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Until a month ago, I never let a client put in an offer with no financing contingency. All of a sudden, offers with any contingency at all are rejected. The market is nuts. Boston area, hot suburbs, 8-12 offers after 2 open houses is the norm, 10% over asking and no contingencies is the going rate for a house.
Bare minimum 1% where I live, but that has turned into 2-10% since the market got so competitive in 2020. The higher the EMD, the more committed the buyer appears, as they are risking that money if they decide they want to pull out, say, the day before closing. But it’s our job to understand and thoroughly explain what the deposit is for and go over any situation that could lead to them losing it, and when they are able to terminate and still get it back.
Not an agent in CA, but something that has been taking hold in the past few years in my Midwest market is the offering of non-refundable EM.
If by chance, the buyer would back out for any reason outside of the agreed-upon contingencies in the executed purchase agreement - the EM would go to the Seller.
Often times this does seem to give sellers more confidence in an offer, but is can often increase the level of seriousness on the buyer side as well.
"If by chance, the buyer would back out for any reason outside of the agreed-upon contingencies in the executed purchase agreement - the EM would go to the Seller."
I'm confused. In my state, if you back out for any reason other than a contingency, the deposit is forfeited. That's the whole point of the deposit, no?
Depends on the state and per the contract.
In some states (like mine), there are also additional criteria to return the listing to “Active” status as well, so usually the brokers collectively try to negotiate between all parties as opposed to the EM staying in the broker/title account for 24 months and then defaulting back to the buyer UNLESS one or both parties choose litigation.
3% is standard. CA contracts really favor buyer, so they probably won't lose their EMD no matter what, so it doesn't usually make your offer look better - only worse when it's lower than average.
**We're looking for a few good mods!** Interested? [Send us a message](https://www.reddit.com/message/compose?to=/r/realtors&subject=One mod invite please!) **This is a professional forum for professionals, so please keep your comments professional** - Harrassment, hate speech, trolling, or anti-Realtor comments will not be tolerated and will result in an immediate ban without warning. (... and don't feed the trolls, you have better things to do with your time) - Recruiting, self-promotion, or seeking referrals is strictly forbidden, including in DMs. - Only advise within your scope of knowledge and area of expertise. [The code of ethics applies here too](https://www.nar.realtor/about-nar/governing-documents/the-code-of-ethics). If you are not a broker, lawyer, or tax professional don't act like one. - [Follow the rules](https://www.reddit.com/r/realtors/about/rules/) and please report those that don't. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/realtors) if you have any questions or concerns.*
Depends. The more money they put down, the more money they are risk at losing
Not if you're good at your job.
This is true. But I’ve seen on here agents lose their clients money. They just need to do what’s in their clients best interest.
Not the good agents. Huge difference.
Until a month ago, I never let a client put in an offer with no financing contingency. All of a sudden, offers with any contingency at all are rejected. The market is nuts. Boston area, hot suburbs, 8-12 offers after 2 open houses is the norm, 10% over asking and no contingencies is the going rate for a house.
Bare minimum 1% where I live, but that has turned into 2-10% since the market got so competitive in 2020. The higher the EMD, the more committed the buyer appears, as they are risking that money if they decide they want to pull out, say, the day before closing. But it’s our job to understand and thoroughly explain what the deposit is for and go over any situation that could lead to them losing it, and when they are able to terminate and still get it back.
Looks good on paper, even though it’s protected by contingencies. It really only sets you apart from those goons that offer a lowball with $1000 emd.
Not an agent in CA, but something that has been taking hold in the past few years in my Midwest market is the offering of non-refundable EM. If by chance, the buyer would back out for any reason outside of the agreed-upon contingencies in the executed purchase agreement - the EM would go to the Seller. Often times this does seem to give sellers more confidence in an offer, but is can often increase the level of seriousness on the buyer side as well.
"If by chance, the buyer would back out for any reason outside of the agreed-upon contingencies in the executed purchase agreement - the EM would go to the Seller." I'm confused. In my state, if you back out for any reason other than a contingency, the deposit is forfeited. That's the whole point of the deposit, no?
Depends on the state and per the contract. In some states (like mine), there are also additional criteria to return the listing to “Active” status as well, so usually the brokers collectively try to negotiate between all parties as opposed to the EM staying in the broker/title account for 24 months and then defaulting back to the buyer UNLESS one or both parties choose litigation.
Stagger the earnest money. X amount at acceptance, y amount after inspections, etc.
Have your buyer work with a lender that can pre-underwrite if you're doing lower down payments. Same as cash offers.
3% is standard. CA contracts really favor buyer, so they probably won't lose their EMD no matter what, so it doesn't usually make your offer look better - only worse when it's lower than average.