What's the minmum that can be used for earnest money?

Asked by Rea Belfon, Brooklyn, NY Fri Aug 9, 2013

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9
Annett T. Bl…, Agent, Fort Lauderdale, FL
Fri Aug 9, 2013
Hi Rea,

first you should speak with your agent about the deposit and I am sure they can help you.

Here in Florida there are no set rules, BUT some government agencies have set rules on the deposit.

If you buy a HUD home the regulations are:
$500 for a sales price up to $50,000
$1000 for a sales price $50,001 and on vacant lots it has to 50% of the listing price.

In general I would not put more than $5,000 down because this will becomes a civil matter if the deposit release is being not approved by one site and can become a big mass. Everything under $5000 can be brought up within the small claims court and can be decided faster.

Believe me I had learned this the hard way before I became an agent and was told by other agents to put in as much as I can. Just don't do it. The contract is not always decided on the deposit. Either you have the money or you don't!

Hope I could help.

Annett T. Block
http://www.FloridaConnectsInc.com
1 vote
John Bourassa, , Fort Lauderdale, FL
Fri Aug 9, 2013
Rea,

There is no rule dictating a minimum earnest money deposit when buying real estate. Usually, all Florida contracts call for 2nd earnest deposits: The 1st deposit is minimal (from $1,000 to $5,000 and even more for mega mansions). The 2nd make up about 5 to 10% of the purchase price depending on the price of the house (1st deposit + 2nd deposit together equaling 5 to 10%). The protocol is to offer a strong first and a strong second earnest deposit. By doing so, you are sending a firm message to the seller that you are really serious about buying his/her property.

However, you can make an offer with $0 deposit if you want but a seller would most likely not even consider your offer. Rarely (but it is known to happen once and a while), a seller will accept an offer presented with $0 down but there would be a stipulation in the offer that if the seller accepts the offer, then buyer will have 2 to 3 days to come up with a strong deposit. Or, if you put down, say, a minimal 1st deposit and no 2nd deposit, again, you show the seller that you are financially weak and seller will think twice and very hard about accepting your offer--but if this is all you have to put down, there is nothing you can do about it.

Other buyers who really want a property are very confident to buy that property, they put only one deposit but it is the full 10% down.

Remember that real estate is not a charity event and sellers may sympathize with you but for their own sake of selling their property, they don't want to take on a weak buyer.
1 vote
Meir Aloni, Agent, Plantation, FL
Fri Aug 9, 2013
There are no "rules"/minimum
However, the more you put in escrow, the better your offer will look.....

****Did you like this post? If so, please click Green thumb. Thank you!


With enthusiasm,

Meir Aloni & Team

CRS (Certified Residential Specialist)

CDPE (Certified Distressed Property Expert)

RECS (Real Estate Cyberspace Society)

Successfully selling Broward County since 1986!
1 vote
Stephen McRo…, Mortgage Broker Or Lender, Tampa, FL
Fri Aug 9, 2013
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If you want to ensure that your offer is the least desirable offer, put the lowest in Good Faith Deposit.

Do the opposite for the opposite effect

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1 vote
Lorraine Hun…, Agent, Jacksonville, FL
Fri Aug 9, 2013
Hi Rea,

I agree that in a seller's market where there are few properties and many other buyers bidding for the same property, your earnest money deposit should be as optimum as possible.

Yes, there are second deposits that can be made but keep in mind that many savvy investors are making deposits of up to $10,000 with strong contingencies written to protect the deposit until suitable appraisal values are determined and inspections completed.

A contract should be written to demonstrate the confidence of the buyer to assure the seller yet provide for realistic contingencies to move to a successful and smooth closing.

If you are not yet committed to working with a realtor in Fort Lauderdale, please feel free to email me at LorraineHunter@keyes.com for additional information. I would be happy to work with you!

Lorraine Hunter, CDPE
RealEstateSolutionsIntl.com
954-903-4240
0 votes
Joan Tole, Agent, Fort Lauderdale, FL
Fri Aug 9, 2013
Offer will not become a legal contract if signed unless there is "good and valuable consideration" otherwise known as Earnest Money! Keep this in mind and if you seriously want the property then also consider that there will be other offers, will they be better than yours? Earnest Money is the first thing they look at next to Terms!
0 votes
Barbara East…, Agent, Pompano Beach, FL
Fri Aug 9, 2013
It all depends on where you are looking to buy, what type of property and the asking price. I have seen as little as $500 put down as earnest money on an inexpensive condo. But, when you put a small amount down the Seller may not see your offer as a serious one. The Seller wants to make sure that you are not going to walk away from the deal. Your Realtor can assist you with suggesting the right amount of earnest money to put down and what contingencies should be in the contract so that there are no issues with getting your earnest money back if all the contingencies are not met.

Barbara Easton-Irvin
Atlantic Properties

http://www.FortLauerdaleHomes4U.net
0 votes
Gary Hitchco…, Agent, Coral Springs, FL
Fri Aug 9, 2013
There are no rules depends on your total offer and what seller feels comfortable with.
0 votes
Crystal Bond, Agent, Plantation, FL
Fri Aug 9, 2013
That would depend on the value of the home and the sellers that you're working with. I would suggest a minimum of 5% (again, depending on the value of the home).
0 votes
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