Ask Phyllis: a blog series of frequently asked real estate questions. Please email us here.
Dear Phyllis,
I am living in my mother’s house, who recently passed. I am not the trustee but a beneficiary. My husband and I can only afford $500,000 and are looking in Palmdale. I need the money from my inheritance to complete the sale. With COVID, everything is so restrictive. The first time we even looked at a home, I had to submit a prequalification letter and sign disclosures before we were allowed in. And then we got only twenty minutes to decide whether we wanted to buy the home—each time we wanted to see a home, we had to sign COVID disclosures.
We finally found a home and decided to write an offer. The down payment comes from my mother’s house, which will be on the market next week. Now my Realtor just sprung on me that if my offer is accepted, I will need to make a 3% earnest money deposit to escrow or $15,000. I do not have that kind of money. At this point, I wonder if she is putting up these roadblocks. Are things really this complex buying during COVID?
John
Dear John,
I feel your frustration. Buying during COVID has many different restrictions. As a real estate professional, I, too, am frustrated by all the rules and challenges. Let us address your concerns one by one. Yes, because of COVID, only prequalified buyers are viewing homes. And this makes perfect sense, especially with homes that are occupied. The seller and agent determine showing time frames. But I agree that twenty minutes is a very short timeline. And indeed, it puts an extra burden on the agent and the buyers to be sure to be on time.
The earnest money (aka good faith) deposit is negotiable; however, it is customary that it is 3% of the purchase price. Perhaps you have a family member who will help you with a loan. But discuss this with your lender. The lender will want to verify the source of these funds with additional documentation required. The additional paper trail may be unnecessary with “seasoned” money in the bank for several months.
Best of luck to you on your move!
