Monday, May 16, 2011

Making Good on Your Real Estate Purchase Offer - Have Faith!

Most frequently, we meet first-time buyers who are unaware of the various factors in making an offer on a beautiful piece of Mid Century Modern architecture.  How would one know if not informed by their agent or Google?  One of the most important elements of an offer is the Earnest Money Deposit ( EMD ) or otherwise known as, THE GOOD FAITH DEPOSIT!

All right.  You've signed the offer and the seller has agreed to move into escrow with you.  Now, it's time to adhere to one element of an OFFER: the Earnest Money Deposit ( EMD ) / Good Faith Deposit. 

Simply stated, the Good Faith Deposit is something a Buyer should be concerned with when delivered an executed contract from a seller. Throughout the transaction, the buyer should want to put their best foot forward by demonstrating their cooperation by abiding by the deadlines stated in the accepted Residential Purchase Agreement ( RPA ). The first sign of earnest action on behalf of the buyer will come from them in the form of the Earnest Money Deposit ( EMD ), otherwise known as the Good Faith Deposit.

Depending on how you stipulate the time frame for the deposit within the contract, (RE101 - The Residential Purchase Agreement is a legal contract.), it will determine when and how it will take place.  All parties must abide by the expiration periods demonstrated in the contract. Here in California, CAR's standard time frame is a 3-day period, but your contract should be reviewed to clarify your time frames for expiration periods.  A purchaser will have to make a copy of a personal check / bank check / money order to be included with the submitted offer.

The standard dollar amount for the Earnest Money Deposit ( EMD ) / Good Faith Deposit is typically 3% of the purchase price. Take for example a home purchase of $500,000.  The Earnest Money Deposit ( EMD ) would amount to $15,000.  A home sold for $1,000,000 would require the buyer to make an EMD of $30,000.  We are finding the process of the buyer wiring the deposit into their escrow account most timely and efficient.  Make sure to instruct your agent to tick the box for wired funding.  If you do elect this alternative, you do not need to provide a copy of a check.  Remember...  Would you want a lazy buyer purchasing your home???  

With today's real estate market in an economic twist, here at modernhomeslosangeles, we are finding a fierce and competitive race to get offers accepted on the Mid-Century Modern Value Listings.  When there is an intriguing listing, such as the gorgeous Mid Century Modern REO listing for 3783 Whitespeak Dr. you have to demonstrate your competitiveness with good faith and earnest actions.  Even with a Bank-Owned ( REO ) listing, you want to provide every measure to secure that your offer will stand!  You could be competing with 20 other offers.  Why wouldn't you want to stand out and be a player?

When everyone abides by the deadlines drawn within the contract, all parties end up happy. Remember, real estate is a two-way street. Place your shoes on the seller's feet. Wouldn't you want a buyer to purchase your home with a timely Earnest Money Deposit ( EMD ) sent into escrow immediately to demonstrate their earnest intentions?
Once there is a green light, either your agent or yourself should speak with y our assigned escrow officer and arrange for your deposit to be delivered or wired with their specific requests in order to stay within your contractual guidelines. 

Good faith is something all parties should act upon in real estate transactions with all points of the contract. If you really want to impress, be timely.

Here at moderhomeslosangeles, we strive to communicate well with clients and share a wealth of information, whether buying or selling real estate.  This allows fluid communication between all involved parties and a smooth transaction. 

Show FAITH.  And in return, have a modern day!

Steve Ward
Realtor®, SFR®
Mid-Century Modern Architecture Specialist
Keller Williams Realty - Los Feliz
Short Sale and Foreclosure Resource
DRE Lic #01871422
213.305.8537 direct
MODCOM - LA Conservancy Modern Committee

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