All Forum Posts by: Rhondalette W.

In all likelihood they got burned before by some buyer who got the property and then backed out. Or maybe they're just a nervous nelly. If you back out during the inspection period (which they want to be only 7 days, so you need to get on it if you go for this) you'll still get your emd back. And yes, the earnest money is applied to the purchase price.

@Rhondalette W.

With our market being as hot as it is, you should expect to pay fairly high earnest money deposits.  People are trying to "wholesale" listed properties.  Agents and sellers do not like it.

Short version... if you are going to be able to close in 30 days as an investor they believe you should have $3500.  If you said anything longer than 30 days, they will not take you serious.

You should expect all of the earnest money to be applied toward the property price.  The option money on the other hand may or may not go toward the price.

EM could still be refundable after the option period expires if there is a financing contingency

Emd is refundable, option money is not. Why they would want a higher earnest is beyond me, be cause buyer can get that back if they bail. Option isa guarantee for the seller and isn't refundable

@Rhondalette W.  as @Chris Mason states Texas is its own animal the way they do things.. I was surprised as well.. we have bought 500k deals with 100 dollar options... its SOP in that area to get a free 10 day look unless you consider 100 option fee not free.. then you go hard with whatever EM is negotiated between the seller and buyer.

one thing I can think of is the seller does not want a wholesaler tying up the property for 100 bucks.

Or the seller is unaware of Texas customs...

In our area EM tend to be low as well although that is starting to change.. I would often see 500 and 1000 EM on 200 to 250 deals... and on my new construction we get 1% now a days and get some push back from that.

If you want a hot property though you need to lead with big EM  when I first came to Oregon I can't tell you how many deals I beat the locals out of because they were used to 500 and 1000 dollar EM and would offer 5k that was mid 90s or even better they only wanted to put up a EM NOTE... which I will not accept under any condition personally.

Every area is different.  In mine $5k is low and I have had to put $20k EM on a $325k purchase.  So that might be normal in your area

I'm not in TX but it would generally benefit the seller to have a higher earnest money dep because then they feel your offer is stronger than someone who is only putting down 1k in EMD. The EMD will then be subtracted from what you need to bring to closing for example, if you're putting 20K down, you only need 16.5K at closing because the other $3,500 will be in escrow to be applied at closing.