Making a offer on first real estate property

8 Replies

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

@Nile Reavis   Some type of Ernest Money Deposit is very common but it should be your realtor's brokerage or the title company holding the deposit, so it's not like you are writing a check to the seller or the listing agent.  I would not think anything of it unless it seems unreasonable or you are asked to submit a deposit with no contingencies.

@Nile Reavis what I believe the agent is asking for is the earnest money deposit, which is common practice to provide. However, I've never gave the earnest money while making an offer, I've always given it once I've gone into contract (there's usually a time frame you must have the money turned over, so it's definitely good practice to have the money available when making the offer). The money will then be held in a trust or escrow account, during the inspection and any due diligence period. If you are to back out of the contract during the allotted inspection/due diligence period, you should receive it back.

Ask for clarification from the agent on whether or not it's earnest money he/she is asking for, and if so, ask why it's being required to make an offer.

Allan

Originally posted by @Casity Kao :

@Nile Reavis  Some type of Ernest Money Deposit is very common but it should be your realtor's brokerage or the title company holding the deposit, so it's not like you are writing a check to the seller or the listing agent.  I would not think anything of it unless it seems unreasonable or you are asked to submit a deposit with no contingencies.

 @Casity Kao thank you for the response. I was very unsure if this was common or not seeing as it is my first time going through this process. 

Originally posted by @Allan Rosso :

Nile Reavis what I believe the agent is asking for is the earnest money deposit, which is common practice to provide. However, I've never gave the earnest money while making an offer, I've always given it once I've gone into contract (there's usually a time frame you must have the money turned over, so it's definitely good practice to have the money available when making the offer). The money will then be held in a trust or escrow account, during the inspection and any due diligence period. If you are to back out of the contract during the allotted inspection/due diligence period, you should receive it back.

Ask for clarification from the agent on whether or not it's earnest money he/she is asking for, and if so, ask why it's being required to make an offer.

Allan

 @Allan Rosso thank you for the response. So after your offer was accepted you turn over the earnest money deposit? because right now they haven't officially accepted my offer yet. Also I am worried about if I have to back out of the deal for any reason, I don't want to lose my deposit.

@Nile Reavis  yes exactly. If your offer gets accepted, then the contract will be signed by both parties, and then you will give your earnest money deposit. As long as you back out before your contingency period is over, you will not lose your earnest money deposit. 

In my experience, the contingency period is usually 10 days, and common contingencies include pending the buyer obtaining financing as well as pending inspection. However, you can add any contingencies you want. For example, pending the appraisal coming back high enough to satisfy you. 

Just make sure you read the contract and fully understand it before signing it. That way you can make sure to decide to back out or move forward while you still legally can. Also, if you want any special contingencies or terms included in the contract, make sure they get put in there as well before it gets signed. 

Originally posted by @Allan Rosso :

@Nile Reavis yes exactly. If your offer gets accepted, then the contract will be signed by both parties, and then you will give your earnest money deposit. As long as you back out before your contingency period is over, you will not lose your earnest money deposit. 

In my experience, the contingency period is usually 10 days, and common contingencies include pending the buyer obtaining financing as well as pending inspection. However, you can add any contingencies you want. For example, pending the appraisal coming back high enough to satisfy you. 

Just make sure you read the contract and fully understand it before signing it. That way you can make sure to decide to back out or move forward while you still legally can. Also, if you want any special contingencies or terms included in the contract, make sure they get put in there as well before it gets signed. 

 @Allan Rosso thank you for the response. I am learning a lot about this process. Its great to be receiving so much advice.

@Nile Reavis , no problem at all. Definitely reach out if you have any more questions. Goodluck with that offer!

For what it’s worth, I’ve been in situations where I’ve written the Ernest money check and included a copy with the contract. Helps to show that you’re serious.

Once the Contract is signed by both parties, the Ernest check goes into the realtor’s or title companies trust until the deal is complete.

Join the Largest Real Estate Investing Community

Basic membership is free, forever.