What is Earnest Money?
February 26, 2016
After you’ve selected your new dream home and you begin writing an offer, you’re going to be asked to provide earnest money to go along with your offer. But what is that? The earnest money deposit is an important part of the home buying process. It tells the seller you’re a committed buyer, and it helps fund your down payment. On average, you can expect to hand over 1-2% of the total purchase price as earnest money. Without earnest money, you certainly could make an offer on a property but sellers rarely accept offers without a deposit of some sort.
Assuming that all goes well and your offer is accepted by the seller, the earnest money check will be cashed by the sellers’ brokerage and will be held safely in an escrow account until closing. Once everything is ready, the funds are released from escrow allowing your earnest money to go towards your down payment and closing costs.
If during your inspection period you find something, or perhaps multiple things, that you are not comfortable with and decided to no longer purchase the home, upon a signed cancellation notice, all your earnest money will be given back to you. To be on the safe side, make sure the purchase agreement covers how a refund would be handled.
If you or someone you know is thinking about buying a home and/or selling your current home, contact The Better Living Group today! We are here to provide you with information on purchasing a home and a free market analysis for the home you are considering to sell. The Better Living Group are Real Estate professionals in the Twin Cities and Greater Metro areas who are ready and able to assist with all of your Real Estate needs and goals and to provide only the best Real Estate service to all of our clients past, present and future.
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The Better Living Group
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