Do you make a "good faith" deposit any time you make an offer? Or only in special situations? Thx

Asked by Eessary, Winter Springs, FL Sat Jun 11, 2011

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Mark LeMenag…, Agent, Lake Nona Orlando, FL
Sat Jun 25, 2011
No, my client's never include an escrow deposit when they make an offer. Rather they make the deposit AFTER the seller has executed the contract. This process is so normal that it is a regular part of the standard Florida sale and purchase contract. The default is 3 days.
1 vote
Michael Emery, , Minneapolis, MN
Sat Jun 11, 2011
Generally you always make a good faith deposit show the sellers you are serious about buying their home. The amount of good faith money varies from market to market. Here in MN the typical is 1 percent of contract price. However with some bank owned properties, they will require a minimum dollar amount and/or percentage of contract price.

The only time you are generally do not need to immediately give a good faith deposit is when you are purchasing a short sale home. Usually the earnest money is given to the sellers agent on successful approval from their lender.
1 vote
Shanna Rogers, Agent, Murrieta, CA
Sat Jun 11, 2011
Hi Eessary,

Not sure about in FL, but in CA buyers always make a "good faith" deposit when they make an offer. The lowest amount is 1% of purchase price. If you really want your offer accepted, the higher the "good faith" deposit, the better. However, I wouldn't go over 2% of the purchase price as you can lose this if you cancel contract for a reason not specified in the purchase contract (i.e. you've removed all contingencies and then decide to cancel contract).

Shanna Rogers
SR Realty
1 vote
Avi Maganda, Agent, Apopka, FL
Tue Jun 21, 2011
You make a "Good Faith Deposit" anytime you make an offer on the house in the special situation that you really want to buy it.

A "Good Faith Deposit" is like a "Ring" of an Engagement.
How would a Fiancee feel if a Fiance say to her:
"Would you marry me?, I will give you a Beautiful Ring later!"

Avi Maganda, Charles Rutenberg Realty
Phone 321-287-5340
0 votes
Jose Davila, , Orlando, FL
Sun Jun 12, 2011
"No law requires the buyer to make an earnest money deposit on a real estate contract. An appeals court case affirmed that a promise to buy and a promise to sell are enough consideration to create a valid contract for sale of real estate. Licensees must present all offers, with or without a good-faith deposit. If an offer is presented without a good-faith deposit. the seller usually counteroffers for a substantial earnest money to help ensure that the buyer performs." (Florida Real Estate Broker's Guide)
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Ada Sanchez, Agent, Kissimmee, FL
Sun Jun 12, 2011
If the property is a Short Sale or REO - Yes and No. - If you are dealing with a SHORT SALE - you can always say "DEPOSIT IN THE AMOUTN OF $____________ UPON ACCEPTANCE - No reason in tying up your money. Some agents will sit there waiting for more than 10+ offer and then submit them to the bank. Too many other prorperties out there to waste your time.

Do not hesitate to contact me via email, if you have any other questions.

Ada Sanchez
Pacific Atlantic Realty
0 votes
Alan Martin, Agent, Orlando, FL
Sun Jun 12, 2011
A deposit is always required with an offer but it can be delayed. It is used as a measure of the buyers seriousness. I do not ask for a deposit on short sales because it is so easy to back out during the process. I would be happy to explain further if you are thinking of buying a short sale. Or indeed any other property.
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Antonio Vega…, Agent, Saint Cloud, FL
Sun Jun 12, 2011
It's not a special situation, but the rule. On special situations it may be delayed or until past the inspection period. When buying cash they may request up to 10% good faith up front, at offer acceptance.

Some banks selling foreclosures even ask for a cashier check with their name to be copied and included with the offer. That's how they know you will not be using the same escrow to make several offers.

Tony Vega
Charles Rutenberg Realty
0 votes
Bill Eckler, Agent, Venice, FL
Sun Jun 12, 2011

Deposits are an extension of the buyers commitment to purchasing a property. Simply stated, most sellers would consider an offer accompanied by a reasonable deposite more seriously than one with a lesser amount or none at all.

If you are serious about purchasing a specific home, the message that you send to the seller should indicate that level of interest.....a refundable deposit is usually the first step in sending than message.

Good luck,

0 votes
Ken Anderson, Agent, Orlando, FL
Sun Jun 12, 2011
In general you do not until you have an accepted offer. It really depends on hoow the contract is written. With a short sale it isn't accepted until the bank accepts the offer.

Ken Anderson- Broker
ApexOne Realty, Inc
0 votes
Veronica Dav…, Agent, Winter Park, FL
Sun Jun 12, 2011
Yes. Typically this is the case as your're showing "good faith" to the seller that you're serious about the purchase. However, there is usually a contingency attached to the deposit such as acceptance of the offer by the seller, loan commitment within certain number of days and satisfactory home inspection and delivery of satisfactory title to the property, to name a few of the contingencies to the deposit.

The deposit can be given at the time the offer is written or upon acceptance of the offer by the seller or in the case of a short sale, sometimes it is made upon approval of the short sale transaction by the third party. Most sellers do not want to take their property off the active market without a good faith deposit by the buyer. If all terms and conditions are not met in the standard Offer then the buyers will get their money back. Great question.

Veronica Davis-Lee
0 votes
Broker Dave, Agent, Orlando, FL
Sat Jun 11, 2011
Yes, unless agreed to by the seller as part of the negotiation of the offer to purchase which is rare, good faith is required to be placed in an escrow account.

If there are issues with the inspection or appraisal you have the right to renegotiate or cancel and get your escrow back.

Up late watching the Texas Indy race and the 24 Hours at Le Mans.

Dave Lowe, Real Estate Broker

Knowledge, Experience, Family Values
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0 votes
Mary Condon, Agent, PPanama City, FL
Sat Jun 11, 2011
Hi Eessary!

A "good faith" deposit is otheriwse known as "earnst money" at the time you make an offer.
Although, it is not absolutely required for a valid real estate offer or a contract, an earnest money deposit from the buyer(s) customarily accompanies an offer to buy real estate. The amount, a small fraction of the total price, is listed in the contract, with the remainder of the cost to be paid at the closing.

There is always a risk, though small, that a buyer could loose this deposit if they do not fulfill the terms of the contract. Seller often do not keep this money because it holds up the marketing and subsequent sale of their home. Some seller realtors view a larger "earnst money" deposit at the offer as the buyer showing more serious intent to buy.

This may be a better stragety for a buyer to use in a seller's market, not a buyers market.

I hope this helps you make an informed decision Eessary.

Mary Condon
0 votes
Molly Hay -…, Agent, Columbus, OH
Sat Jun 11, 2011
You do not have to put good faith money down at the time of an offer. Typically it is put down once all parties agree to the contract and the terms. Earnest money is important because it lets the seller know you are serious. The money is given back to you at closing so really you aren't out anything. In fact some foreclosure/bank owned properties are asking for 1%-3% in good faith money from buyers. However on a regular sale I have had buyers put down as little as 100.00.
0 votes
Brenda Feria, Agent, Richmond, VA
Sat Jun 11, 2011

If the seller has no money to hold the buyer to the transaction, what would keep the buyer from walking from the transaction? It is just that -a good faith deposit, which shows that the buyer is in earnest - also referred to an earnest money deposit. The larger the good faith deposit, the more the seller can trust that the buyer will go through with the transaction.
0 votes
Kathy Weber, Agent, Murrieta, CA
Sat Jun 11, 2011

I agree with Shanna.

In our market, the stronger the offer, including the deposit, the more secure & qualified
your buyer will look on paper.

Bottom line......if the buyer's are going to buy a house, they should have the funds to do so.

The deposit will only help to reduce the loan amount anyway. Best of luck!
0 votes
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