Real Estate and Taxes Question

[RunningBum]

Whenever I buy a place, I put down $1,000 earnest money.
Oh you should hear the real estate agents scream about "showing my seriousness" etc.

But the real reason they want a big payment is then you are screwed out of the money if something goes wrong. While I understand I would still be liable to be sued for screwing up a deal, if I'm immediately out only $1,000 instead of $15,000, I'm in a better position.

Plus it does not tie up a lot of money if the deal collapses and the Realtor is supposed to return it to me.

If I were a seller of a mid to high priced property, I probably wouldn't accept your offer, especially if the market was pretty good for sellers. $1000 isn't worth it to take my house off the market when you are showing strong signs that you'll back out.

 

[Sunset]

If I were a seller of a mid to high priced property, I probably wouldn't accept your offer, especially if the market was pretty good for sellers. $1000 isn't worth it to take my house off the market when you are showing strong signs that you'll back out.

I understand some folks have that view, and I know it could be a risk.
However I also don't put many other conditions in an offer.

To me buyers back out, using conditions, especially the satisfactory financing one.

 

[hiker88]

I am very thankful for the suggestions I received here. Until I posted my question, I had no knowledge of a margin loan or the 60 day IRA "loan". It turns out the sellers decided to give me five more days. That was just enough time to call Vanguard on Monday morning and start the settlement period for temporarily liquidating the portion of my IRA that I need. The mortgage loan I applied for earlier should be finalized next week, so I will be able to return the money to my IRA very soon. So now, I will neither lose my deposit or suffer a huge tax bill from selling my investments from my taxable account. Yay!!!!

 

[Koolau]

At the (possibly) worst time (2009/2010) we found ourselves in a very similar situation. We wanted to "trade" homes, but couldn't sell one before we bought the other. (We had found the "perfect" place and we would still needed a place to live while we remodeled the new "perfect" place - yeah, I know, I know.)

We COULD have cashed in assets, but there would have been either a big tax bite or we would have give up some very nice investment vehicles (think I-bonds procured in the early 2000s - back when they actually paid interest!) So we went to the bank and asked for a loan. They didn't care that we had lots of assets - in fact they said "why don't you just sell your assets?" THEN a bank person asked to see our 1040 for past 3 years. Turns out we had LOTS of income - because we had been converting tIRAs to Roths and paying the taxes. Believe it or don't, the bank said THAT was income and THAT qualified us for a loan. GO FIGURE.

SO, check you 1040s and see if you have more income than you might think. Naturally, YMMV.

 

[NgineER]

I am very thankful for the suggestions I received here. Until I posted my question, I had no knowledge of a margin loan or the 60 day IRA "loan". It turns out the sellers decided to give me five more days. That was just enough time to call Vanguard on Monday morning and start the settlement period for temporarily liquidating the portion of my IRA that I need. The mortgage loan I applied for earlier should be finalized next week, so I will be able to return the money to my IRA very soon. So now, I will neither lose my deposit or suffer a huge tax bill from selling my investments from my taxable account. Yay!!!!

Glad that it is working out for you, nice to keep that dough for when you really need it.