What is Typical Amount of Earnest Money to Give?

2 Comments so far

1. Arn Cenedella on June 21, 2009 8:08 am

   In the San Francisco Bay Area, the typical deposit is 3% of the purchase price. Occasionally, one sees a smaller deposit say 1% with an increase to 3% upon removal of all buyer contingencies.
   Why 3%?
   In California, the most a buyer can lose and a seller obtain AFTER the buyer removes all contingencies and PROVIDED the contract calls for liquidated damages and involves the purchase of an owner occupied 1 to 4 unit building is 3%.
   Under liquidated damages, the seller can not sue to force buyer to complete purchase - the seller can not sue for damages, etc - the seller gets to keep the deposit ONLY.

2. David Thomas on June 22, 2009 1:30 pm

   Three things of note from my expertise in California; 1] we never have 10% of the purchase price at risk in any transaction - 1% initial deposit and increase typically no more than another 2% “upon receipt of loan commitment” or docs ready to be signed; 2] where was the title search/report to state early on that the land was leased? where was the disclosure of the material fact of the leased land from the seller so buyer could object? 3] buyer’s only hope is to not agree to release the deposit and force a court injunction hopefully holding up the sale of that particular co-op so seller can’t legally sell to anyone else and themselves release the deposit to buyer feeing seller to move on. Very poor reflection of humanity in this society either way. Commentary from David Thomas of SellThatHouse.net on “Seller Decides To Keep A Buyer’s Life Savings” http://abclocal.go.com/wabc/story?section=news/7_on_your_side&id=6868196