Deposit amounts
This question came in last week:
“I’m working with my broker to formulate an offer for a condo in Boston. How much should I put down to “bind the offer”? How about for signing the P&S?”
My answer, after the jump.
First of all, if you’re working with a buyer’s broker (as opposed to the listing broker), he or she will be the most important person to consult with about how much to put down. The standard amount to “bind the offer” is $1,000.00. This is basically the buyer’s way of showing the seller that he intends to negotiate in good faith.
The bigger question is the deposit to put down with the signing of the P&S. This is important because if the buyer can’t perform (i.e., can’t get a loan after the mortgage contingency deadline has passed or wants out for any other reason), the seller is entitled to the deposit. In my experience, I’ve seen deposits ranging anywhere from practically nothing to 20% or higher. The higher the deposit, the more attractive it is to the seller for the reason above, as well as for the fact that it infers you don’t need a lot of financing.
Hope this helps.