"An earnest payment (sometimes called earnest money or simply Earnest, or alternatively a Good-faith deposit) is a deposit towards the purchase of real estate made by a buyer to demonstrate that he/she is serious (earnest) about wanting to complete the purchase. When a buyer makes an offer to buy residential real estate, he/she generally signs a contract and pays a sum acceptable to the seller by way of earnest money. The amount varies enormously, depending upon local custom and the state of the local market at the time of contract negotiations."

So what does this mean to you when you are buying real estate in Mora, Minnesota, or anywhere else in the nation?

When you find that perfect house and are ready to write an offer, one of the first things in the contract is the earnest money.  Your agent will ask you how much you want to offer.  Remember - IT IS UP TO YOU WHAT TO OFFER.  The offer of earnest money shows the sellers that you are serious, and you really want their house.  Some sellers may come back and ask for more later in a counteroffer, but until that happens, what you say goes.  When you write the offer you will have to present a check, cash, or certified funds for the amount that you name.

So where does the money go?

What happens first is the money sits in a folder until the offer is accepted.  IF THE OFFER IS NOT ACCEPTED, THE CHECK WILL NOT BE CASHED.  Once the offer is accepted, the check is cashed within three days of a signed agreement.  The check is deposited in a trust account for the company who has the listing.  There it sits until closing.

If the deal falls apart due to financing, depending on how you wrote your offer, you may get to keep your earnest money, or the seller may get it.  If you back out for any reason other than a contingency on an inspection, the sewer, or the well, you may lose your money to the seller.  So try to have a valid, serious reason if you are going to back out of the deal.

Once you get to closing, you will see the earnest money as a credit toward your new home.  It is that much less that you are financing, and that much more equity that you have in your home.  How cool is that?

If you ever have questions about the home buying process, please feel free to contact me anytime!  I'm more than happy to help!  I am a licensed real estate agent in Minnesota, and I specialize in:

• Mora MN Real Estate
• Pine City MN Real Estate
• Cambridge MN Real Estate
• Milaca MN Real Estate
• And more!