REO Property & Earnest Deposit Required by Bank

Hello all -

Quick question for you all to see if the bank I am dealing with is working under normal REO practises.

I have an offer in on an REO property which was accepted except for the amount of earnest deposit they are asking for. The following are the details:

Purchase price: $30,000
Earnest deposit I offered: $1,000

The bank is stating they require 10% on all REO properties for deposits whcih would be $3,000.

Now I know I will get this money back at closing once I complete the double close with my end buyer but I don’t necessarily want to float the extra $2,000 if possible.

Please advise with any thoughts.

Thank you.

Jason Stackhouse
J&R Investments Group, LLC

Good to meet you…

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…

Congrats on the deal


The desposit is going into escrow and will be taken out of purchase price. I will see if the bank will accept what you suggest in that I increase my deposit after removal of inspection contingency.

Thanks for the advice.


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.


Rob -

Appreciate the response and wanted to let you know that after speaking with other investors/realtors, I am finding that 10% deposits on REO’s is the norm.

And I will get my depsoit plaus profit back when I close with my end buyer, just wanted to see if I could possibly give smaller deposit if at all possible.



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.