rather waits for the next one that has a deposit. The higher the deposit, the more chance the offer has, to get accepted. This deposit stays in the posession of either the buyer's representing agents office, in a case of a short sale, until the short sale has been approved by the sellers bank(s) or upon acceptence on a foreclosure, will be deposited in the title company's trust account. The buyers contract has certain days where the buyer can back out of the contract for certain reasons. If the buyer decides not to continue with the purchase past these days, there is good chance that part of or all goes to the seller. I hope this answered your questions.
1 vote Thank Flag Link Thu Oct 8, 2009
You are required to put down a deposit, even if its only $1. Most sellers want to see 3% but its not always necessary if you have a strong offer to back it-like having an all cash offer. This is the money that you are at risk of losing should you decide to suddenly cancel your contract for no good reason. This is why the more you put down, the more commited you are to purchasing the property and the likelyhood of you backing down is less. This makes the seller more comfortable with accepting your offer because it will more likely close. Hope this helps! Call with questions-
Jamie Nash
Century 21 Mammoth Realty
Jamie@century21mammoth.com
760-914-0625
0 votes Thank Flag Link Tue Dec 1, 2009
We can provide you with all the answers to your Finance questions

http://www.valleyloanfinder.com
0 votes Thank Flag Link Sun Nov 15, 2009
Big-shot2k,
The good faith deposit is not required by law, but it can not more than 3% of the asking price. However, the seller may requist to make sure only serious buyers submit offers. For your second qustion, it will depend the contract, please consult with your agent.
Hope that helps.
If there is anything I can help, please contact me.
2096270032
ymohamed@gotracy.com
0 votes Thank Flag Link Thu Oct 8, 2009
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