What is Earnest money?
@investrealestate Earnest money is also known as a good faith deposit! Learn more at sellvp.com/earnest-money #earnestmoney #closingcosts #homebuying #homebuyingtips
When you are buying a house you will need to put down earnest money. Earnest money is also known as a good faith deposit.
For example: This house you want is $100,000, you will put down money to tell the seller you are serious. The seller will take the home off the market and move forward selling the home to you. When you go to the closing table, your earnest money is applied to the closing costs. It is not in addition to the closing costs. So let’s say you are buying a house for $100,000, you put down $1,000 earnest money. You now owe $99,000.
Can I get my earnest money back?
You can get your earnest money back during the due diligence period. The due diligence period includes doing inspections on the home, obtaining a satisfactory loan and the property appraising for the agreed upon amount.
- Inspections. During the inspections period, If the house has too many issues, you can say wooooah! This house has too many issues that I did not know about and the seller is not willing to chip in. This may be a deal breaker and you can get your earnest money back.
- Financing. If the interest rate goes sky high and you can not afford the monthly payment or you lose your job and can not obtain a loan you are allowed to cancel before the financing deadline.
- Appraisal. If the property does not appraise for what each party agreed to or for higher the bank may not give a loan on the property. If the property does not appraise we will negotiate with the seller, however if we can not meet on terms your earnest money is refundable
@investrealestate Can YOU get your earnest money back? Yes! Learn more at sellvp.com/earnest-money #earnestmoney #earnestmoneydeposit #homebuying #homebuyingtips
When can’t I get my earnest money back?
After your due diligence period. If the house passed your inspection approval, appraised and you have the green light from your lender your due diligence period is over. If you cancel then the seller is entitled to keep your earnest money. This is what the seller will keep as damages if you are ever in breach of contract. Let’s say if you find a house that you like better after the due diligence period, you are not entitled to your earnest money back.
How much should I put down?
The more money you put down the more serious of a buyer you are. Typically is about 1-2% of the price of your offer. More earnest money may make your offer more competitive in a multiple offer situation but you will also lose more if you ever are in breach of contract.
Let’s say we are in a multiple offer situation. The only difference in your offer and the other offers is you have more earnest money down. The higher earnest money amount may cause the seller to like your offer better! It shows you are more serious than the other buyer.
Is cash ok?
Yes cash, personal check, cashier’s check and money order are all forms of payment for earnest money.
When does it get deposited?
After the seller and the buyer agree to terms and sign a purchase contract, the agent has 72 hours to deposit the earnest money into the assigned trust account.
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