In a real estate transaction, a touchy issue is how much trust the seller has in a buyer. The existence of a good faith deposit helps put a seller at rest.
Good Faith Deposit
If you are selling your home, condominium or other real estate, you should always require a buyer to make a good faith deposit. The good faith deposit simply establishes that the buyer is serious and, to some extent, has the financial capacity to follow through on the purchase.
The amount of the good faith deposit is dependent upon the agreed sale price of the real estate. Although percentages vary from state to state, a cash deposit equal to three percent of the sales price is typical. For instance, the deposit would be $9,000 for home selling at a price of $300,000. As with most transactions, this percentage is negotiable. I don’t recommend that you accept anything less than two percent.
Once the buyer and seller agree to the amount of the good faith deposit, you have to figure out what to do with the deposit. Importantly, the seller should not hold the deposit as doing so could make the buyer very uncomfortable. Instead, the money should be deposited with a third party and held “in trust.” Potential third parties include escrow and title insurance companies as well as an attorney if your state requires their involvement.
A good faith deposit acts like an insurance option for a seller. Moving through escrow can take 30 to 60 days, during which the property is off the market. The good faith deposit essentially compensates the seller for this time in the event the buyer is unable to follow through on the purchase of the property.
Depending on the laws in your state, a buyer who can’t close will lose the deposit. Typically, the only exception to this is when the seller allows language indicating the deposit will be returned if the buyer can’t get a home loan. Of course, including such language can open the seller up to repeated frustration when bad credit buyers repeatedly fail to get funding.
Good faith deposits are a fundamental part of a real estate transaction. Buyers should expect to pay them and sellers should demand them.
'The attention to detail and professionalism that Troy and his staff brings to our contract drafting process is unmatched. It’s a rare occurrence to find a law firm that cares as much about your legal protection as you do. But, Doucet Co. LPA is that law firm."
Mr. Doucet and his staff handled two foreclosures and a related matter for me. I found everyone in his office to be professional, effective and responsive. Everything he handled for me got me the results I expected. I highly recommend Doucet Co., LPA.
As an attorney and former client of Doucet Co., LPA, I was very impressed with the representation of Troy Doucet and his firm. I would recommend him to all who face difficulty in saving their home or getting cooperation with their mortgage companies.
If you need legal assistance regarding foreclosure, I urge you to consider putting your complete trust in Doucet Gerling. They will employ their vast knowledge and expertise on your behalf and work to attain a great outcome for your individual needs and situation.
"Troy Doucet is one of the most gifted attorneys that we have ever had the pleasure of dealing with. He treated us with kindness and generosity. We were most impressed with his integrity and high sense of duty to us. If you are looking for an attorney to get the job done we highly recommend Troy Doucet. Our family can never thank him enough for getting our foreclosure problem solved."
My company has worked with multiple law firms in the past, but none have come close to matching the quality we are seeing from Doucet & Associates. If you want an attorney who has a deep understanding of both the legal system AND business, hire them – you won’t be disappointed.
"Mr. Doucet worked wonders in my case. He stood up for me when I felt overwhelmed and helpless and kept my credit rating and future intact. Thanks you so much for helping me and my family."
"My family and I would like to send a thank you with sincere gratitude for all the time, hard work, and long hours set a side daily to represent and speak on our behalf during a very challenging time in our life. Our success is a reflect of your commitment. Thank you Troy Doucet & law firm."