In today’s pro talk we will talk about Earnest Money And the role it plays in a real estate transaction.
What is earnest money in a Real Estate Transaction?
Earnest Money is an important part of home buying process.Once the buyer & seller come to a final agreement in a real estate contract,the buyer will deposit an agreed amount as a show of good faith to purchase the property
How much money is enough for Earnest Money?
The amount is normally based on a percentage of the sales price. However, the buyer can elect to pay more in order to make the offer stand out and to increase his/her chances of buying the property under special circumstances.
Who holds the earnest money?
The earnest money does not go the the seller, rather it goes to an escrow agent such as a title company who holds it till the purchase is consummated. The buyer has 3 calendar days to deliver the money. Earnest money will be credited to the buyer at the closing of the transaction
What happens to earnest money if the transaction falls apart?
The earnest money is typically returned to the buyer if the buyer decides to terminate the contract for any reason during what is called the option period. Unfortunately, things may go south after the option period is exhausted and dispute arises over earnest money. At this time, the terms of the contract determines who receive the earnest money. Here is the bottom line: As a buyer, be diligent about your contract deadlines and give proper and timely notice of your intention to cancel the contract. As a seller, you will not automatically get to keep the earnest money if the buyer drops out, but you may be entitled to it when a buyer breaches the terms of the contract & does not complete the purchase.
In closing, whether you are a buyer or a seller in a dispute over earnest money, we will discuss the role of earnest money and other terms of the contract with our clients at the beginning of the process to prevent any unexpected surprises.
End As always, your dream team is committed to providing you with tools, education & excellent care. Think of us as one stop-shop for all your real estate needs. If you liked this video please subscribe, like and follow us on social media and share this video with anyone who can benefit from it.