Is 10% Earnest Money too much?
I have a seller with several turn key rentals he's getting rid of. I am in the process of putting 3 under contract and he is asking for 10% earnest money on each. I'm still fairly new to wholesaling but isn't that a bit much? What is the typical percentage of sale price used to determine earnest money?
Ashley
Most Popular Reply
Once upon a time 10% was standard here ... but with the "forever ascending" real estate prices most Canadian markets have witnessed over the past two decades, deposits as a percentage of price tag have dropped dramatically.
I disagree with @Arlan Potter, 10% is not way too much. If we are selling a well maintained, up-to-date, performing property and are looking for a cash buyer, we may ask for a 10% deposit - depending on the final price tag. Part of the reason is to weed-out the wholesalers posing as buyers and the tyre kickers who aren't ready to play.
When the shoe is on the other foot, we have offered earnest money as high as 25% to convey we are serious and ready to go. We once made a 100% deposit on an REO we were after. We have never offered less than 5%.