A "normal" deposit for buying San Francisco Real Estate
A reader asks:Do buyers generally put down 3% or is that flexible when making an offer?
Our reply:
The amount of deposit that is given with the initial purchase offer can reflect the seriousness of the buyer. We encourage buyers to make the largest deposit they are able to (up to 3%) when we present their offers. This shows the seller 1) that they have cash available, 2) are qualified buyers and 3) are serious about purchasing the property.
However, if the buyer's money is tied up in investments and will take some time to liquidate, the initial deposit could be any amount but usually a minimum of $1,000 which is then increased to 3% within a short period of time or upon removal of contingencies. This same approach applies when the buyer is getting 100% financing.
The reason 3% has become generally accepted as the deposit up to close of escrow is because of the liquidated damages law in California. This clause in the sales contract reads as follows: "Item 27. LIQUIDATED DAMAGES. If Buyer fails to complete this purchase because of Buyer's default, Seller shall retain, as liquidated damages, the deposit actually paid. If the Property is a dwelling with no more than four units, one of which Buyer intends to occupy, then the amount retained shall be no more than 3% of the Purchase Price. Any excess shall be returned to Buyer. Release of funds will require mutual, signed release instructions from both Buyer and Seller, judicial decision or arbitration award. BUYER AND SELLER SHALL SIGN A SEPARATE LIQUIDATED DAMAGES PROVISION FOR ANY INCREASED DEPOSIT (e.g., CAR Form RID)."
- Janis Stone
posted by SFResidence.com @ 8:06 AM
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