Expert: Dick Dennis - 9/22/2008

Question
QUESTION: I have a house in North County San Diego I'm looking to put a bid on but my realtor is asking me to out a 1% deposit, is this normal?

ANSWER: It depends on the lender (I suppose you are talking about an REO where the bank owns the property), Dionne. Also, banks nowadays want to make sure they have a buyer who has money to buy a house. You should also be aware that a bank may require you to have 20% as down down payment. That's how rough it has become. Talk to a Realtor or a lender to see if the new FHA program can help you buy that house. I wish you well.

Dick Dennis      dick@dickdennis.com

---------- FOLLOW-UP ----------

QUESTION: I have a pre approval from my bank already for the loan, but my realtor is asking me to give him 1% just to make the bid?

Yes I have my down payment ready but I'm not sure why he wants the 1% funds right now before the bank (yes it's a short sale) we even have a purchase agreement?

Answer
As long as you are already approved for a loan, show the Realtor that you have it. If you are prepared to pay the required down payment, why are you concerned with the 1% deposit? If you do not get the house, you get your deposit returned to you anyway. Also, you may require that the check IS NOT deposited until the seller has approved your purchase agreement. Then you have to pay lots more for your down payment.

Dick Dennis