With more first time home buyers taking advantage of FHA loans requiring only a 3.5% down payment, the good faith/earnest money deposit amounts have relaxed as low as 1%. Even my conventional loan buyers are putting 1% earnest money deposits down unless for that particular property the seller is requiring a higher percentage up to 3%. If it is a multiple offer situation, then higher earnest money deposits may be considered stronger.
You will usually have 17 days in which to perform your inspections and renegotiate terms if any before the contingency deadline is declared and signed off on. You can always ask your Realtor to show you in the documentation that it is 17 days.
****BEWARE**** Fannie Mae properties and some of the other investors or bank-owned will sometimes require buyer signed addendums PRE-acceptance that shorten contingency time to 10 calendar days with higher good faith deposits required, so make sure you know exactly how much and how many days you have and that you see it in writing and not only hear it verbally.
If you are still in the process of choosing a Realtor, I would be more than happy to assist you as I service and know the 90043 area very well and it's surrounding communities. Do not hesitate to contact me at 310-508-4354 or post any other questions you may have. We're more than happy to help. Good Luck!
I don't usually weigh in when there have been a flurry of answers but I feel compelled to do so now. Your "earnest money" or deposit is the money you put down on the table to show the seller you are serious about wanting to buy the home. Contrary to popular opinion the amount you choose to use as earnest money or deposit is not set in stone. In fact, in California you can make an offer to purchase without placing one thin dime as a deposit or earnest money offering.
Some agents will tell you that it has to be 3% of your projected purchase price but in truth it doesn't. The 3% is the amount set forth in the purchase contract that the seller is limited to recovering if you both choose to sign the arbitration section of the contract and something should go wrong.
Now, here's the thing, if you don't offer up a significant amount of money when you make your offer it is very possible that the seller will think you are just wasting their time and may choose to either not respond to your offer at all or to reject it.
The other agents who have told you that until your contingencies (which are the things you are saying you must be ok with when you sign the contract in order to go forward from offer to closing) are removed. Typically, you have a minimum of 17 days from the time your offer is accepted and escrow is opened before you need to have completed your investigation (home inspection, termite inspection, etc.) before you have to in effect "put up or shut up". This doesn't mean that if something pops up unexpectedly that might make you want or need to cancel the transaction you can't back out of the deal but it can mean, especially if you have signed the contingency removal form to allow all of your easy escape hatches to be closed that you might be able to get out of buying the house but you very well may have to leave that earnest money deposit behind.
Remember, no body can force you to buy a home - even one you have made an offer on, however, if you are not mindful of the time periods for doing the things you need to do, at the very least you could lose some money, at the very worst you could lose a lot of money.
As for the property inspection, get this done as soon as you possibly can after the offer is accepted and escrow is opened so that you have ample time to review the results and to decide if you are ok with things as they are, need to renegotiate because some things are not ok or if the job is just to big for you to undertake and you want to back out.
You will need to give a copy of the inspection report to the seller but you are under not obligation to move forward if, for any reason you are unwilling to do so. And, as long as you have made your decision within the contractually specified time periods and you haven't agreed to remove your contingencies, your deposit should be returned to you.
I hope this helps, that you have found a home that you will be very happy with and that you never need to worry about trying to get a deposit back because things go so smoothly for you.
Take care and have a wonderful day!
Tisza Major-Posner, Realtor DRE #01784679, IVPG Realty (909) 837-8922
In California, you may back out of the deal if you are not satisfied with the inspection, no questions asked. You do not need to get the seller's agreement. You simply do not sign off and give your approval of the inspection. Escrow typically refunds your earnest money deposit immediately in this case.
Please let me know if you have any more questions.
Earnest money deposit or escrow deposit are monies that are â€œset asideâ€ or held in escrow as a real estate transaction unfolds. As the names imply, they are paid by the potential buyer to make a statement that the buyer is â€œearnestâ€ in purchasing the real estate property from the seller. The money is deposited in an escrow account for safe keeping. At this point it is out of the sellerâ€™s hand , but not in the buyer pending on how the real estate transaction proceeds. The person or group in charge of holding and accounting for the escrow money is usually a real estate company of an attorney ( generally the sellerâ€™s attorney but I have seen either attorney hold the monies in the account). In New Jersey , the earnest amount is generally $1000 but every state has a â€œlocalâ€ norm and precedent . I am not familiar with the California environment and what is the norm, This allows the real estate contact negotiating and processing to go forward and it shows the seller that the buyer is ; â€œearnestlyâ€ interested in the property. As a side note, once money is in an escrow account, both parties ( buyer and seller) must agree before the money is released and returned to the buyer. This is generally not a problem but may take time to get all the legal processing accomplished.
Bernard ( BJ) Brill
Emails: RealtorBJB@gmail.com or BJ.BRILL@PrudentialNewJersey.com
The earnest money deposit is basically the same thing as the initial deposit, set forth in section 2.A. of the California Residential Purchase Agreement. Customarily the earnest money deposit / initial deposit is equal to 3% of the purchase price. If you find things during the inspection that you disapprove of after receiving the inspection report, as long as you are within your inspection period (which is set forth in section 14B), you will be able to request that the deal be canceled and request that the seller return your deposit.
Please email me if you have any questions at firstname.lastname@example.org . Check with your agent for the specific details & deadlines of your transaction - they should be explaining this to you and looking out for your best interests to make sure you comply with all of the deadlines, so that your deposit does not be put at risk.
Have a good day - good luck!
Coldwell Banker Residential Brokerage
15490 Ventura Blvd.
Sherman Oaks, CA 91403
If the inspector finds several things wrong with the property, you have choices for your next move. If you really want the house, you can request that the seller make the necessary repairs and/or give you credits to make them yourself. This is a chance to basically re-negotiate. If you don't want to re-negotiate and you think the house requires too much work, or if the seller doesn't want to negotiate, then yes, you can back out of the deal and get all of your money returned.
This is how it typically works, unless you do not include an inspection contingency in your original offer.
If you would like to talk about this in greater detail, I would love to help you.