Writing earnest money checks is the first real commitment you make when you purchase a home. It tells the seller you are serious, and it hits your pocket book if you bail.
You may be hesitant putting a lot of money on the line. That’s understandable. Rest assured that I will do whatever I can to get your money back (as long as you follow the contract).
Let me explain how earnest money works …
Why Offer Earnest Money?
Today’s sellers’ market is very competitive. Offering earnest money shows you are committed. I can tell you from experience that offers without earnest money will often get rejected. The seller knows you could get out of the contract for any or no reason.
Where Does the Earnest Money Go?
Earnest money checks are written to the brokerage of your buyer’s agent. They are kept in a “trust” account. The broker can only disburse earnest money at closing or if both parties agree to release the money.
When Do You Submit Earnest Money?
In the purchase offer we specify when the earnest money will be submitted. Traditionally, you would pay it 3 days after contract acceptance.
How Much Earnest Money Should You Offer?
If you compete against other buyers, you should offer more earnest money – I suggest a minimum of 1% of the purchase price. If there’s no competition for the property you may offer less.
How Can You Get the Earnest Money Back?
The only way you will lose your earnest money is if you change your mind and cancel the contract for no reason. Our purchase contract specifies exact rules how earnest money is disbursed:
You will receive the earnest money when you close, either as a check or as a credit to the purchase price.
There are 5 escapes that give you the right to terminate without losing the earnest money:
- the attorney approval clause
- the property inspection clause
- the finance contingency
- the appraisal contingency
- the title search
By law the broker is not allowed to pay out your earnest money without the written consent of the seller. If there’s a disagreement you may have to get a court order.
Timelines are Critical
Getting dates wrong can spell disaster when it comes to earnest money.
Fortunately, as you work with me, you will get an exact timeline with specific dates when the earnest money is due, and all other contract milestones need to be completed.
Call or text me TODAY at (614) 975-9650 because the housing market is less competitive in Fall!