Hi Henry, and Happy Thanksigiving!

First of all, there is no "law" in regard to deposit money amounts. What is "typical" varies from state to state, and varies even within our own state.

In my area, we generally take a check for $1000 when we present the initial offer. If the offer is not accepted, the check is given back to the buyer. If the offer is accpeted, and the seller signs the contract, then the check is deposited either into the Brokerage trust account, or the attorney's account, and the attorney review period begins.

Generalyl...again, this is what is done in my area............. the balance of 5-10% of the selling price is then put on deposit within 10 days following the attorney review. Putting the full 10% down is very common..........but that is not written in stone.

I am not sure what your purchase price is, so you can do the calculations. Certainly, everything is up for negotiations, but I have never seen only $1000 held in escrow, unless the buyer was going for a 100% loan, and they didn;t have more money.

It's asking a lot to ask the seller to remove his home from the market with only $1000 on deposit....way too easy for the buyer to say they changed their mind, sue me, and walk away.
No one would simply walk away from 5 or 10% ........As I said, 10% is very common here ....I have sold homes over 1 million, and the 10% rule of thumb still applied.


All of these terms, however, should have been part of your intial offer, as here we start with a signed contract in which all the details are in writing ahead of time, so there shouldn't be any surprises for you now.

Good luck with your purchase!!
Debbie Rose
Prudential NJ Properties

Hi Henry, the amount of the "earnest deposit" is one term of the agreement - the $1,000 initial deposit is quite standard, and then 10 days or so after attorney review a second deposit is made - I generally recommend that the $1,000 plus this second deposit - be 5%, but the expectation may vary by area as Debbie has pointed out. I do not think it reasonable to expect a seller to accept just the $1,000 as a deposit - the deposit shows your seriousness. The seller will be taking the home off the market once you are under contract - doing that with just a $1,000 deposit would be a tough sell.

If you are uncomfortable with the deposit amount that your agent has suggested, discuss it with her/him. It certainly is not a set formula.

Good luck to you!
Best,
Jeannie Feenick
"Unwavering Commitment to Service"
Find success at http://www.feenick.com

A good faith deposit is what ever you want it to be. If you're going to be in a bidding war, a larger deposit is better. If you're in the military, or using a VA loan (100% financing) $1,000 has gotten the job done for my clients.

I agree with Debbie from Livingston, it varies from place to place in NJ. If you're working in north Jersey, you're probably using an attorney, ask her/him.

Good Luck!

Laura Giannotta
Keller Williams Realty Atlantic Shore

Henry,

Sean is correct, the "earnest money" is loosely based on the sale price of the home and demonstrates in some way your level of committment to the deal. One important factor to consider is if things go awry and you need to take legal action to recover your deposit, claims over $15,000 will be handled by a different court system. Small claims up to a couple thousand dollars, special civil to about 10 or 15k, but over 15k needs to go to a division of the the NJ Superior court. A snippet of the NJ Judiciary website listed below:

"If you believe you are entitled to more than $15,000, your case should be filed in the Law Division,
Civil Part of the Superior Court. Even if you are suing for more than $15,000, you can still sue in
Special Civil, but you give up your right to recover any amount over $15,000. The additional money
cannot be claimed later in a separate lawsuit.
You must be at least 18 to file your claim. If you are under 18, your parent or guardian has to file the
claim for you. A corporation, limited liability company or limited liability partnership may not file a
complaint for more than $3,000 without a lawyer; such a complaint may be filed only by a lawyer
representing the corporation, limited liability company or limited liability partnership."

I believe having to use the Superior court may be more costly and time consuming, which is one of the reasons to ask for such a hefty deposit. Of course only an attorney can give you legal advice, and you may want to consult a Real Estate attorney before writing the check or negotiate a smaller deposit. The earnest money is as negotiable as any other portion of the transaction.

Good luck,

Barbara Smith ABR,GRI
NJ/PA Licensed Realtor
cell/text: 609-980-7593
email: BarbSmith321@comcast.net

The price and terms are part of the equation, but also are there any other offers in? Has the property had a failed escrow because the buyers walked? Is it a bank owned property???? Some banks need to see 3%, some sellers need to see the buyer is serious and sometimes you just need to be a stronger offer than the other buyers. A strong offer is not only about price but time to close and money upfront. Usually an increased deposit is done after inspections have been completed and contingencies released so now you are just getting the loan, repairs if any and title completed. I'm in California so it may be a little different here.

There is no law regarding amount of deposit. Some form of deposit is required because all contracts require consideration to be valid. 1000K, initially, is quite common in jersey, although it can be less or more. For the second deposit, the amount should be whatever is necessary to secure the deal with the seller. Obviously, it can vary widely(sometime none, and sometimes as much as 5% or more) and may depend on the value of the home, the strength of the terms of your offer, etc. If you feel uncomfortable with the amount, talk to your agent. He/she will be able to guide you accordingly based on the current deal to ensure a win/win situation for everyone involved. Hope that helps.

Henry,

How much is the house listed for?

$15,000 does seem a little bit high but then again if its a $1million dollar house it doesnt. All depends. For example I had a closing last week where it was $1,000 then $5,000 on a $430,000 sale. Closing in 30 days.

I think it all depends on your terms as well. If you want to drag it out, then they will probably want to see a higher deposit.

It could vary on how strong of an offer you want to present to the homeowner. Usually a 1st deposit for $1000 is typical and the 2nd deposit can be whatever you prefer, $5000 or more if you want to make a stronger committment to purchasing the home. Then again I work in PA and it may be different in NJ.