What is a Real Estate Binder Deposit or Escrow Binder in Florida?
A Real Estate Binder Deposit or Escrow Binder in Florida is a paid deposit by a home buyer, to show a home seller, that the buyers real estate offer is made in good faith. It underlines the strength to a home seller if a home buyer is able to come up with the required down payment and can qualify for a loan.
The Deposit or Binder is negotiated between a home buyer and home seller. The initial deposit amount offered is a very important first step in the ongoing contract negotiations.
When a Real Estate Binder Deposit or Escrow Binder in Florida is negotiated it all is based upon leverage. You see, a binder deposit is a concern to a home seller since this will show and establish a home buyer’s strength. If a searching home buyer makes a strong deposit/ binder a seller could fear to lose a possible strong home buyer which in return will give a buyer some leverage over the seller in the contract negotiation process.
This also works contrarily. A low deposit or even no deposit binder, as I have seen many times, gives a home buyer a weak position and may give home seller leverage over the buyer since a seller may see this as a not serious offer or buyer.
When to make a Real Estate Binder Deposit or Escrow Binder?
As a Florida home buyer you should be represented by your own buyer’s agent. As your personal Buyer Agent, we will represent YOU, the home buyer’s best interest and advise you as such. A good Buyers Agent will advise you to make your initial offer as favorable as possible and will ask you for a strong deposit.
I have seen many times that a buyer has offered to pay deposit many days after an offer will be accepted, which could mean a not qualified buyer to a seller. As a buyer’s agent, our clients always present a strong offer where we show to a home seller that our buyer is financial strong, serious and qualified. A strong deposit will bring you closer to receive a contract for the home you have fallen in love with in the first place.
A buyer paid Deposit or Escrow Binder will be paid into an escrow account (trust account) with a Closing Company, a Real Estate Brokerage or Law firm and as contracted for. The deposit will be accounted for against the down payment or it will be released back to the buyer if no contract could be signed. There are other escrow situations and other deposit releases possible with a deposit which we are not covering with this article.
How much Real Estate Binder Deposit or Escrow Binder in Florida should I make?
A buyer should present a strong deposit within the initial offer to a home seller. This in return may motivate a home seller to take a lower offer with a higher deposit. Also, consider that you have fallen in love with the home and want to secure a favorable and strong position before a seller. This can make a seller decision easier and shows you as the qualified buyer.
A deposit amount depends on different situation, the type of sale (arm’s length or distressed sale), on market condition (seller or buyers’ market), the asking price, are there multiple offer situations and much more.
Every transaction is unique when buying and selling a home and a deposit depends on the individual sale and circumstances on its own.
If you are a home buyer and found your Dream Home, secure a better position when negotiating with a home seller and make sure that you understand – What is a Real Estate Binder Deposit or Escrow Binder in Florida? -and what it means and the negotiation power it can give you