What's an Excessive Earnest Money Deposit?
Heads Up to All Buyers, Read On....if you're in the real estate market you need to know this especially if you're interested in foreclosures.
Excessive Earnest Monies are now being asked by the banks in some of the new foreclosure listings. Why? Because they can and it's become a sellers market with lower inventory.
Let's start with what's the normal earnest money asked for on a property. In the Dallas Metro area, 1% of your offer price is the norm. What some of the banks are asking for are:
5% to 10% up front.
For example on a $300K property, a $3000 earnest money deposit would be acceptable. So now some banks will be asking for 15K to 30K, just to accept an offer.
That's excessive but seems quite acceptable for the banks. I guess....nothing surprises me anymore.
What's' a buyer to do? If there are multiple offers probably not too much, just make sure you want the house and take advantage of the 7 to 10 day option window they give you. Once you pass all contract contingencies including financing addendum and you decide to back out, expect your money to be tied up. Get pre-approved before you make an offer, that's the best advice I can give. With the banks you won't have a choice on this but if a owner seller asks for it, which I can see happening, that would be negotiable, maybe.
The market is always changing and it's good to know about having to have more money to buy a home. Happy Weekend! Lets us know if you need help navigating the real estate market with honest and truthful insights that won't waste your time or money.