I am about to place an offer on a Short Sale that needs a lot of work (butterflies in my stomach) I obtained bids to get the work done and my realtor will submit them with the offer. There have been several low offers turned down, but none of those offers have included estimates for any of the repairs.
What would be a reasonable $ of earnest money to put down? Would it be wise to just pay the HOA transfer fee and Capital Reserve Fees or negotiate? My realtor said that she has never seen a bank pay them. She also asked about a warranty and again, said she has never seen a bank pay. There is also a 5% surcharge for the short sale and potentially the payment of lawyer fees to handle the negotiation of the short sale if the seller doesn't pay them.
I have taken those items into consideration when I came up with the offer.
@Account Closed your agent should be able to advise you on an EMD amount. I usually do $500-$1000. It is just a good faith deposit so imo it is not a big deal on getting an exact amount or percentage. However, everyone else has probably done a similar amount. You may want to stand out since there are many offers usually in a short sale. If you want to stand out maybe do more depending on what the purchase price is.
Rest assured you'll be paying that 5% fee, which is definitely out of line, unless we're talking a sub $50k property.
People love to see earnest money. You should look into any laws that pertain to earnest money. I know that in CA the maximum that you are allowed to lose is $3,000. So, I use to put $10,000 in earnest knowing that I could only lose $3,000 if it went side ways. The most I have ever put down for earnest was $20,000 on a $200,000 SFR. I still have the inspection clause in there that allows me to get out of the contract if I find anything that I don't like. I never put the normal $500-$1,000 anymore because of the inspection clause. Hope this helps.
I am sure you know that short sales can take a long time, so if you are going to lock up earnest money think about a clause in the contract (90 days) which will limit how long your money is locked up.
Thank you all for the information.
I would walk away from any deal requiring the buyer to pay 'Short Sale Negotiation Fees'. That's the red flag of a real estate hustler.
1k. if it's a cash sale, sometimes they want 10%
I work a lot of short sales in NJ. Deal direct with the realtor that has the listing, show them you have the funds, but do not put any money down until after the offer is accepted by the bank. Then I would put down a higher amount (3-5%)