Today I’m excited to bring you yet another Facebook Live interview, during which I was asked some great questions on an important subject: earnest money.
The first question I tackled was one I’m sure many of you have wondered yourself: What exactly is earnest money?
Earnest money is a good faith deposit submitted by a buyer in a real estate transaction once a purchase contract has been drafted and signed.
With this in mind, you may be curious as to how much this deposit should be.
Though the amount can vary, a typical earnest deposit will be about 1% of the purchase price. That said, the specific amount is negotiable within any given transaction.
But how and when is this money paid, and who holds onto it during the transaction?
In our market, this money can be paid in one of two ways: You can pay it in our board contract within three days after acceptance, or you can pay it within three days of the home inspection after working through the request to remedy. In either case, the money will be held in an escrow account until closing.
Also, there are a couple of scenarios in which you can get your earnest deposit back. If you’re dissatisfied with the findings of the inspection or if the home doesn’t appraise, you can walk away from the deal without losing any of your earnest money. Otherwise, these funds will be applied toward your down payment or closing costs at the end of the deal.
If you have any other questions or would like more information, feel free to give us a call or send us an email. I look forward to hearing from you soon.