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Sorry for the sellers (We can start a new thread, if you want).
What will increase the buyer's negotiation power? (This is not about whether the current market is buyer's market or seller's market.)
Some people suggested
1. Pre-approval mortgage letter
2. 20% down payment
3. large earnest money deposit
4. No contingency other than standard appraisal and home inspection
Anything else?
As for #3, I don't really understand. From the seller's perspective, how will bigger check make the offer more attractive? When I sold my house, I didn't care whether the deposit was $5,000 or $20,000 as I won't see that money.
Sorry for the sellers (We can start a new thread, if you want).
What will increase the buyer's negotiation power? (This is not about whether the current market is buyer's market or seller's market.)
Some people suggested
1. Pre-approval mortgage letter
2. 20% down payment
3. large earnest money deposit
4. No contingency other than standard appraisal and home inspection
Anything else?
As for #3, I don't really understand. From the seller's perspective, how will bigger check make the offer more attractive? When I sold my house, I didn't care whether the deposit was $5,000 or $20,000 as I won't see that money.
Make it a clean contract without asking for a bunch of concessions. During negotiation, when you give up something you can trade it for a concession. A clean contract is more likely to be countered with a reasonable offer.
In the contract state that you will double the earnest money when the contingencies are removed.
Number 3 means you are very serious because after the contingencies are removed, if you back out, the seller can retain your earnest money. So it means you intend to go through with the deal. The larger the earnest money, the less chance you are willing to walk away from it.
I'd add "being flexible on when you can close" to the list. If you can close quickly if the seller needs to, or close in 3 months because the seller needs to wait for their new house to be finished, you're ahead of a buyer who needs to close at the end of next month with no possibility for negotiation.
Number 4 definitely....in this market if I am having a hard time selling, my buyers will be in the same boat..If we did that there would be a date for them to remove that contingency and i would continue to show the house.
Is the earnest money deposit a local thing? I'm in California and never heard of it. Of course, it could be because we've never bought a house (yet) . . .
Is the earnest money deposit a local thing? I'm in California and never heard of it. Of course, it could be because we've never bought a house (yet) . . .
Christeen, we are california natives, this is our first home out of state. We have always put down an earnest money deposit. The money is held in escrow until closing, the check should not even be cashed until offers are given and accepted. Depending on the price of the home, I would guess $1,000 - 10,000 would be appropriate. Hope that helps. If you are short on cash you might want to 'borrow' from family or something and put it in a savings account so you have it when you write a check with your offer. Like I said, just a thought. are you using an agent, they should be able to fill you in on whats the norm for your area....
I've negotiated deals where the buyer wrote a letter with the offer that they would only request repairs required for lending. That guy was a carpenter though. We did a full home inspection, but we offered a lot less hoping that the stress of not haggling over repairs would offset the price loss.
#3 makes a huge difference because that is the sellers only recourse for damages (at least out here in Oregon). Yes, my sellers have gotten earnest money before so don't think it always goes back to the buyer.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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Quote:
Originally Posted by christeen
Is the earnest money deposit a local thing? I'm in California and never heard of it. Of course, it could be because we've never bought a house (yet) . . .
The deposit was known as just that in CA a long time ago. Now it's common to refer to it as earnest money or as you put it, the earnest money deposit.
Sorry for the sellers (We can start a new thread, if you want).
What will increase the buyer's negotiation power? (This is not about whether the current market is buyer's market or seller's market.)
Some people suggested
1. Pre-approval mortgage letter
2. 20% down payment
3. large earnest money deposit
4. No contingency other than standard appraisal and home inspection
Anything else?
As for #3, I don't really understand. From the seller's perspective, how will bigger check make the offer more attractive? When I sold my house, I didn't care whether the deposit was $5,000 or $20,000 as I won't see that money.
#'s 1-3 really don't mean anything to the seller. In Georgia, the new Purchase & Sale agreement doesn't include a financing section - it is assumed the buyer already has financing or will secure it during their due diligence period. Now, being able to shorten that inspection/due diligence period can be helpful. There is no requirement for earnest money to have a binding contract, so all it does is demonstrate that the buyer is serious enough to write a big check.
The other items are more important to a mortgage lender.
#4 is always good. Another way to sweeten the deal is to allow the sellers to remain in the home for a period of 30-60 days or so after closing (provided your buyer can work with this). Sellers like having the flexibility of having the proceeds of the sale in the bank and plenty of time to go find their new home. If you do this, be sure to get a simple, one-page rental agreement signed at closing. This will ensure the buyer that they can get the seller out and it enables the seller to get renters insurance on the contents of their home until they move out.
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