When a buyer and seller reach agreement on a home sale, the buyer typically puts a small amount of money into a trust account. This up-front deposit is more commonly known as "earnest money".
A sales contract's earnest money requirement will vary from contract to contract. It can be as high as 10 percent of the purchase price and could be as low as $500; earnest money is a negotiable item between buyers and sellers.
Earnest money amounts can be affected by several conditions:
Market conditions: Stronger markets often call for more earnest money
Buyer economics: First-time buyers often give less earnest money
Seller psychology: Skeptical sellers often ask for more earnest money
This particular financial transaction is a confirmation made in "good faith" by the buyer to show that he intends to complete the agreement. How much or little is paid doesn't matter.
At some time during the process, if it should happen that the buyer doesn't follow through to complete the sale, he will likely have to lose the earnest money paid.
It is not something that happens often because there are "outs" written into the agreement called "contingencies."
A typical contingency is that the seller must provide a clean title policy to the buyer, or that the buyer must secure financing prior to given date, or that the home must pass a satisfactory inspection.
Earnest money will be returned to the buyer if any of the above contingencies cannot
be met. Such failure with regard to the contingencies will void the contract.
If the contingencies are me, the earnest money then becomes a deposit to be applied
To the buyer's financial responsibilities when the sale is settled. For instance, if a buyer is
required to have $60,000 at the time the sale is scheduled for closing, the actual amount
the buyer presents will b e $60,000 minus the earnest money.
Earnest money customs vary from state to state, city to city, and even locale to locale. Be sure to ask your real estate agent and/or real estate attorney for professional counsel before signing purchase contracts. The earnest money you save may be your own. - 15224
A sales contract's earnest money requirement will vary from contract to contract. It can be as high as 10 percent of the purchase price and could be as low as $500; earnest money is a negotiable item between buyers and sellers.
Earnest money amounts can be affected by several conditions:
Market conditions: Stronger markets often call for more earnest money
Buyer economics: First-time buyers often give less earnest money
Seller psychology: Skeptical sellers often ask for more earnest money
This particular financial transaction is a confirmation made in "good faith" by the buyer to show that he intends to complete the agreement. How much or little is paid doesn't matter.
At some time during the process, if it should happen that the buyer doesn't follow through to complete the sale, he will likely have to lose the earnest money paid.
It is not something that happens often because there are "outs" written into the agreement called "contingencies."
A typical contingency is that the seller must provide a clean title policy to the buyer, or that the buyer must secure financing prior to given date, or that the home must pass a satisfactory inspection.
Earnest money will be returned to the buyer if any of the above contingencies cannot
be met. Such failure with regard to the contingencies will void the contract.
If the contingencies are me, the earnest money then becomes a deposit to be applied
To the buyer's financial responsibilities when the sale is settled. For instance, if a buyer is
required to have $60,000 at the time the sale is scheduled for closing, the actual amount
the buyer presents will b e $60,000 minus the earnest money.
Earnest money customs vary from state to state, city to city, and even locale to locale. Be sure to ask your real estate agent and/or real estate attorney for professional counsel before signing purchase contracts. The earnest money you save may be your own. - 15224
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