How much Earnest money should I put down on a Foreclosure

earnnest-money-foreclosures A very common question we get asked is how much money should I put down on a foreclosure property I am trying to buy? And like everything else in real estate the answer is, it depends.

If you are looking in the Phoenix foreclosure homes market you probably understand things have changed a lot over the last 4-5 months. If you were putting in an offer in January of this year $1,000 would have been a pretty standard answer for earnest money, but not any more.

The first thing you need to do is find out if you are up against other offers. If there are not any other offers on the house then a $1,000 earnest offer or 1% may be okay.

If there are other offers on the house and you are in a multiple offer situation then things change and you need to become much more aggressive. You need to ask yourself, how bad do you want this house and if it is one you really want your offer is going to need to be competitive.

If you are a cash buyer in a multiple offer situation then 10% should be your bare bone minimum. I have some investors right now that are offering 50% as earnest money. If you are financing then you may want to talk to your lender and figure out what you are planning on making as a down payment. If you are planning 3.5% down, 20% down or anywhere in between then you may want to put that as your earnest money to be credited towards your down payment.

The Phoenix foreclosure house market is a very competitive market right now for buyers, you need to be willing to put your best hand on the table and earnest money is one of your tools. And please never forget, there is always risk with earnest money, if you are not comfortable with the deal and the situation then be cautious about a large earnest money because you could lose it if the deal falls apart.