Clarify what the agent is going to do with the deposit… Is it going to escrow? Is it sitting uncashed in his file? Can you counter with an acceptance to increase deposit upon all inspections and active contingency removal… May buy yourself the time you need…
I have purchased many REO’s over the past 20 years and these transactions are a bit unique. Most of them were purchased from one bank out of Spokane Washington who were investing pension funds from a large insurance company. All of my transactions required a large deposit and at that time, they required for the closing, a totla of 5% down and they financed the balance on a 30 year note which I was able to wrap and resell.
In today’s market, 10% seems to be the normal request for REO purchases. With the discounts being given along with attractive financing, it really turns out to be a good deal. You can recoup your money by the closing if you line up a buyer. Also, you can have buyers already lined up and require them to put a similar deposit as is required by the bank so that you are not out of pocket.
I have been using the same $3,000 for 15 years now on every transaction that I write. I set the money aside (In form of non-cashed check) with my title company. Every offer I have written says “Earnest Money to be held by _______________ Title Company in the amount of $_________” Then when they call my title company and ask if they are holding Earnest money the answer is always “YES” To my knowledge they have never cashed the check and I have used this money on at least 1,000 transactions.