Zillow Advice: Home Buying - BUYING A HOME-GOOD FAITH DEPOSIT QUESTON

Wow. An agent refusing ...

Wed, 24 Sep 2008 23:53:00 GMT

Wow. An agent refusing to submit your offer? We have to submit all written offers by law, even if we don't think they'll fly. Of course, we'll give our take on it, but that's all it is. We don't make the rules for the client on the offers. The seller, of course, can accept or reject it.

I just had a realtor refuse ...

Wed, 24 Sep 2008 23:45:00 GMT

I just had a realtor refuse to submit offers on my behalf because she thought my GFD was too small at $500. Before this, I had submitted three offers and lost them from being outbid. None of which countered that they wanted more GFD. There was some article talking about how realtors' offices had a stockpile of pasta to help them through hard times, but I'm having the hardest time finding an agent that is willing to work!

I wouldn't give them a penny ...

Wed, 24 Sep 2008 23:45:00 GMT

I wouldn't give them a penny more than the standard 1k (or what you already put down). They are lucky to have an offer at all. If they don't like your lowball offer than tell your realtor that you are willing to move on to the next house. Don't feel pressured by the seller, the ball is 100% in your court. Remember during the bubble years, the ball was in the seller's court but those days are long gone. There's probably several comparable homes you can get cheaper than what this seller wants. There's probably a good chance that the sellers realtor will end up calling you in a couple of weeks wanting to accept your original offer when they realize no one else is biting. By then, they might as well have reduced the price. Then you come back and reduce the offer. Just my 2 cents worth....

1-2% is fairly standard depending ...

Wed, 24 Sep 2008 23:32:00 GMT

1-2% is fairly standard depending on market conditions (hot market usually more like 2%, slow market usually closer to 1%). Just make sure you have an inspection clause, a financing clause, and a decent agent...so if something goes awry you have the ability to get the earnest money deposit back. However, believe in real estate karma...if you keep someone's house off the market for a month and decide a day before you just don't like it, it is fair to have them be compensated for that time off the market. (The purpose of using earnest money as liquidated damages)

upon personally inspecting ...

Mon, 22 Sep 2008 10:01:00 GMT

upon personally inspecting the home i found that i did not like the driveway... it was too square, i have always wanted a roundish one. please refund my good faith deposit, good day

If you verbally committed, ...

Sun, 21 Sep 2008 18:39:00 GMT

If you verbally committed, at least in FL, this means nothing so even if you decide to back out for any reason you should receive all of your good faith deposit back, in FL it is called an escrow deposit. If you are going to be signing anything related to the escrow deposit please make sure it reads that all funds will be refunded if during all home inspections anything is found to be unpleasing to the buyer. This protects you from pretty much anything. Even if after the home inspection you find anything and I quote "anything" is unpleasing you will be able to back out of a contract and still receive your full escrow deposit. I understand why especially in todays market the sellers are asking for a high escrow deposit but you need to make sure you are protected as well. And as much as you hope your agent has your best interest at heart it would be nieve to say all do there job with the best interest of the client so make sure you are on top of things as well.

Mark, Thanks very much ...

Sun, 21 Sep 2008 03:25:00 GMT

Mark,

Thanks very much for your informative post. My agent said the reason why they are asking so much is because my offer was so low. I'm even suprised they are willing to accept the price at this point, so my agent assured me it was because they want to know I'm serious and will not back out (unless of course the inspections show something major). I verbally committed, but I guess I could change that. But like you said I can surely get my deposit back if I back out due to home inspection findings. Might be a little hassle though. Man this all too new for me!! Thanks again!

And on the subject of inspections, ...

Sat, 20 Sep 2008 16:18:00 GMT

And on the subject of inspections, remember that no matter how nice a guy he is, your real estate agent has an unavoidable conflict of interest when it comes to your house inspection and your attorney (you want to make sure that you are not stuck with any problems; he wants to make sure the deal goes through) so find your own inspector and attorney, through friends or recs (I can give you the name of the guys we used if you want).

I would also recommend that your attorney insert a clause that any underground oil tanks will be removed prior and that you'll get an NFA letter from the govt if there was one that needed to be removed. Underground oil tanks that leak and contaminate the soil can be a six-figure liability that is not covered by homeowners insurance. You don't want to take on that risk in this buyer's market.

So I would be cautious about ...

Sat, 20 Sep 2008 16:18:00 GMT

So I would be cautious about putting down a large "good faith" deposit. I really see it as something that can only come back to bite you if someting goes wrong during the inspection/attorney review process. I would put down only a minimal token amount, like 1K. As far as I'm concerned, in this market sellers are lucky to be getting an offer in the first place, and if they aren't happy with me putting 1K down then let 'em wait on the market while the economy collapses around them.

And if you decide to put down a larger deposit, make sure that you only put down a small deposit now (e.g. your 600 good faith deposit) and the rest only after the post-inspection period negotiations end (in NJ there is mandatory attorney review, and your contract should give you like 2 weeks to get the house inspected, and after the inspection like another 2 weeks to provide the sellers with a list of things -- if any -- that you want repaired; they can either accept or reject the deal, but in any case, make sure that the second part of your deposit is not due until all that is resolved).

Future28, First point, ...

Sat, 20 Sep 2008 16:09:00 GMT

Future28,

First point, just in case you hadn't realized it yet - the seller is in effect making an offer to you at this point, they are not "accepting" your offer, because your offer was legally rejected the moment they came back to you with a counter-offer.

So you are under no obligation to proceed under the same terms as your original offer at this point. Just FYI.

As for the 4K good faith deposit, here's my take. I've bought/sold real estate only twice on my own so far. The first time I put down a nominal 1K good-faith deposit; the second time I put down a larger deposit (closer to 1%) because I was making a low offer and wanted to make it look stronger.

I ran into some problems on the second deal (sellers had given me an incorrect disclosure before I made my offer, and then tried to play hardball with some repair items that were revealed during inspections and which it turned out they knew about but had not disclosed, and it didn't help that their attorney was a jerk). In the end things were resolved to my satisfaction, but there were points during the process where I was kicking myself for putting down a large good-faith deposit. Even though legally I knew I was not at risk of losing it (because everything was contingent) I also know that even the easiest legal question can be a major hassle to resolve, especially when someone else is holding your money.

Zillow Advice: Home Buying - *****BUYING A HOME-GOOD FAITH DEPOSIT QUESTON*****