OfflineI am in CA, my realtor just gave up on me. She says that $500 is too low? Here what she says:
Hi Ricky,
As your realtor, I'd like to advise you that we will not get anywhere with any of our offers if we only give $500 earnest money deposit, for the following reasons:
1. The seller/bank will not put their property off the market for 17-21 days ( to give you time to do your home investigation and/or get your loan approval) for a mere $500 compensation to them should you decide not to get the property or should your loan not get approved.
2. You are competing with all cash ivestors who are willing to give the 3% earnest money deposit.
Putting a limit of $500 on your earnest money deposit only shows that you are not that serious about getting into any Real Estate transaction and we are just spinning our wheels needlessly. Until such time when you can be ready to do so, I can no longer represent you in any other transactions.
Any advice anyone in CA?
There is fact and fiction involved in your agents statement.
If you are dealing with REO property most of the banks will require so much as earnest money. It could be $1000, or a percentage of the purchase price which could be 3% and some go as far to state whichever is greater. And in some instances there are several cash buyers that are competing for that deal.
But the fiction lies in not all of these bank owned properties are chased in this manner. It sounds as if the agent does not want to work for the pay. If there are more than 1 offer that needs to be generated, than the agent is not wanting to do that. The agent wants an easy deal, where the seller is readily going to accept. My advice would be find another agent that wants to work with you - 500 dollars in many cases is sufficent.
I'm not in CA, and I'm not a Realtor, but this is what I know...
1) Agents are paid by commission of sale price. This lady makes it sound like she's making a percentage off your deposit also. Suspicious, at best.
2) I've NEVER heard of anyone getting beat out on a deal over deposit money. It's always been about a buyer who has made a better offer, either on terms, price, or both.
3) Any savvy investor who shells out $500 or more on every single offer they make is either spending someone else's money, printing their own money, or on the fast track to bankruptcy.
4) 3% or higher for a deposit might be the norm if you're looking at $400k properties or higher, but just like listing price, they're going to ask for the moon and hope some buyer is a freakin' astronaut.
5) Why would a seller/bank pull their property off the market when they haven't even accepted your offer yet? Either I'm misunderstanding her plain English, or it sounds like an excuse (aka "Snow job").
6) Judging just by the language of her letter, she sounds lazy, greedy, dishonest, and rude. She seems more interested in her opinion of herself than your business. She would have been an obstacle to your success.
7) She's getting out of your way, and that's the silver lining I see here. For every 25 realtors you go through, you may find 1 worth your time. Clearly, she wasn't "the one."
Here's my advice, for what it's worth...
"
Use this experience to improve your screening of future Realtors.
CA is full of agents who work for investors, focus on those who do.
Pin this "letter" of hers up on your dartboard, archery target, etc.
When you cash your first huge check, send her a voided copy and write on it, "Thanks for your support! Ricky...
I'm almost willing to bet $500 by the time she gets it, she'll be in a different line of work. Keep pushing, and take care...
Morals of your story:
"When someone shows you who they really are, believe them." - Madea.
"Never let a 'Realtor' push you around. NEVER!" - Dave Boyden.
http://www.deangraziosi.com/real-estate-forums/investing-journals/32641/...
"No one can slow you down but you. Get out of your own way, you'll see the road's smoother and wider than you thought."
It appears you already received some advice from other members. Besides finding another real estate agent you could offer a higher earnest moeny deposit upon "acceptance of contract and satisfaction of any contingences" you note in the purchase agreement. Thus, this will still give you a little time to complete your due diligence or implement your exit strategy. I hope this helps. Good luck with real estate investing. Believe and Achieve!
- Joe
In one word -- NO.
My agent has a photo copy of my check for $500 for her to make multiple offers with. I also live in California.
That's a great point, agents usually only deposit earnest money when a contract has been accepted. Also if a lender wants more earnest money it is up to them to negotiate for it - Not your agent! It is a shame that this agent feels this way - don't let this stop you. You definately need to look for an agent right away one that wants to help you. There are several agents out there that would love to assist you, especially in todays given market conditions.