What is the typical deposit required to make an initial buy offer for an Apartment?

When preparing to buy an apartment, the buyer makes a refundable escrow deposit that is part of the initial offer. Is there a typical amount or percentage that applies for the initial deposit? For example, in making an offer for a $1,000,000 apartment complex, how much is typically presented with the initial offer?
In Buying Property - Asked by Robert C. - Feb 2, 2009
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Answer(s)

Dwight B.
Owner/Investor
Baltimore, MD

The earnest money deposit amount is typically a percentage of the sales price. And, the deposit amount included with the letter of intent or PSA largely depends on the size of the property. The common deposit for a smaller property is 3% to 5%, and for a larger complex, it's 1%.

Feb 2, 2009
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Paul S.
Broker/Agent
Glendora, CA

It will partially depend on what is common in the area. A deposit is not needed to create a contract. However most offers have them included. The bigger the deposit the stronger you can look. Depending on your state, there might be a limit on the amount you put at risk which is calle Liquidated Damages.
In my state (Ca.)it is usually limited to 3% of the sales price for residential 1-4. However commercial may not have a limit and in fact usually will become non-refundable at some point.

Feb 5, 2009
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Chris S.
Broker/Agent
Coeur D'alene, ID

All depends and there are many schools of thought on this.
I like using some percentage of the purchase price, say 3%. However, many people advise to put as little up front as possible because that capital is at risk and can be defined as liquidated damages. Further there are big differences from state to state on the liability, and utlimate responsibility for the deposit.

Feb 6, 2009
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