06/03/2021
THE EARNEST MONEY DEPOSIT
You know that expression, “Put your money where your mouth is”? That’s kind of how earnest money works. 🤑
Instead of just SAYING that you want to buy the home, earnest money shows that you are serious about buying it. It’s a good faith deposit you pay after a seller has accepted your offer and is typically due within 3 business days of the date that all parties signed the contract. Sometimes listing agents won’t even take a home off the market until the earnest money deposit has been made. It can be in the form of a check or wire transfer and is paid to the escrow company, which is usually the title company. 📨
The amount for the earnest money deposit varies based on the type of property being purchased and the local market conditions, but generally speaking for the mountains, you can expect to pay $1000 for every $100,000. So, for a home that’s listed at $500,000 you will probably pay $5000 in earnest money. 💰
The escrow/title company will deposit your earnest money check immediately, so be sure you have enough money in that bank account to cover the check. At closing, the earnest money is applied to the purchase price.
In the event the sale does not close, the purchase agreement spells out the conditions under which you would either be refunded or forfeit the earnest money. For example, let’s say your home inspection reveals a serious structural issue 🤯 and you decide to walk away from the transaction. If you terminate on or before the Inspection Termination deadline, you are entitled to get your earnest money back.
Thinking about buying a home this year? Preparation is the mother of victory. Message me and I can point you in the right direction!
