Home Buying in Poteau>Question Details

John Brain, Home Buyer in California

What is the average percentage of earnest money to price in today's market?

Asked by John Brain, California Fri May 6, 2011

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Since the housing market is so fragmented by different locales and types of sales, I can only generalize what to expect for the SF Bay Area. For regular sales and REOs, sellers are looking for 3% of the offer price. For distressed sales like short sales, you can put down 1% initially and increase to 3% later once the bank actually accepts. This way, you won't have to tie up your money for 3-6 months waiting for a bank response.
Web Reference: http://www.archershomes.com
3 votes Thank Flag Link Fri May 6, 2011
Earnest money is a way of getting a sellers attention. If you can afford a large one, up to 5% you demonstrate a serious intent to buy the home. If there are competitive bids, this may allow you to beat out another bidder. If you don't have a large earnest money available, do what you can but realize this is a measure of intent.
One consideration I make for my sellers is the earnest money enough to cover their costs while we are off the market with this offer. If it's a 30 day close, I like to see at least a one month months worth of mortgage payment.
In my 10 years in Real Estate I've never had a buyer or seller lose their earnest money. It can happen, but if you know the terms of your contract, and you are sincere in your intent you shouldn't be too concerned. Ask your agent to explain what your contingencies are and the dates associated with them, so you can both keep track.
0 votes Thank Flag Link Fri May 6, 2011
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