Posted by Dirk Roach on June 21, 2000 at 20:24:28:
I took my first ever non-refundable deposit. And it was even a personal check. I know I know, what was I thinking?
Anyhow closed on the deal yesterday. It was a sizable downpayment around 4k. And guess what the folks showed up with a 2k cashiers check and 2k in cash. They asked if I could void the previous check, because “frankly, it was wasn’t worth the paper it was printed on”. I had not deposited the check, so we voided it and gave it back to them. No Problem. But it goes to show you.
Dirk
BOTH buyers have broken contracts before moving in! - Posted by Debra G - VA
Posted by Debra G - VA on June 16, 2000 at 07:18:02:
Late last month I had sold two mobile homes within 2 weeks of buying them, and had obtained deposits of $250 from each buyer. We were scheduled to close next week, within a month of signing the contracts. This was to allow them to pull together the rest of the down payment and give a month’s notice to their current landlord. Wouldn’t you know it, this week BOTH buyers have called to cancel their contracts and forfeit their deposits!!
One was a quality buyer, who managed to find a rent-to-own house instead. The others were more iffy, but had also spent a weekend putting skirting on their new trailer (in exchange for my paying their sales tax). He got laid-off, and didn’t want to work at $7 an hour flipping hamburgers to finish getting the money together. This couple was to provide a down payment of $1,000 because of their rough credit and work histories. NOW, they are asking me to find them a home for just $1,000 CASH and no payments (in decent condition, to boot!). Fat chance! They can find their own trailer at that price.
Anyway, did I make a mistake in allowing up to a month for folks to pull their money together to complete the sale? Should I only sell to buyers with enough ready cash to complete the sale immediately? I thought my deposits were large enough to discourage cancellations. Guess not. Any suggestions?
I never let anyone tie up a home for a few bucks. Even if they offer a substantial non-refundable down payment, you will have too many problems. Once they get home and start thinking, they have buyers remorse.Or their friend, or family member convinces them what an idiot they are, etc. And regardless what they agreed to, they will fight to get their deposit back.
I just tell them to call me when they have all the money, and if I still have the home, we’ll talk. This way, you haven’t allowed someone to take your home off the market, and prevent you from selling it to someone else.
Last year, I sold a home and transferred title. The buyer changed his mind before even moving in, and wanted all his money back. I refused, and he reported me to everybody he could think of. I forwarded copies of all the documents he had signed, to all those people, and that was the end of that. My point is, even with everything documented, you will occasionally have some jerk that places no value on their word. They will promise anything.
You have to stay in control. By taking a deposit to hold the home, the other party has the leverage. That’s not the position you want to place yourself in.
Re: BOTH buyers have broken contracts before moving in! - Posted by Ernest Tew
Posted by Ernest Tew on June 16, 2000 at 08:41:18:
In practice, the amount of deposit you can get depends on the local market. It’s always a good idea to get as much deposit (and down payment) as you can. But, if you ask too much, some buyers will be lost. Without being familiar with your local market, it wouldn’t be easy for anyone outside the area to advise you as to how much to charge. You will begin to get a feel for it as you work with more people.
Buyers do tend to lose some of their enthusiasm with time. So, whenever possible, it’s a good idea to close as soon as the buyer is ready.