On every listing a Buyer will view, there will be earnest money required and these monies need to be deposited within 72 hours of acceptance of offer, unless otherwise specified in the contract.
What is Earnest Money?
These are funds Buyers offer upfront in good faith they will proceed with their offer. Rarely will a Seller accept an offer without earnest money, but years ago we did have promissory notes giving buyers some time to deliver earnest money or in lieu of a deposit. Have not seen promissory notes for years.
Why are the earnest money requirements so different between the homes we saw today, all of the homes are priced around the same amount?
The amount is determined by the Seller, sometimes with the assistance of their agent. The amounts are usually between 1-2% of the list price. In a strong Seller's market, you may see deposit requirements a bit higher. (To make an offer look a bit stronger, offering larger amounts than the amount listed in MLS may sway the Seller if there are multiple offers.)
Do they cash my check, or does someone hold it?
The earnest money IS cashed, whether the real estate company holds it or the title company is holding it. BE SURE you have funds to cover this amount. Nothing worse than starting a transaction and the earnest money check bounces. This gives the Seller a nervous feeling from then on out. The earnest money can be in the form of a personal check, cashier's check, money orders or wire transfer. (If it will be a quick closing, there will be a requirement of good funds. Checks take a couple of weeks to cash.)
Your earnest money will be used toward the final amount needed at closing. With VA financing, there is a good chance you may see your deposit returned at closing if the closing costs are figured into the rate.
If something goes wrong, do we get our earnest money returned?
Our contract gives a Buyer the option to terminate through many aspects of a transaction. Two forms will need to be prepared and signed by both buyers and sellers to release the earnest money.
If you have more questions about Earnest money - please give me a call. I would be happy to assist. Joan Cox - 720-231-6373
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