Do you have to pay a security deposit when buying a home?

[08_til_infinity]

The other day when we presented our offer the agent said that we had to pay a 1k security deposit. However when we purchased our condo our agent said that it is only seen as good faith. Do you have to present a security deposit?

 

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[Runum]

Yeah I do. Anywhere from $500 to $1k. Never bought a condo so I don't know why they would be different.

 

[bflbob]

You're confusing an Earnest Money Deposit with a Security Deposit.

I've never heard of a security deposit when you are buying (with the exception of a Lease/Option).

 

[08_til_infinity]

Here is what the contract says word for word.

Deposit: Upon acceptance of this offer, seller and buyer shall be bound by all terms and conditions of this Agreement, and BUYER or BUYER'S agent will deliver immediately upon notice of acceptance of the offer a deposit (the "DEPOSIT") in the amount of $__, or __% of the Sales Price by Cash $__, Check $__, Promissory Note in the amount of $__ to be held by __. Failure to deliver the Deposit shall be considered a breach of this Agreement. If the Deposit is held by a Broker, it must be held in accordance with the rules of the Louisiana Real Estate Commission in a federally insured banking or savings and loan institution without responsibility on the part of the Broker in the case of failure or suspension of such institution. In the event the parties fail to execute an Act of Sale by date specified herein, and or a dispute arises as to ownership of, or entitlement to, the Deposit or funds held in escrow, the Broker shall abide by the Rules and Regulations set forth by the Louisiana Real Estate Commission governing such matters.

 

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[rcardin]

Lousianna is the only state that goes by French Law vs British Law which we are based on(don't quote me though). Could be just the wording, but could mean totally different things.

 

[tbsells]

You don't have to do it. The agent wants you to put up earnest money not a security deposit. The contract is not binding until both buyer and seller agree to its terms, and indicate their acceptance by signing the document. If you don't want to do it simply draw lines through the blanks in that part of the contract or insert zeroes. The seller may not agree to it, or he may not care at all. Its up to him to determine if your offer is accceptable.

 

[^eagle^]

The other day when we presented our offer the agent said that we had to pay a 1k security deposit. However when we purchased our condo our agent said that it is only seen as good faith. Do you have to present a security deposit?

Earnest money is to show that you are a serious buyer.
I Have been offering $500 dollars but most people want $1000. Now if you pull out of a contract you stand a good chance of losing your eanest money. But If the seller bails out you do not.

These are used to make sure you are a serious buyer.

A seller may agree on a $1 earnest money but That seldom happens. It's a weeding idea to usher out tire kickers.

Make sure that your earnest money goes toward closing in your contract. If It's an acutal purchase then it must go to closing costs. But if its a lease option then it may or may not.

 

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[JustAskBenWhy]

No. Legally-speaking, from talking to my attorney, the offer to buy constitutes transfer of funds and is binding, and EMD is not a requirement by by law in most States as I am aware of. However, when you are making a low offer, probably not a bad idea

 

[BrandonS85]

It's common practice in some markets, here in Ohio it's quite rare unless talking about REOs. In large metros on east/west coast with hot markets, you might have to put up $10k-$20k in earnest money to convince a seller you're legit. Putting up earnest money can be a very effective thing, some sellers get burnt pretty badly on buyers who make an offer then try to back out due to stupid reasons.