When you go on a date, you put your best outfit on, fix your make-up and hair, take extra time with your lipstick, put on perfume…When you write an offer, you have to do the same thing.
Classy, Not Trashy
Every area has its customs. In San Mateo County, the standard deposit check is 3% of the purchase price. With all contracts, there must be consideration.
The reason for the 3% is that the agent representing the seller wants to insure that you have the ability to purchase the house. If you don’t have that 3% it’s going to create doubt that you can actually can go through with the sale.
Secondly, there’s a liquidated damages clause in the contract which, in essence, states that if you should default from the contract after you have removed your contingencies, the seller may sue you for damages. What’s the most they can get out of you? 3% of the purchase price. The seller’s agent is going to try to make sure that all that money is available to their client should you change your mind later than you should have.
We’re Not In Kansas Anymore
In some areas, the standard is $1000 or maybe $5000. That’s usually where the houses aren’t so expensive. In the San Mateo area you’re talking about a $750,000 median price. Asking a seller to hold their property for you for 500 or $1000 isn’t going to make them warm and fuzzy and isn’t going to encourage them to take your offer.
Those funds are held by the escrow company; a neutral third party who actually takes instructions from you! Well, from me, but I work for you. If you and the seller don’t agree, then the money doesn’t get released. It stays in that account until you come to an agreement.
Once all of the pieces of the contract have been completed – inspections, appraisal, loan approval, etc – the money is delivered to the seller and the keys are delivered to you. (It’s not really THAT easy but you get the idea.)