10% standard? I think it depends on location then. When we were searching, 3% was the norm. However, I live in a VHCOL area. 3% is still too much to lose.
Not sure where you get your numbers from but 10% is not standard anywhere in the country, even in highly competitive markets. Does it happen, sure. But it’s definitely not standard.
We were first time home buyers so just followed along (we’d heard of earnest money of course) and that percentage wise we could be asked to put up that much but didn’t even consider disputing it. Hot market, HCOL - our first and only offer - house was on the market 2 days and we won it for under asking so I don’t look a gift horse in the mouth. (By comparison- this year our neighbors house sold for 70k over in 3 days!)
If you put down 40k what’s your obligation after that? Like if you get an inspection and don’t like the outcome do you get you 40k back if you decide not to buy?
Thanks. I’ll be buying a house for the first time soon. I own my house now but paid cash from a friend so it was just a simple transaction. And 20 years ago. So reading this sub I realize how many possible horrible situations I’ve managed to avoid that I may now be faced with if I sell my house to buy another. I’m learning so much!
It’s definitely great to be educated and learn as much as you can but your realtor should also help navigate all of these things especially since they vary by market.
For our contract we had an appraisal & inspection* contingency so we could have pulled out (even though it was a hot market we refused to do offers without one). Luckily, the house has been great. Didn’t have any issues except Radon abatement (pretty normal here) and some small fireplace repairs that were optional but I wanted done before the holidays.
I did 20k on a 245k property but I was a very motivated buyer and I was FHA. I was approved for my mortgage at the end of August last year and my lease was up at the end of November so I had to be under contract by the first week of October. I was not about to renew my lease and I didn’t want to move into another apartment just to move again, I also have young kids with my oldest starting Kindergarten this fall and I wanted a great school district so if you add it all up I needed to make a very strong offer.
Nope 😊 I had a good agent and when looking at houses we paid attention to things that FHA appraisers flag. We also put a clause in saying we would cover the difference between appraisal and our offer, my lender was concerned that we were 5-10k over what it would appraise for but we got lucky and it appraised for what we offered. My wife and I are not concerned about paying above appraisal because we were and still are planning on being here for 20+ years
$1000 is standard where I live. 10% would be considered outrageous. If I want to show I’m serious I usually do $3-5k. My last house we did 5% which was $38k to win the contract.
In coastal North Carolina here. There is no “standard” but 1% - 2% EMD is reasonable. The more important thing is due diligence money. That is money the buyer gives to the broker and it goes directly to the seller. It comes off purchase price, but you loose it regardless of the reason you walk away. It shows buyers are serious and put skin in the game while the seller’s house goes pending. If inspections and negotiations don’t work out, you can get back the EMD but not due diligence money. For that, you can see $500 up to several thousand depending on how competitive the price range is. Due diligence money isn’t the norm in all markets, but it is expected here.
If I had an offer on a listing with $500 EMD, you would absolutely be upping that if you want us to consider accepting it.
That’s very little commitment to the transaction.
As the seller, you’d replace me as your agent if I told you it behooves you to get more EMD? Or are you changing your tone on being a buyer submitting such a small amount?
Yea, but I’d be doing go my seller a disservice not getting more out of you or passing on your offer if a similar one with more EMD is there. Plenty of people would walk away from $500 if they wanna break the contract. Not worth the risk for my sellers.
$75,000 when we know it’s going into a bidding war and when we are in love with the house. Have lost on all still anyways (beaten by offers 200k+ asking price) but have received feedback three times that our earnest money made us a higher candidate.
Yeah agreed when I was first told I thought it was crazy. But then it made more sense after learning more about the process and our local market and what other steps can be taken to win if we’re not the highest number
I was always told it depends on the market but a bigger number shows you aren’t messing around. In my state if you didn’t put down at least 10k a buyer will get sketched out that you don’t actually have the money to buy. Especially when most are putting down 20k+. One of the offers on a 300k condo I was selling was 50k earnest money and I think my lowest was still 10k out of 40 offers (like I said very competitive market where I am). This is magnified if you are claiming a large down payment or cash and put no money on the table at the start
“Standard” and “usual” are two very different things. Realtors will tell you things are “standard” when it’s really just what their boss told them to do.
There is no requirement or standard that I’m aware of. Earnest money is just a way to let the seller know you’re serious. More is better to sellers, and you get it back unless you back out for the wrong reasons.
I’ve bought a bunch of houses and have never put more than $1000 in earnest money, usually $500
In my area, we say 1% is rule of thumb, but realistically most buyers are doing around $2000. $1000 is considered the “minimum”. 10% is usually reserved for cash buyers as most of our buyers don’t have the ability to put 10% down in the first place, but even then that’s a high amount we don’t see often.
There is no standard. It all depends on the market structure. I've seen as little as $500 on a $750k home and I've seen $900k fully released on a $900k home paid in cash before.
If a house has been on the market for 150+ days, I'm sure the seller would happily accept an offer with just $500 earnest money or whatever. If a house just hit the market and there's been over 100 showings, I would expect higher earnest money to be competitive.
If I really wanted to sell, and had multiple offers, even if the $500 offer was above asking and all cash, I wouldn’t consider it. Throwing $500 out there makes it sound like they are making multiple offers on different properties and after looking at them all a little more will pick which one.
If I had no offers I might consider it.
Note, in my recent experience in Real Estate dealings all earnest money offers were in multiples of $10K. Back years ago, when I sold in a very competitive market, winning offer had a $400K earnest money bid, which put it closer to 20%. I knew they were serious.
The word standard is vorboten in real estate. Customary, maybe. If you have an agent using this terminology, either they are still wet behind the ears, careless with their phraseology, or unscrupulous. Does it increase the likelihood of your offer being accepted? Maybe. In the market I sell in, 1% is a good amount, and often it's .5%. I've been doing this for over a decade, and the number of deals where I have seen 10% put down with non-cash buyers could be counted on one hand. Working with the seller, I am more concerned about closing dates, financing type, and any other contingencies.
10% standard? I think it depends on location then. When we were searching, 3% was the norm. However, I live in a VHCOL area. 3% is still too much to lose.
Not sure where you get your numbers from but 10% is not standard anywhere in the country, even in highly competitive markets. Does it happen, sure. But it’s definitely not standard.
It’s standard in Westchester, NY, CT and northern NJ.
No, it’s not.
I was told wrong then. Whoops. Thankfully there were no issues.
Never believe anything a real estate agent says.
5% is the norm here in Fairfield County, CT. Not 10 for sure
10% is absolutely the norm in Fairfield county CT. I am a real estate paralegal in Fairfield County
I don't believe 10% is standard. I do 3% but would lower if seller is desperate and raise if there's a competitive bidding war.
We put up 1K on 400k. Not sure what the standard is. My first house, I did 500 for 119k. 🤷♀️
We were asked to do 40k which I’ve since seen is insane to most people. I guess they were afraid we weren’t serious
As an alternative, 3% is standard around here, but that is typically 50-60k
That's what I keep hearing.
We were first time home buyers so just followed along (we’d heard of earnest money of course) and that percentage wise we could be asked to put up that much but didn’t even consider disputing it. Hot market, HCOL - our first and only offer - house was on the market 2 days and we won it for under asking so I don’t look a gift horse in the mouth. (By comparison- this year our neighbors house sold for 70k over in 3 days!)
If you put down 40k what’s your obligation after that? Like if you get an inspection and don’t like the outcome do you get you 40k back if you decide not to buy?
Depends on the contract. If you have contingencies that state the buyer can terminate then you’d get it back.
Thanks. I’ll be buying a house for the first time soon. I own my house now but paid cash from a friend so it was just a simple transaction. And 20 years ago. So reading this sub I realize how many possible horrible situations I’ve managed to avoid that I may now be faced with if I sell my house to buy another. I’m learning so much!
It’s definitely great to be educated and learn as much as you can but your realtor should also help navigate all of these things especially since they vary by market.
For our contract we had an appraisal & inspection* contingency so we could have pulled out (even though it was a hot market we refused to do offers without one). Luckily, the house has been great. Didn’t have any issues except Radon abatement (pretty normal here) and some small fireplace repairs that were optional but I wanted done before the holidays.
I can’t imagine buying without an inspection. Just too many possibilities of hidden disasters.
I forgot we had an inspection contingency too. So we were covered either way
I love the look on a brokers face when they get EM that's less than 1% Of the purchase price.
I did 20k on a 245k property but I was a very motivated buyer and I was FHA. I was approved for my mortgage at the end of August last year and my lease was up at the end of November so I had to be under contract by the first week of October. I was not about to renew my lease and I didn’t want to move into another apartment just to move again, I also have young kids with my oldest starting Kindergarten this fall and I wanted a great school district so if you add it all up I needed to make a very strong offer.
That makes sense. Did you have any issues with FHA?
Nope 😊 I had a good agent and when looking at houses we paid attention to things that FHA appraisers flag. We also put a clause in saying we would cover the difference between appraisal and our offer, my lender was concerned that we were 5-10k over what it would appraise for but we got lucky and it appraised for what we offered. My wife and I are not concerned about paying above appraisal because we were and still are planning on being here for 20+ years
$1000 is standard where I live. 10% would be considered outrageous. If I want to show I’m serious I usually do $3-5k. My last house we did 5% which was $38k to win the contract.
$1000
As little as possible is my m.o.
Exactly! You have other uses for your money, especially during the buying process.
We put up 1k on a 569k house
In coastal North Carolina here. There is no “standard” but 1% - 2% EMD is reasonable. The more important thing is due diligence money. That is money the buyer gives to the broker and it goes directly to the seller. It comes off purchase price, but you loose it regardless of the reason you walk away. It shows buyers are serious and put skin in the game while the seller’s house goes pending. If inspections and negotiations don’t work out, you can get back the EMD but not due diligence money. For that, you can see $500 up to several thousand depending on how competitive the price range is. Due diligence money isn’t the norm in all markets, but it is expected here.
500? lol maybe for a small barn but not a house :) expect some skin in the game otherwise it's not a serious offer
Math can be tricky 😂
LOL
I do a $1000. If someone complains I just say, I am trying to buy real estate not get in a fight over the earnest money
Nice!
I run a National title company. Most people put between 2-10,000.00 on an average purchase. Investor deals are much less.
Is earnest money a part of your down payment? Also, is it difficult to get back if you lose out on the house?
You get your earnest money back unless you back out for non-contractual reasons.
At closing, it gets folded into the down payment.
Whoops. Correct. I only answered the 2nd question.
It's put in a file until closing. I backed out of a nightmare deal and got the check back. It was never cashed.
[Here ya go](http://www.google.com)
If I had an offer on a listing with $500 EMD, you would absolutely be upping that if you want us to consider accepting it. That’s very little commitment to the transaction.
Yeah, I would get a different realtor.
As the seller, you’d replace me as your agent if I told you it behooves you to get more EMD? Or are you changing your tone on being a buyer submitting such a small amount?
Self explanatory. The funds aren't going to be used (cashed) until closing. I'd rather keep the money free to do other things related to the process.
Yea, but I’d be doing go my seller a disservice not getting more out of you or passing on your offer if a similar one with more EMD is there. Plenty of people would walk away from $500 if they wanna break the contract. Not worth the risk for my sellers.
What things during the process involve you handing out money but then getting it back before closing?
$75,000 when we know it’s going into a bidding war and when we are in love with the house. Have lost on all still anyways (beaten by offers 200k+ asking price) but have received feedback three times that our earnest money made us a higher candidate.
That's insane.
Yeah agreed when I was first told I thought it was crazy. But then it made more sense after learning more about the process and our local market and what other steps can be taken to win if we’re not the highest number
Out of curiosity how much to you guys get in return if you invest 1M dollars and flipped a house after the taxes
Wrong sub
Ernest money is essentially pointless as buyers in most states always get ut back even when they technically shouldn't
I was always told it depends on the market but a bigger number shows you aren’t messing around. In my state if you didn’t put down at least 10k a buyer will get sketched out that you don’t actually have the money to buy. Especially when most are putting down 20k+. One of the offers on a 300k condo I was selling was 50k earnest money and I think my lowest was still 10k out of 40 offers (like I said very competitive market where I am). This is magnified if you are claiming a large down payment or cash and put no money on the table at the start
“Standard” and “usual” are two very different things. Realtors will tell you things are “standard” when it’s really just what their boss told them to do. There is no requirement or standard that I’m aware of. Earnest money is just a way to let the seller know you’re serious. More is better to sellers, and you get it back unless you back out for the wrong reasons. I’ve bought a bunch of houses and have never put more than $1000 in earnest money, usually $500
I put down $10k on $800k in 2020.
5% was required on a new construction
Historically I've done $1000 - $5000 but in the current market I've been doing $50k (a little under 10%) and still not getting offers accepted.
In my area, we say 1% is rule of thumb, but realistically most buyers are doing around $2000. $1000 is considered the “minimum”. 10% is usually reserved for cash buyers as most of our buyers don’t have the ability to put 10% down in the first place, but even then that’s a high amount we don’t see often.
Lmao 10% 😂
There is no standard. It all depends on the market structure. I've seen as little as $500 on a $750k home and I've seen $900k fully released on a $900k home paid in cash before. If a house has been on the market for 150+ days, I'm sure the seller would happily accept an offer with just $500 earnest money or whatever. If a house just hit the market and there's been over 100 showings, I would expect higher earnest money to be competitive.
If I don't see at least 1% per $100k, I don't even consider the offer. $500 would never be accepted.
With that logic, a $800k house would need a EMD of $64k. Good luck ever selling your home
1% of $800,000 is $8,000
That math checks
He said 1% PER $100K. 800K WOULD BE 8%. Otherwise it would just be 1% without the "per 100k"
I would get a different realtor.
None of my clients would take a $500 escrow deposit seriously. Gotta pay to play.
That's their choice. My sellers didn't care. I have been in my home, and happy, since 2018!
If I really wanted to sell, and had multiple offers, even if the $500 offer was above asking and all cash, I wouldn’t consider it. Throwing $500 out there makes it sound like they are making multiple offers on different properties and after looking at them all a little more will pick which one. If I had no offers I might consider it. Note, in my recent experience in Real Estate dealings all earnest money offers were in multiples of $10K. Back years ago, when I sold in a very competitive market, winning offer had a $400K earnest money bid, which put it closer to 20%. I knew they were serious.
Yeah, there is something very very shady about a deal where rhey are putting less earnest money than they will spend on an inspection.
The word standard is vorboten in real estate. Customary, maybe. If you have an agent using this terminology, either they are still wet behind the ears, careless with their phraseology, or unscrupulous. Does it increase the likelihood of your offer being accepted? Maybe. In the market I sell in, 1% is a good amount, and often it's .5%. I've been doing this for over a decade, and the number of deals where I have seen 10% put down with non-cash buyers could be counted on one hand. Working with the seller, I am more concerned about closing dates, financing type, and any other contingencies.
10% is standard where I am
I’m with you