How Much Should You Put Down For a Deposit On The House You Want? Read This Before Handing Over The Check
Putting down a deposit on a home raises lots of questions. Do you get it back? How much should you put down? What if the seller backs away from the deal? What if you change your mind? Well, if the market is doing really well, a seller probably isn’t going to try to keep your deposit if something happens. If their house has been slow to sell and you’ve pretty much been the only available buyer, you might not be so lucky when it comes to getting is back.
When a buyer makes an offer they, they are required to put up a deposit. You shouldn’t ask yourself “how much should I put down?” You should be asking yourself how much money you’re willing to lose if something goes wrong and you don’t get it back.
Yes, putting a lot of money down makes the buyer think you are serious about the house. However, you don’t want to be in debt if you can’t get your deposit back and you’ve emptied out your savings account, for example. When you write the check, imagine the worst. Write an amount that you would feel OK with about not getting back.
A seller can always counter with you and ask that you put more down. You’re allowed to reject that counter if you want to. Don’t ever feel forced. Read: When Does the Earnest Money Deposit Get Paid to the Seller? You’ll definitely want to make sure that the seller honors rights to cancel before you write the check. The buyer (at times) has the right to cancel; however, the escrow holder has a policy that requires both of you to release the earnest money.
Know that if you change your mind about buying the property, the seller is going to keep your deposit. After all, that is the whole point of the deposit. It’s to protect the seller in case the buyer decides to walk away. So if you deice not to buy the house, and the seller keeps your money, you can’t really be angry with them.
The seller has already risked a lot by holding the house for you this whole time, and it may be hard for them to find another buyer. Especially if the only buyers they had, they’ve now turned away because they thought you were going to purchase the house. For further reading, check out: Understanding the Earnest Money Deposit.