Yellow, Home Buyer in 07450

How much should a "good faith" deposit be?

Asked by Yellow, 07450 Tue May 31, 2011

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18
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Wed Jun 6, 2012
1% of the purchase price. Good luck,

Jim Simms
NMLS # 6395
JSimms@cmcloans.com
Financing Kentucky One Home at a Time
1 vote
Here in CA in 1-3% depending on how strong you would like your offer to be perceived and taking into consideration the type of real estate market you are in at the moment.
Victoria Always, REALTOR, GREEN
victoriaalways@firstteam.com
Flag Sat Aug 20, 2016
Harriet Lewis, Agent, closter, NJ
Wed Jun 6, 2012
Regarding a good faith deposit, it does depend on the purchase. For example, on higher priced homes there is often the request on the Sellers end to put more than the standard $1,000 which is customary in many purchases in Bergen County, New Jersey. In other cases, the initial deposit is higher when you want to get a competitive edge, especially in a bidding situation. In other situations, people are waiving the initial deposit and going right into the 10% deposit within a 7-10 day period of time. Please contact me with anytime with any further questions or to help you with your real estate needs: (201)467-5738.
1 vote
Melinda Cronk, Agent, Ridgewood, NJ
Tue May 31, 2011
Just to clarify, I think we're all saying the same thing, but using the term "good faith" differently. In the Ridgewood, NJ (not sure why Trulia places me in CA!) area, contracts are signed at the time of the Buyer's initial bid, and some sort of earnest money must be included, which is what we commonly refer to as the "good faith" deposit. This is deposited with your real estate firm, and temporarily held until the price negotiation with the Seller is complete. This is different from the total deposit you will put down if a deal is reached, and it's also different than the balance you will put down on the entire transaction.

Let's say you want to purchase a house for $500,000. In the Ridgewood, NJ area, your chances of reaching a deal are best if you are looking for 80% financing or less, and you are able to put down a 10% deposit. So, for example, let's say you submit a contract to the Seller with a $500,000 purchase price, a promise to put 10% ($50,000) down within approximately the next 2 weeks, and another 10% ($50,000) at closing, leaving the 80% balance ($400,000) covered by the mortgage. At the time you sign the contract, you will attach a check (again, usually $1,000) that represents the good faith deposit. Then, when Attorney Review is complete, the balance of your 10% down is due, which is this case is $49,000 since you've already given the smaller check up front. I hope that helps.

Melinda Cronk
mcronk@tarvinrealtors.com
1 vote
Pacita Dimac…, Agent, Oakland, CA
Tue May 31, 2011
Wow....It was interesting to see that $1000 is enough as a good faih deposit check in your neck of the woods

Where I am, we generally recommend 1-3% of purchase offer as the initial deposit. The higher the deposit (which is part of the down payment anyway) the stronger the offer is perceived by the sellers. $1,000 would have been extremely low unless the property is listed at $100,000.

Just had to comment ....real estate IS local. :)
1 vote
Jim Olive, Agent, Key West, FL
Mon May 21, 2012
Guess I'm different and locality is important. For me, it's usually .5 to 1% of purchase price and it isn't pony'd up until a bilatteral agreement is reached...
0 votes
Maria FORSBE…, Agent, Hackensack, NJ
Mon May 21, 2012
The usual is $1000 as in all previous answers! Good luck in your purchase!
Web Reference:  http://www.viprealtorsnj.com
0 votes
Chris Arnt, , Ridgewood, NJ
Mon May 21, 2012
$1000 is typical in this area.
0 votes
Francesca Pa…, Agent, Manasquan, NJ
Thu Jun 9, 2011
I agree with all of the previous posters, $1000 is the standard amount for a good faith deposit.
Web Reference:  http://www.PatrizioRE.com
0 votes
Jeanne Feeni…, Agent, Basking Ridge, NJ
Thu Jun 2, 2011
Hi Yellow, The customary $1,000 at time of offer is generally followed up about 2 weeks later (I most often see 10 days after the conclusion of attorney review) with a second deposit. I consider both of those taken together to be the earnest deposit.

I've had buyers say, "why not just the $1,000"? and I remind them that on the strength of your promise to buy which is bolstered by your earnest deposit, the seller has taken their home off the market. The likelihood of a seller doing that without a serious downpayment are low. Think of it as "skin in the game". As other posters have stated, if you are serious, show it.

Now if you are doing FHA financing and putting an minimal amount - say 3.5% - down, then I generally suggest to my buyers that they put the $1,000 at signing and the remaining deposit in at the 2nd deposit (ie about 2 weeks out) deadline.

A seller will evaluate offer price and terms. The deposit is one of those terms and is viewed as a signal of seriousness and commitment. In a close race, it can make the difference.

All deposit monies are kept in escrow until close.

Best,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference:  http://www.feenick.com
0 votes
Wanda Stathis, , 07450
Wed Jun 1, 2011
It should be one thousand dollars .
0 votes
John Juarez, Agent, Fremont, CA
Tue May 31, 2011
@Melinda Cronk

Thanks for the explanation of what a good faith deposit is in your neck of the woods. In California, it is different. The amount of the good faith deposit is usually indicated on the purchase offer (contract) which is signed by the buyer and presented to the seller. If the offer is accepted, it is signed by the seller, acceptance of the offer is conveyed to the buyer and a contract is in place. The contract document will specify when the good faith deposit has to be deposited with the escrow holder, most commonly within three days after acceptance of the offer. There are, of course, variations on this theme but what I have described is most common.

Again, real estate is local.
0 votes
Karen Boyle, Agent, Ridgewood, NJ
Tue May 31, 2011
Hello Home Buyer,

Usually we ask for a $1,000 deposit to be put down upfront, along with your offer. This counts towards your downpayment total (usually 10%+, depending on the type of loan you're getting). If there are multiple offers on the table sometimes it benefits you to put down more upfront, your agent would advise you if that's the case. The deposit is refundable if your offer is not accepted. Hope this information helps! Good Luck to you.

Warmly,

Karen
0 votes
David Burnham, , Washington, DC
Tue May 31, 2011
I always tell people it is as much as you can afford. The bigger the deposit is, the more your offer is set above the rest. Chances ar so remote that the seller will ever be able to get this and if they can, thy are generally only going to get damages, not necessarily all of it.

With that said, I am usually recommending about 10% if the have that much for a down payment. It is not uncommon for us to see deposits of $30,000, $50,000, or more.

It does depend on your area, but the money is in your control. As long as you do not default on your contract, you will not lose it and if you have to put the money up in 30 days, why not put it up now? It will help you in your negotiaton.

Remember, sellers want to find an offer that they think will get to settlement. If you put up $50,000, then chances a you a going to have the resources to make it to settlement.
0 votes
WTF..? That's what the pre-cert from a lender is for, that shows that you are legit, 1% is good enough.
Flag Sun Apr 10, 2016
Bill Eckler, Agent, Venice, FL
Tue May 31, 2011
Yellow,

One of the intentions of a deposit is to illustrate to the seller that you are a serious buyer and have interest in their home.

Our approach varies slightly from some others in that we try to get our buyers to present an offer that sets theirs above all others. With this said, we often recommend an initial offer of $1,000 and a secondary offer that is submitted after the home inspections are completed(10 to 15 days) after the offer acceptance.
The secondary amount can be any amount the buyer is comfortable(but keep it reasonable).

If you have found a home that "is the one" using an initial and secondary deposit approach may be what will make the difference.

Best wishes,

Bill
0 votes
Carolynn Mon…, Agent, Haworth, NJ
Tue May 31, 2011
Hi there Home Buyer: Good Faith deposit is $1000 check made out payable to your Agents Real Estate Office Escrow account and transferred at request once the deal is solidified.

It means exactly what it says "good faith". It is given as a tool to show that you are a serious buyer. If the deal is not accepted by the seller then it should be returned to you.

Give me a call if you are ready to purchase and I will walk you through everything.

Regards,
Carolynn Monaco
201-639-5555
0 votes
Melinda Cronk, Agent, Ridgewood, NJ
Tue May 31, 2011
The most common amount you see in the ridgewood area is $1000, but it can vary. In certain situations your agent may suggest you go higher, for example if you are among multiple bidders on the same property. The good faith is part of your overall deposit. In this area, sellers generally like to see you putting down 10% of the purchase price. That balance is often due a couple of weeks after attorney review is completed.
0 votes
Maria FORSBE…, Agent, Hackensack, NJ
Tue May 31, 2011
In a REO or foreclosure deal I may suggest up to $5000 depending on circumstances
0 votes
Maria FORSBE…, Agent, Hackensack, NJ
Tue May 31, 2011
I usually recommend $1000
0 votes
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