Posted by Sean Matyja on Monday, April 22nd, at 7: Earnest Money is the initial deposit that a buyer will submit when writing an offer on a property that is listed for sale. While there is no real "standard" amount of earnest money required, the amount submitted with an offer can have a strong affect on the offer's strength.

What percentage of purchase price is typically required | Zillow

We do however see buyers offer less, and we also see some buyers offer more. Typically a cash buyer will offer a higher amount of earnest money to show their strength and ability to purchase, while buyers planning to obtain a mortgage will offer a little less.

There is no real right or wrong, or standard amount, however as local Park City Realtors we do have our opinions when representing a buyer or seller.

What brings up this topic is that we recently "offended" a buyer for one of our listed properties in Park City. We represent the seller of a condo in the Three Kings townhomes in Park City's Old Town neighborhood. After numerous showings we finally did receive an offer from a Salt Lake City resident, who is working with a Realtor from Salt Lake City. We felt like we were priced very well, and only lowered to bump up interest as it was nearing the end of the busy ski season.

Now this was viewed by the seller as a decent initial offer, however it was not enough to get a deal done so we countered, which is very normal. The buyer was apparently offended that we asked for more earnest money.

What is the typical amount of ernest money to give | Zillow

They viewed it as us as being "conceited" Park City agents and a personal offense to their financial ability. Now I had already explained to their agent that 1 - financing in Park City was a different process and difficult because so many of our condo associations are largely owned by investors and have a much larger mix of investment properties and nightly rentals, and not the common primary resident owners.

We wanted a larger deposit of earnest money so the buyer and their agent would take the loan approval process more seriously. To be clear, we were not worried about the buyers ability to close, but we were worried about the condo HOA's ability to be approved by a loan underwriter. He failed to explain to his client that we were making a normal request in the Park City market, even though they do not do so down in the Salt Lake Valley market - another reason to work with a LOCAL realtor - again off topic and I could go on for hours about that too!

So with the rejection we received, and the "hurt feelings" we caused, I was curious to see what other marketplaces see as "standard" amounts of earnest money. I stated that we had recently "offended" a buyer by asking for an increase in earnest money, and I was curious to know what the standard was in other areas of the country. You can see the results of the votes below:.

The voting results was a fun and informative process and proves there is no actual standard, but it can be all over the board as far as what people see and what people expect to see.

The most informative part were some of the comments and discussions that were posted and shared along with the votes. Below are a few of the comments from other real estate agents across the country who posted to the online poll: After all, the buyers are going to need to produce funds for downpayment at closing, so paying a partial amount upfront "shouldn't" be an issue.

In a strong seller's market, like we have here in the Denver metro area, higher earnest money should separate the flakier buyers from the serious ones. I know of some buyers that offer more earnest money than the asking amount which is specified in the MLS here to show how serious they are.

Now that our inventory is low Buyers are willing to give the earnest money to show good faith and to win the battle of Hight and Best offer madness. Suburban communities vary widely as to what is customary. Seller's won't consider anything less.

Maybe they were not that serious about the property or just did not have any additional cash on hand for the purchase process" - Dara Alperen-Cipollone. The successful bidder paid a price higher than my client's offer and that winner offer even beat out a cash offer! Sonia, I agree serious buyers - serious EM deposit. However, it is challenging for some buyers to understand our current market conditions" - Lori Donahoo.

Sounds like their Realtor hasn't educated them properly. There are also several buyer protections in the contract and financing doc, so the chance of a buyer losing the escrow deposit is pretty slim.

Without some "skin in the game", buyers could terminate a contract much too easily. I am surprised that escrow is not required in some areas! If I'm trying to help my buyers win a bidding war, a higher earnest money check helps! I make my buyers aware of that upfront along with what percentage places are typically selling for in the current market presuming they are priced appropriately.

The only exception is if it's a first time home buyer where it's very clear via the offer that they are putting down minimum down payment and may not have the ability or the comfort level If it's not a 1st time buyer then they should have had to deal with this issue before and in a counter as the seller's agent i will include the words Earnest money is just like any other part of an offer and the old phase the greater the risk the greater the return should be evaluated.

As a seller's agent lower earnest reflects greater risk and i would therefore hope to see greater return for the seller should they accept it.

Conversely higher earnest dollars should lessen the risk of a deal going south and so would typically decrease the return on the seller's investment. This Beautiful Turn-key Silverado Lodge Condominium Has A Nice Location Overlooking The Pool And This Beautifully Maintained Sunny South Facing Townhome Has Never Been In A Rental Pool.

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How much is a standard amount for "earnest money" on a home purchase? | Yahoo Answers

Standard Amount for Earnest Money when Buying Property in Park City? How Much Earnest Money is Required when Buying Property? You can see the results of the votes below: However, it is challenging for some buyers to understand our current market conditions" - Lori Donahoo "Offended? Related Links Read more about the Home Buying Process in Park City Browse all New Homes for Sale in Park City Utah. Tags National Association of Realtors 2 park city realtors 11 Buying a Home 5 mortgage news 2.

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