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Kelly, Home Buyer in Hollywood, Los Angeles...

What is the standard % to put down for Earnest money in Los Angeles?

Asked by Kelly, Hollywood, Los Angeles, CA Wed Dec 12, 2007

I have read generally, to put down

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Answers

16
Earnest money deposit is typically 3%. Occasionally a seller will request an increased deposit.
0 votes Thank Flag Link Wed Feb 11, 2015
The standard EMD in LA is 3% of the purchase price, however, I have seen some buyers put as low as 1% down and others put as much as 5% down. As the seller, it is in your best interest to collect the standard or higher in case the buyer defaults.
0 votes Thank Flag Link Wed Jun 27, 2012
FYI there is no "standard", period. It really depends more on the situation and market. Has your agent explained to you what Earnest money is and what it means? How some view it, the higher the number the more serious the offer. I do not know about LA but here in Tucson, AZ 1% is pretty normal on transactions but when we personally put in our offer couple of years ago on our home, we went 10% to show our intent.

Best of luck.
0 votes Thank Flag Link Tue Feb 8, 2011
Some sellers ask for a 3% deposit.
I've also had some counter back with an increase in deposit.

A low deposit could be an indication they are not all that serious or committed to the deal which could mean the deal may not close.

In this market seller's, especially the banks, are not necessarily looking for the highest offer, just the one that is committed to the deal and will close on time.
0 votes Thank Flag Link Tue Feb 8, 2011
As many of the answers indicate, 3% is standard. I have opened escrow with less as the buyer's were serious, but didn't have the liquid cash at that moment, to open escrow. Since a lot of properties have been on the market for sometime, without any offers, you may have more flexibility in your negotiations. However, remember, you are always trying to represent yourself as a serious, qualified, "strong" buyer. So, make sure to discuss strategy with your agent as each property has a different story and should be treated on a case-by-case basic.

Happy House Hunting,

Renee’ Kische
Keller Williams Hollywood Hills
http://www.accesshollywoodrealestate.com
323.377.7976
0 votes Thank Flag Link Mon Feb 7, 2011
Kelly,

The earnest money deposit is a good faith deposit. The earnest money deposit serves to basically reassure the seller that you are serious about their property and willing to deposit that amount as a show of good faith.

The amount of the deposit can vary but its typically 3% in Los Angeles. The factors influencing it can be market conditions (so in a slower market you can probably negotiate it down), how much interest a property is generating (in a multiple offer situation a larger deposit could make your offer stronger) etc.

Usually your earnest money deposit is safe until you remove your buyer contingencies (loan, appraisal and buyer investigations). normally your contingencies would be active contingencies (which means that you as a buyer would have to remove them in writing) but a lot of REO addendums change that to a passive one - which means that once you pass the contingency deadline, your deposit might be at risk. your realtor should be able to advise you on how and when to release the contingencies in your purchase process.

Hope that helps
0 votes Thank Flag Link Thu Oct 23, 2008
The standard is 3% but in this market, it could be less. I've had good faith deposits of 5,000 and no one was insulted by it. This market is strong for first time buyers, who might not have the customary large good faith money. If their credit and financing is very good, it's not usually an issue.
0 votes Thank Flag Link Thu Oct 23, 2008
Hi Kelly-
Here in the Hollywood Hills area, I would say 3% is the standard earnest fee. Most REO properties won't even look at anything less than that and now have had much more complicated contigencies and removals on the earnest money.
Make sure your realtor knows everything about your contract so that you dont end up losing the deposit, as i have seen this be very common when the sellers are the lenders.
Good luck to you
Lou

LA Real Estate Group
Lou & Alex
info@myLARealEstateGroup.com
http://www.myLARealEstateGroup.com
0 votes Thank Flag Link Wed Oct 22, 2008
I would definately say anything other than 3% is a red flag. As a seller, i would just be suspicious of someone that won't put down 3%. Occassionally, on a foreclosure you will see a $5000 cashiers check.
3% is the liquidated damages as well when a buyer does not fulfill thier end of the agreement.
Web Reference: http://www.sethihomes.com
0 votes Thank Flag Link Thu Sep 25, 2008
3% is standard in LA but it is a buyer's market. The more important part of the picture is "Can you close on this property" Some buyers wire in their money and show proof of funds and never write a check. The earnest money represents to the seller the seriousness of the buyer to purchase the property. I hope you have a great agent who can negotiate what you want to purchase.

Good luck!
0 votes Thank Flag Link Wed Dec 19, 2007
Yep as Karen mentioned it is local. Here in Tucson it isn't uncommon to see $500 earnest deposits!

Just keep in mind that there is no "standard" by which you must abide, it really is unique to your situation!
0 votes Thank Flag Link Thu Dec 13, 2007
Hi Kelly,

Wow, I'm surprised by the answers. My clients usually put down 1%. Occasionally the seller asks for a higher amount, usually when the client has 100% or 95% financing. When I list properties the amount offered is often less than 1% which I will counter a little higher.

As they say, "all real estate is local".
0 votes Thank Flag Link Thu Dec 13, 2007
Three percent but it is negotiable. You can write the offer with less however be prepared to possibly have the seller counter with 3%.
0 votes Thank Flag Link Thu Dec 13, 2007
3% is the norm, cashed when escrow is openend. Often times it depends on the listing agent and how long the property has been on the market as well as the buyer's situation, but to be safe I would have 3% ready.
0 votes Thank Flag Link Thu Dec 13, 2007
Hi. Is that figure true nationwide? I'm in Maine, and I thought it was typically much lower than that around here.
0 votes Thank Flag Link Thu Dec 13, 2007
Hi Kelly,
Traditionally buyers put 3% of the purchase price down as an earnest money deposit, but this is not a number that is set in stone. In today's market more and more buyers have been able to put 2% or even 1% down, as it is much more of a buyer's market. In a seller's market it would be hard to do this, but when there are no other buyers and sellers are desperate to sell their homes, they will often accept less money in the buyer's deposit. Feel free to give us a call or check out our website for more information! And good luck with your purchase!
Web Reference: http://www.keyserhomes.com
0 votes Thank Flag Link Wed Dec 12, 2007
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