February 22nd, 2013 Categories: Crofton Real Estate
Q. Is an up-front deposit necessary when I find and buy a home? If so, how much?
A. The short answer to your first question is “Yes, you will need to submit an earnest money deposit when you make an offer on a home.”
The answer to “How much?” is not quite so simple. There is no written guideline that I’m aware of and no hard and fast rule. In fact, the amount of earnest money deposit may boil down to what the seller requires before he will take his home off the market for you.
In my experience, 1% of the sale price seems to be customary for any home in the greater Crofton area. That would be a $1,000 earnest money deposit for a $100,000 home (if you could find one priced that low in this area) or a $3,500 deposit on a $350,000 home. There are exceptions to this, of course: A highly motivated buyer in a competing bid situation might be inclined to double or even triple that amount to make his offer more appealing to a seller, or a buyer and seller may agree on a something less than 1%. The amount of earnest money deposit , like the price, is totally negotiable.
For more information, be sure to read Paragraph 18 of the Maryland Association of REALTORS standard Contract of Sale, which spellls out in some detail what happens to your deposit from the moment you write the offer until closing.
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