Buying house but using sale funds for Downpayment

[lazarru]

We've gotten a contract on our existing house and have decided on our new house that we're going to purchase. We're going to have a profit of about 150 grand from the sale of the old house and plan on putting 100 grand of that as the downpayment on the new house. Our agent is telling us we still need to put another 10 grand down up front as part of the amount we pay after 10 days. At the moment I don't have that, waiting for payment of 20 grand on a job that I did.

Question is if your using funds from existing sale for the downpayment how do you get around having to put down bit bucks 10 days after signing the contract? I'm in Jersey in that makes any difference. We asked the realtor and she was just like, well that's to make sure you don't drop out of the sale.

Thanks

 

[chrissyk]

We only escrowed $1000 of "earnest money" at 10 days on all of the houses we've bought. I think that our FSBO buyers may have escrowed more at 10 days, but that was their lawyer's doing and not our request. I think that this is variable, so I'd tell my realtor that I could only put up 1K or 5K or whatever of earnest money at 10 days and leave it at that. If they think that they are going to lose the sale over it, they'll find a way to work within your present budgetary confines.

 

[C.Ann]

$1000 good faith is standard here.. Ask your realtor why it isn't standard there!

 

[Cyndirella]

I'm a Realtor (although in NC) and I'm not sure what your agent is talking about. There is earnest money, but there is no standard amount...I have had clients use as little as $300 as earnest money. Are you buying new construction or a resale home?

 

[ducklite]

In NJ it's pretty standard to want $1000 at presentation of offer, and between two and five percent of the purchase price at or before the end of the attorney review period. You have a few choices. See if they will be willing to wait a bit longer for the d/p, go to your bank and see if you can get a short term signature note, or borrow the money from your other long term savings.

If there were multiple offers on the house, you will very possibly lose it if you don't come up with the rest of the cash...if you can't come up with the full $10K, how much can you come up with--maybe offer that amount now with the rest in 30 days?

All that said, I wouldn't listen to the Realtor, I'd tell him/her that you are going to let the attorney's for the two parties discuss it. Often the attorneys are happy to work something out which is satisfying to both clients. Congrats on teh new house!

Anne

 

[PlutoPony]

In NJ it's pretty standard to want $1000 at presentation of offer, and between two and five percent of the purchase price at or before the end of the attorney review period.

So in NJ is the $1000 considered earnest money and would be forfeited if the deal was called off by the buyer (unless it was for a reason allowed in the contract)? How about the 2-5% - and who holds it? Home buying really does vary a lot by state and even area within the state.....

 

[WIcruizer]

First, you need to talk to your lender, not the real estate agent. Lenders are more creative than ever in these situations. The $100,000 would be posted as your down payment when the sale of your home goes through. Pretty common. The $10,000 in earnest money depends on how hot the property is. Supply and demand. Try to negotiate with the realtor on the terms. If they don't budge and you really want THAT house, you'll have to play along. You could get a $10K LOC and pay it off as soon as you get the money from your job.

 

[Chicago526]

Here in IL, $1000 is standard earnest money, and is due within a day or two of the offer being accepted. The rest of the downpayment is due at closing. I never knew this would vary by state or region! I guess you really do learn something new everyday!

 

[PlutoPony]

I never knew this would vary by state or region!

Oh yeah.... something else we've found that varies is when you give possession of the property. In NC and VA, possession is given at closing, unless arrangements are made by the seller to rent back for a specific period of time and usually some money is held back at closing to cover any potential damages. In recent experience in Ohio, possession is given no more than 30 days after closing, with no money held back. When last we bought (8 years ago) our NC sales contract was 2 pages - and the one we signed 1 month later in VA was 12 pages! Lots more caveats and legalize in VA....

 

[ducklite]

So in NJ is the $1000 considered earnest money and would be forfeited if the deal was called off by the buyer (unless it was for a reason allowed in the contract)? How about the 2-5% - and who holds it? Home buying really does vary a lot by state and even area within the state.....

The $1000 would be returned if the buyer called the deal off for a reason such as the property not appraising for the sale price, something major coming up in a home inspection, etc.

The 2-5% is held by the buyers attorney in their trust fund. Actually the initial deposit is as well--although sometimes that is held by the real estate agent int heir trust fund. The seller doesn't get any of the money until closing.

Anne

 

[ducklite]

Oh yeah.... something else we've found that varies is when you give possession of the property. In NC and VA, possession is given at closing, unless arrangements are made by the seller to rent back for a specific period of time and usually some money is held back at closing to cover any potential damages. In recent experience in Ohio, possession is given no more than 30 days after closing, with no money held back. When last we bought (8 years ago) our NC sales contract was 2 pages - and the one we signed 1 month later in VA was 12 pages! Lots more caveats and legalize in VA....

In NJ possession happens at closing, unless there is a rent back arrangement. In either case legal ownership happens at closing.

Anne