Is HUD Earnest Money Mandatory?
I have a friend looking to buy a home that is a HUD repo and the Realtor he talked to told him that all offers had to be accompanied by a 1K offer/earnest money for HUD homes. Is that true? I am in Illinois and not to familiar with HUD policies. I had the impression that the earnest money was only to make the Realtor more comfortable with making hte offer.
pejames, you are absolutely wrong in that statement:
"I had the impression that the earnest money was only to make the Realtor more comfortable with making hte offer."
Earnest money is there to make SELLER more comfortable with your offer and provide them with assurances that you are able to go through with the contract. Listing agents will often advise sellers to accept contracts that look more credible and earnest money helps substantiate the contract.
As far as your question goes, HUD requiers $1,000 earnest money for all properties sold for more than $50k and $500 for properties under $50k. Those funds need to be made in terms of certified funds(cashier's check or money order). Personal checks are not acceptable. It is HUD requierment - not Realtor's.
Quote:
On 2004-01-05 13:52, pejames wrote:
I have a friend looking to buy a home that is a HUD repo and the Realtor he talked to told him that all offers had to be accompanied by a 1K offer/earnest money for HUD homes. Is that true? I am in Illinois and not to familiar with HUD policies. I had the impression that the earnest money was only to make the Realtor more comfortable with making hte offer.
Cool, I stand corrected. I appreciate the correction. I was not aware of the HUD requirements. Is that standard throughout the US? Thanks for the quick response to my question.
I believe the amounts vary slightly by regions, but in general all HUD sales require earnest money. All information about HUD sales process can be found at http://www.goldenfeather.com
My previous statement about earnest money is correct - except that in Souther Ca earnest money is $2,000 for property over $50k.
Thanks compwhiz, I appreciate the info. How goes investing in your area?