Advice on making an offer on first real estate property

10 Replies

The sellers agent is asking for a deposit to go with my offer on a property. How common is it for a cash deposit to be included with an offer on a property?

@Nile Reavis 100% normal.  This is called an "earnest deposit."  It shows that you are earnest in your intent to buy and creates a binding contract.  Also, it is forfeited if all contingencies are met but you fail to purchase.

@Nile Reavis Confirm this with the sellers agent, but what they are probably referring to is a picture of a check that will be used as earnest money if you can come to an agreement on a deal with the sellers. 

I would not give cash to anyone just to make an offer. Your pre-qual or proof of funds is what shows you are a worthy buyer.

@Nile Reavis ... @Larry T. and @Michael Noto  know what they are talking about here and this is all 100% accurate (in my experience).... there is no requirement for a deposit when an offer to purchase is placed, however, in my experience a photo of an earnest money deposit check ( I send a picture of a check for $1,000 made out to the asset manager) along with a proof of funds (which is just a true and verified statement from my bank) that shows you have the funds to cover the down payment if using financing, or the whole purchase price if its a cash sale does a great job of showing you are serious.... look at it from the sellers standpoint, if you had two offers in front of you and both are for the same amount what looks better? an offer.... or an offer with a deposit and proof the potential buyer can move forward with the purchase.... There's no money out of pocket unless the offer is accepted at which time you will then have to make good on the deposit and send an actual check.... but this is all pretty standard.....good luck! 

Originally posted by @Michael Noto :

@Nile Reavis Confirm this with the sellers agent, but what they are probably referring to is a picture of a check that will be used as earnest money if you can come to an agreement on a deal with the sellers. 

I would not give cash to anyone just to make an offer. Your pre-qual or proof of funds is what shows you are a worthy buyer.

 @Michael Noto thank you for the response. Yes a picture of a check was requested. I had never heard of this and wasn't sure if it was common. It makes sense that my pre-qual would be enough to show the seller that I am a serious buyer.

Originally posted by @Larry T. :

@Nile Reavis 100% normal.  This is called an "earnest deposit."  It shows that you are earnest in your intent to buy and creates a binding contract.  Also, it is forfeited if all contingencies are met but you fail to purchase.

 @Laary T. thank you the response. Yes thank you for clearing this up from me. I just wanted to make sure I wouldn't be making a mistake by giving the deposit and things didn't go well and I end up losing money. It is good to know that the deposit is forfeited is all contingencies are met but I don't purchase.

Originally posted by @Michael Spittler :

@Nile Reavis ... @Larry T. and @Michael Noto  know what they are talking about here and this is all 100% accurate (in my experience).... there is no requirement for a deposit when an offer to purchase is placed, however, in my experience a photo of an earnest money deposit check ( I send a picture of a check for $1,000 made out to the asset manager) along with a proof of funds (which is just a true and verified statement from my bank) that shows you have the funds to cover the down payment if using financing, or the whole purchase price if its a cash sale does a great job of showing you are serious.... look at it from the sellers standpoint, if you had two offers in front of you and both are for the same amount what looks better? an offer.... or an offer with a deposit and proof the potential buyer can move forward with the purchase.... There's no money out of pocket unless the offer is accepted at which time you will then have to make good on the deposit and send an actual check.... but this is all pretty standard.....good luck!

@Michael Spittler thank you so much for your response. The way you've  explained things, it makes perfect sense to me now. I will absolutely send the earnest money deposit with my offer. Thanks again for such thorough feedback.

@Nile Reavis ... Your doing the right thing by bringing your questions here.... BP is a wonderful tool in that sense when something might not be a law or rule but is somewhat of a common practice.... best of luck to you.

I wouldn't provide a copy of an EM check until the seller accepted my offer verbally. I put in plenty of offers and I don't think I've ever been asked to produce an EM check or copy thereof until the seller has at least verbally agreed to accept my number. If I were to have to get EM checks to submit every offer (most of which don't get accepted), my bank would disown me - literally.

Because then I'd have to go back to the bank and return the cashier's checks.

I would tell your realtor to tell the seller that you will have no problem producing the cashier's check within 24 hours provided the seller verbally agrees to your offer price. If not, you're not wasting your time nor the bank's to come up with a cashier's check just to put in the offer.

I've personally never seen that in all the years I've been doing this. And I would guess I'm well over 300 or 400 offers.

Originally posted by @Mike H. :

I wouldn't provide a copy of an EM check until the seller accepted my offer verbally. I put in plenty of offers and I don't think I've ever been asked to produce an EM check or copy thereof until the seller has at least verbally agreed to accept my number. If I were to have to get EM checks to submit every offer (most of which don't get accepted), my bank would disown me - literally.

Because then I'd have to go back to the bank and return the cashier's checks.

I would tell your realtor to tell the seller that you will have no problem producing the cashier's check within 24 hours provided the seller verbally agrees to your offer price. If not, you're not wasting your time nor the bank's to come up with a cashier's check just to put in the offer.

I've personally never seen that in all the years I've been doing this. And I would guess I'm well over 300 or 400 offers.

 @Mike H. thank you for your advice. I haven't done many offers but this was the first time I have been asked for an EM check. The sellers agent wanted just a photo of an EM check, this would be a credit to me at closing if my offer is accepted. This is my understanding after talking to my agent and others.

Originally posted by @Michael Spittler :

@Nile Reavis ... Your doing the right thing by bringing your questions here.... BP is a wonderful tool in that sense when something might not be a law or rule but is somewhat of a common practice.... best of luck to you.

 @Michael Spittler you are absolutely right. BP is amazing!! This was my first time starting a discussion on BP but I needed some advice and the first thing I thought about was using the BP community to help me. Im still learning and hopefully I can close my first deal soon. Thanks again for the advice.

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