Meryl Sher, Home Buyer in 07675

Our broker thinks we should give a 10% deposit along with our bid on a short sale house in Fl. Is this usual?

Asked by Meryl Sher, 07675 Mon Apr 20, 2009

We initially gave a $1000.00 deposit, but she thinks the offer will carry more weight with the additional funds. The bank has not accepted our offer and we were under the impression that you should not give the 10% until there is a contract. Any advice?

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9
First of all, you have many big OUTS on short sales...so you could get your $$ back pretty easily... but I wouldn't sugggest ANY money until the short sale is approved
why would you put $1000 into another person's account for 4-6 months?
0 votes Thank Flag Link Sun Apr 26, 2009
Absolutely NOT! Very bad ill-conceived recommendation.

Do not put more than $1000.00 into the good faith deposit escrow on a short sale. I hate to question the knowledge/experience of other real estate professionals, but to hear an agent make a recommendation like that and for what she hopes it will achieve makes me very skeptical of what else she may be missing or not doing for your best interests. A short sale could take a very long time to close and the last thing you want to do is tie up a large amount of money for a long period of time like that.

I am a real estate professional/mortgage broker in Palm Beach county. If you are interested in moving forward with this property and you have not settled on financing, or even if you have been working on financing please contact me at madoring10@yahoo.com and I would be more than happy to give you a very competitive rate to compare to your current quotes on hand and also be there to assist you in this transaction in whatever way possible.

FHA is currently offering rates as low as 4.875% with as little as 3.5% down.
0 votes Thank Flag Link Mon Apr 20, 2009
Dear Meryl,
Your relationship with your Broker is very important; if he/she thinks 10% deposit will help your offer, then you should consider increasing the deposit. Every case is different and I think if you do not feel like your Broker is steering you in the right direction, it might be better to sever that relationship.
Web Reference: http://www.maryngati.com
0 votes Thank Flag Link Mon Apr 20, 2009
Hi Meryl!
I agree with all the answers my colleagues have given which is that you should not put down any more money until you are given a positive response from the bank. That line in the contract can be filled in as Harry suggests or even with "upon acceptance."
I don't know whether you are paying cash for the property or if you will need financing to complete the transaction. On short sale contracts I have written as well as received for cash transactions a "proof of funds" letter is provided (bank statement, etc.) and is forwarded along with the offer to the bank. If you will be financing part of this transaction I can't see any reason why you shouldn't provide this as well. Whether it helps or not in speeding up the process is anyone's guess but it couldn't hurt. We all are at the mercy of loss mitigation depts.
0 votes Thank Flag Link Mon Apr 20, 2009
Personally, on a short sale I always put in the remarks "escrow payment to be made within 48 hrs of approval from lender"...................saves a lot of messing around and it does not bother the banks..........my experience anyway!

Regards

Harry Ashley
Broker Associate
Hawk Beach Realty
2 Jungle Hut Rd,
Palm Coast, Fl, 32137
Cell: (386)-931-6054
Fax: (866)-793-2579
http://www.palm-coast-flagler.com
0 votes Thank Flag Link Mon Apr 20, 2009
Hi Meryl,

I would NEVER advise any of my buyers to put down more than $1,000 when a short sale contract is written. As the other folks who have answered stated, how do you know how long it will take the bank or banks if their are multiple mortgages on the property to make up their mind. Why should you tie up your money?

I have a couple questions for you?

1) Do the terms of your contract state that you must put down more money within a certain period of time?

2) Did your agent/broker have you sign a SHORT SALE ADDENDUM when you signed the contract? There is a special addendum for short sales, precisely because the amount of time to get the banks to decide can be quite long. The default timeframe is 45 days, at which time either buyer or seller can terminate the contract, if they choose, (within 5 days) or they can continue to wait for the banks decision. I usually put in 30 days for my buyers. If you would like a copy of a blank of this form (if you haven't received/filled one out) let your broker know that you want one, and want to know why it was not included in the package of papers you signed.

3) If you signed a short sale addendum, did your agent broker check the box for timeframes to start from the date the seller delivers written notice to the buyer that the bank has approved the contract, or does it state that all time periods under the contract start at the effective date of the contract ( the date the buyer agrees to accept your offer).

If I can be of further service please give me a call.

Nadine Mauro
Regency Realty Services
561-414-0864
NadineMauroRE@yahoo.com
0 votes Thank Flag Link Mon Apr 20, 2009
Dear Meryl,

There's no set percentage for short sales and some bank owned properties might have a percentage they require, so it all depends on the each individual home. I usually do $1000 only. On the FAR BAR As Is contract it will have a space where you can add another amount after 10 days or so?

Make sure you have a form SSA-2 (Short Sale Addendum) along with any offer; it allocates a set number of days for the offer to be accepted or not; and adds a cancellation clause (important for your deposit).


Linda Bassitt, P.A.
Lowell International Realty Group
Harbour Financial Center
2401 PGA Boulevard, Suite 196
Palm Beach Gardens, FL 33410
Direct Line: 561.313.6961
http://www.LindaBassitt.com
Web Reference: http://LindaBassitt.com
0 votes Thank Flag Link Mon Apr 20, 2009
Well, I would ask you, Are you willing to lose 10%?
0 votes Thank Flag Link Mon Apr 20, 2009
Hi Meryl--You don't say what the price of the home is, so I can't tell if $1000 is 1% or 5%.....

I think 10% is rather a large deposit on a short sale because you have no way of knowing how long this money will be tied up. Short sales have been known to take 3, 4 months--sometimes much longer before you get an answer and I would not want you to tie up substantial funds when you're not getting interest on it.

Additionally, I have not known that 10% makes the bank any more impressed with your offer than, say, 3%. A strong pre-approval letter with no personal conditions (such as the sale of a home) and one that might state your credit score (if it's a high one) and one that states they've verified your employment and assets would be stronger in the eyes of the bank than more deposit money.

I would think that you could offer to increase the escrow deposit to a certain amount (10%?) within 48hours of acceptance.

Hope this helps. Good luck.

Louise Warring, e-PRO, CNS, CSP
Certified Short Sale Professional
Coldwell Banker Residential Real Estate
0 votes Thank Flag Link Mon Apr 20, 2009
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