Have You Actually Told a Buyer They Don't Need to Have an Earnest Money Deposit?
It's one of those passing rules you hear the robot voice say in your continuing education class but somehow you pass over it like nothing and move on to the new tax laws and equal housing rules.
But in most states buyers don't actually have to have real money to put down as an earnest money deposit. Have you ever told a buyer that? Probably not.
What would Mr. or Mrs. Seller think if you brought an offer with absolutely no money down to secure the offer? What would they say? Several years ago, sellers would laugh in your face if you offered them a no earnest money buyer. What security is that? But now?
Would a buyer's offer be accepted if there were no earnest money deposit but a full and solid offer to back it? In this market, possibly.... probably.... YES!
But what about banks? I have been out of the actual real estate industry to know too much about how banks view this. Is this even done? Would a bank laugh in your face - in their ever so business like fashion? How many sellers have come back and asked, "Can they even do that?"
How important is that earnest money deposit? It's not even the seller's money but buyers showing a sense of validity and sincerity can offer the seller some assurance that the buyer is not a "fly by nighter". Don't we tell all the buyers this? Putting down a 1-3% earnest money deposit shows the seller you are a serious buyer willing to risk your own money should you back out.
But there are a lot of serious buyers that choose not to put any money down. They may hold onto it for the larger down payment for the lender. They may need that $500 for the inspection or appraisal costs. What would they all do if they were told they didn't have to put down that earnest money deposit?
What has been your experience? Have you ever let a buyer not include an earnest money deposit? What about something else in exchange for the collateral?
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