Yes, without question. The short sale addendum that we use in California provides for the deposit of said funds in paragraph 3ii, and if a buyer doesn't want to put down a deposit, that is not a buyer for us or for any serious short sale seller. That pretend "buyer" can go make somebody else's life a living hell. We have enough problems in a short sale without lackadaisical buyers too. You want the house, you put down a deposit, just like any other sale.

At one time 67% of sales in central florida were short sales.  Early on, the LA were not requiring an escrow deposit until bank approval.  That resulted in buyers making offers on several properties and disappearing when they felt like it.

A contract without a deposit was not respected.

Then things changed 180.  Now every LA is requiring an escrow deposit at the beginning of the contract which holds the buyer in the deal longer. Buyers that have to plunk down money take it seriously.

Eve

They must have a skin in the game.

In real estate, it's all negotiable. 

Yes, it is like any other sale and if contingencies are not met, then the earnest money is refunded.

Yes, absolutely.  I treat it just like any other contract.  If the contract has been approved by the seller then everything is the same - just waiting on the bank.  If this is not done the buyer has no commitment.

Yes.  I believe it shows the lender that the Buyer is serious about their offer and the Buyer tends to be more committed and  willing to wait when the process takes longer than expected.

In Michigan we have to have it in within two days of signing.

Usually yes.....but my last short sale was through homesearch.com where buyer required to pay for bidding. The winning buyer still did not sent EMD to the Escrow and we need to close in two weeks. What a nightmare. The agent who represents the buyer just got a license........he simply does not answer the phone.

Absofriginlootly.  If not, they are out hunting and shopping with worthless offers all over town. 

If I'm the listing agent, yes.  If I'm the buyer's agent no, but we'll do what's necessary.  If there is nothing holding a buyer to the property for at least 60 days, they can just get impatient and find another home and there are no consequences. 

In Texas the contract is clear on earnest money and option fee: Yes.

YES....they must do their inspection and deposit earnest money from Seller not lender approval ...skin in the game and they what they are buying...why wait 60 days to find out there is a defect that they can't live with and won't continue in the transaction.

Here in Tucson, AZ we had a lot (A LOT) of short sales after the market crashed in 2005.  We do not start the process until we get the bank notice of approval, and with the short sale addendum the buyer can cancel at any time prior to that in writing.   Once we get bank approval (can take 4-5 months) then we open escrow, start the agreed upon buyers inspection period (here in Arizona it is 10 days standard) and go from there.  Basically once the seller agrees to the short sale purchase price (and why wouldnt they since they are relying on the bank to forgive the difference) we hit the pause button until we get approval.  Yes, buyers can keep looking, find another to make an offer on, cancel the short sale, and make the other offer. I  have lost count of how many times I have seen a short sale back on the market, just after the buyers cancelled.  Then it is a short sale with an approved price, which can really speed things along.

A catch 22... for example the subject is condo - buyer can't move forward and discover in writing if HOA has a lawsuit, 20% owners or as in some areas deed transfer tax restrictions - things that might throw out the deal from a lender viewpoint. No reason to order an appraisal or inspection until AFTER the bank or banks say yes in writing, as information can become outdated. Some banks will not take the offer seriously as @Mike & Eve Alexander mention

I would but until the offer is signed the buyer can request it back without having to go through lots of red tape. I think it tends to make the buyer feel committed to the sale and stick with it longer.

Yes. Doing sok, in my mind, shows commitment and that is always an issue with short sale buyers.