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What is the Amount of Earnest Money Deposit in Sacramento?
When you’re ready to make an offer, you will need to consider the amount of earnest money deposit required for a purchase contract. Although the amount of earnest money deposit is not specified, and could be just a $1.00 or even simply “love and affection,” consideration is part of the essential elements of a purchase contract. Because back in Real Estate 101, we had the essential elements of a purchase contract drilled into our heads. Do you know what those elements are? I’ll tell you, in case you have forgotten.
Amount of Earnest Money Deposit and
Essential Elements of a Purchase Contract
- A legal purpose
- Competent parties
- Offer and Acceptance
- Consideration
- Validation
While there is no minimum amount required, most buyer’s agents try to keep the earnest money deposit under 3% of the sales price. The reason for that is in the event of default, the seller might be entitled to liquidated damages, and that amount is limited to 3% of the sales price. Any amounts deposited over that sum would be returned to the buyer. Unless, of course, the seller refused to release the earnest money, and then there is a penalty that can be imposed for refusing to release. To get that penalty, though, and to get the rest of the money released, well, it could involve an expensive court case or Small Claims.
Rather than fight that battle, it’s safer to limit the earnest money deposit to less than 3%. But how low can you go is what some buyers want to know. Now, considering how the seller will interpret the buyer’s eagerness and willingness to buy the home, it might be wise to put your money where your mouth is. If the amount of an earnest money deposit is $1,000, that doesn’t show the buyer is very serious, even if the buyer is. Especially if the sales price is $400,000. 3% of that is $12,000.
Another twist that plays into this, which was mentioned at one of our office meetings at Lyon Real Estate, is some listing agents are getting sued if the buyer later bails and the deposit was puny, inadequate. I can see that. A judge might question whether the agent was protecting her seller by not asking for a larger earnest money deposit.
From a Sacramento listing agent’s point of view, 1% of the sales price is the bare minimum, but I really prefer 2% to 3% for my sellers. It shows the buyer is genuine and committed. All buyers, unless otherwise agreed to in writing, have a contingency period in the contract that provides for cancellation and a release of the earnest money deposit.
DocuSign vs Digital Ink for Sacramento Real Estate Agents
For a lot of real estate agents, when it comes to DocuSign vs Digital Ink, most tend to choose whichever platform they are introduced to. I’m wondering if many ever compare systems. I’ve used both, and I’ll just lay it on the line upfront that when it comes to DocuSign vs Digital Ink, my vote enthusiastically goes to DocuSign.
Because I’ve been using computers since the 1980s, online since 1991, I generally do not struggle with technology issues. In fact, I often discover back doors to overcome obstacles when glitches set in. There is usually more than one way to access data. But when an agent sent a Digital Ink document a few days ago, it took me a long period of time to figure out how to access a document, much less sign it.
The buyer’s agent had forwarded a purchase contract to me via Digital Ink. He is a new agent, licensed last fall, and I don’t think he’s closed a transaction yet. There were no signatures in the Digital Ink file. They were not set up to sign. But just dicking around with the program was a bit irritating.
Finally, I said to the agent, you should just use DocuSign. For digital signatures, when comparing DocuSign with Digital Ink, DocuSign is so much easier and more user friendly. Even my 95-year-old clients can sign a document with DocuSign. The buyer’s agent agreed, said his Millennial clients could not figure out how to use Digital Ink, either, and that’s why they couldn’t sign the contract.
Part of his problem, in all fairness for the DocuSign vs Digital Ink discussion, is he, like many others, want to synchronize MLS with their digital signing software. In my opinion, synching is a bad idea. The concept sounds like it’s easier and more stress free, but it is not. The reason is the data that is pulled into the documents such as a California Residential Purchase Agreement is pulled from an unreliable source such as Realist. Bad data in, bad data out.
I can’t even begin to take listing in Sacramento until I check Realist against Metroscan, to reconcile, and both pull data from the public records, which can also reflect wrong data. I have more issues with Realist than Metroscan. Names of owners are often reversed, especially Asian names. Or, not all of the owner’s names are disclosed. I always enter my information manually, so at least my documents are correct. Because I care more than the average bear about accuracy.
The other issue with synching with MLS data is it pulls every listing agent’s name into the contract, even if only one agent should be identified.
Later in the day, after I received the signed purchase agreement, the buyer’s agent sent me the contract in DocuSign. There were no signatures on the contract in DocuSign. I asked the agent why. Why did he send me the contract without signatures when I have the signatures? Answer: because I told him to sign up for DocuSign, LOL.
I feel bad for him now because he has two digital signature accounts. I prefer to pay for my own account so all of my data belongs to me. Having your own account also means when my brokerage’s account goes down for whatever odd reason, I can still access my own account.
DocuSign also has a mobile app and I don’t think Digital Ink does. It is very easy to access all of your settings in DocuSign and make the software perform exactly the way you want it to. My only beef, if that is a beef, is I can’t preset signatures to sign at a future date and future time. You know, drip the email to go out on a certain date. That would be helpful to me as a top listing agent because I could upload everything at one time and schedule the paperwork to go out on different days. Because I handle volume.
Or, a client is traveling and asks me to upload a contract on a certain day when I might be traveling. Sometimes I work from my house in Hawaii. I asked DocuSign if we could have this feature and their programmers shot me down flat. A girl can hope for someday. But for efficiency purposes, client happiness and simple peace of mind, you really can’t beat DocuSign.
Just ask Tom Gonser.
Sacramento Home Selling Myths That Sellers Often Believe
Because I’m in full blown spring mode dealing with Sacramento home selling myths at the moment, I’ve noticed that I get asked somewhat the same questions from many sellers. At first I wondered where are they getting these ideas? But then I decided there isn’t any one place, and much of it is arrived at within their own minds. It makes sense to them. Even if it doesn’t make a lot of sense to me, those beliefs, so I try to be even more patient and understanding.
One of the most common Sacramento home selling myths I hear repeated: seeing as how we have to pay commissions and closing costs, can we raise the price? The reason we listing agents get that question? Because sellers temporarily forget how we determined the sales price. And they honestly did not think about paying costs of sale. Raising the price seems entirely rational and normal to ask. When you think about it this way, you can see how a seller could come to that conclusion.
But it is a bad idea. You do not want to be overpriced or priced so high you won’t even get one offer much less the multiple offers sellers crave. When more than one buyer fights for the home, that alone can raise the price. The costs of sale also have no bearing on the sales price. The costs are whatever the costs are. The standard real estate commission in my neck of the woods that top producers charge makes perfect sense because we tend to negotiate better than inexperienced agents who charge less. We also tend to get higher sales price ratios and we eliminate more hassles for our clients.
A second common Sacramento home selling myth: oh, geez, my ceiling fans are so gorgeous and I love my Tiffany light fixtures; can I take them with me? Even if they seem incompatible with the seller’s new home, sellers believe someday they will use them again. Perhaps the fixtures have been part of the seller’s life for years. An emotional reaction. However, they are fixtures: a legal thing. They are also the things that makes the sellers’ home so beautiful. Without the gorgeous ceiling fans and Tiffany light fixtures, the home could lose some of its luster and appeal. It won’t be so pretty anymore.
Fixtures, basically anything attached in a permanent manner, should remain with the home. Buyers do not want to buy stripped-out homes with builder-grade low-end fixtures when they pay a premium price.
The third common Sacramento home selling myth: Must my house be 100% perfect to be for sale? Must all the appliances be brand new? Should we paint the interior and exterior? In our super hot seller’s market, the single most important thing a seller can do is clean the house and get rid of trash. Make it presentable and liveable and loveable. That does not mean sellers need to repaint in contemporary colors or fix minor defects that nobody will notice. Call your Sacramento Realtor today and get that home ready for sale. Spring awaits!
Solutions for Sacramento Listing Agents Who Will Not Call You Back
The only excuse for listing agents who will not call you back.
Little is more irritating than Sacramento listing agents who will not call you back. Well, it’s most likely irritating enough that so many do not even answer their phone in the first place. I am not in a position where I talk to a lot of listing agent because I mostly chat with buyer’s agents. Being a listing agent myself. And I always try to answer my phone. Not only do I answer my phone, but I do in a cheerful manner.
Even if I’m feeling, “what the hell do you want from me?” like busy days can do to a person, I make myself be happy to talk. Because whatever might be going on with me is not my caller’s fault. My caller needs some kind of help. Either to sell a house or more information on a listing. It’s generally all good. For spammers, there is the End Call button and block caller function. No need to get upset.
However, not every listing agent answers the phone. Is it on purpose, like some people believe? Sometimes, I’m sure it is. The listing agent doesn’t want to answer calls from other agents about offers because the listing agent might not be interested in presenting offers that are not the agent’s own buyer. Yes, it’s unethical behavior, but it happens. Or, maybe the agent feels he has enough offers (although the seller would beg to disagree). Or he’s sleeping under a bridge because, hey, rough night, where is the car? You never know.
So, what can you do when dealing with listing agents who will not call you back? I’ll tell you what I do. First, I call that agent every hour on the hour and I leave a cheery message until the agent’s voice mail box is full. Sometimes the box is already full because the agent never answers the phone at all. In those cases, you can call the agent’s broker and ask if the broker will get a message to the agent.
You can also go to the agent’s Facebook page and leave a message, detailing your efforts to reach the agent. Try Twitter and send a direct message there. Look up the agent via Google and call his parents. How about uploading the agent’s photo to Instagram as a Missing Person notice: Has anybody seen this agent? Send an urgent fax to the office fax number.
I have also been known to go to the company website and call every single agent in that agent’s office until somebody tells me how to find the agent. I am absolutely relentless. This is in addition to borrowing a stranger’s phone at the grocery store and calling from a number the agent does not recognize.
On the other hand, maybe for you, well, maybe you should call an agent who answers her darned phone? Because listing agents who will not call you back are not professionals.
Beware of Sacramento Agents Who Have a Dog in the Race
Not every Sacramento Realtor has a dog in the race.
You know what I mean about Sacramento agents who have a dog in the race, right? The underbelly of this business. Especially real estate agents whose sole business model is: no closing, no paycheck. When an agent must close a transaction or starve to death, it can be difficult for a client to feel comfortable with the advice that agent might offer. I get it. But I hadn’t quite had it put to me like a client explained a few days ago.
Basically, he said he was referring me to a co-worker who needed to list his home because I have enough business to be financially comfortable. Implying that it’s difficult to trust an agent who doesn’t. Granted, there are many types of Realtors in Sacramento.
It’s true that there are Sacramento agents who have a dog in the race, but I’m not one of those. I take listings because I enjoy the challenges and it’s rewarding to do a good job for my sellers. The money isn’t bad, either. But money is not my motivation. As a matter of principle, I probably charge more than most other agents, but I also provide services that warrant the highest commission and net higher prices. You might find that ironic but I don’t.
If a seller demands to work with a cheap agent, that seller can work with another agent who won’t do nearly the job I would do. No skin off my teeth. There’s another seller around the corner who values what I do.
And, yes, I find it amusing when a seller asks me if this is a good time to go on the market. I tell them don’t ask a Realtor if it’s a good time because an agent will tell you YES.
New Client: Is this a good time to hire you?
Me: Well, I dunno, maybe you should check back next year to see if I’ve retired.
Darn tootin’ it’s a good time to hire Elizabeth Weintraub! There’s a reason I rank in the top 5 agents in Sacramento.
Although, joking aside, I do tell clients if their home will be difficult to sell, then list it now. We have no inventory. It will sell quickly. We’ll push that price up, and I’ll take care of them all the way through closing. I will monitor the transaction and handle any blips. On the other hand, if you’ve got a stunning home and can afford to wait, then April 15th is prime time.
I’ll sell anything if it’s fun to do. I don’t need to have a dog in the race. But be careful of those who do. Sometimes buyer’s agent will try to threaten me and the seller. They say if we don’t do what their buyer wants, their buyer will walk away. You know my response is to that? That agent is an idiot. They don’t look for answers, solutions.
Still, I don’t hold that against them. Because they could very well be one of those Sacramento agents who have a dog in the race. Those are the ones who rarely make it to the finish line. They do not realize that a sure-fired way to make it in the real estate business is to take the agent out of the equation and focus on what is best for the seller.
