You include earnest money with an offer on a house to show the seller that you are serious about purchasing the house. It becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if you pull out of the deal for reasons other than those stipulated in the offer. A financing contingency is an example of the latter – if your offer was contingent on getting a loan, and you can’t, you can cancel the contract and get your earnest money deposit back.
How Much Earnest Money?
The size of the earnest money deposit is up to you. Real estate agents will sometimes outright lie, and tell you it is this or that amount, or this or that percentage of the offering price. In reality, you can write the offer with a one-dollar deposit if you wish, and the agent still has to present the offer.
Naturally, an offer with one dollar of earnest money may not be taken seriously, and the agent may even persuade the seller to reject your offer. It is a good idea to ask what the local norm is.
You can also do a two-part deposit. You can make an offer with just $100 in earnest money, for example, but specify in the offer that this will be increased to $2,000 once the offer is accepted, or once when an inspection, appraisal, or other contingency is met. This keeps your money from being tied up until you know that the seller is serious about selling to you. This will usually still be seen as a serious offer if the deposit is to be seriously increased at some point.
Who Gets The Earnest Money Deposit?
Never give your earnest money check to the seller. The last thing you want is a seller trying to keep your money after you pull out of a deal because of financing problems, termite infestations, or other valid contingencies in your offer. If the real estate office handling the sale has an escrow account, it should be safe to make the check out to the broker. Otherwise, use a title company or other escrow account, but in any case, always give your deposit to a third party to hold.
How to Protect Yourself
Things can happen, right? If you pull out of the deal for some unforeseen reason – one not included in the contract – you’ll lose your deposit. However, the seller could also sue you for additional damages or even force you to buy the home. To protect yourself have a clause in the offer that specifies the earnest money as “liquidated damages” if you are in default. The real estate agent can help with the language, but this basically means that if you need to default on the contract, the seller can’t ask for more than what you have already included as earnest money.
Fire Prevention – 10 Tips to Keep Your Home Safe
A fire can start in the blink of an eye, but the damage it leaves behind can last a lifetime. That’s why it’s so important to be proactive about fire prevention. Taking some simple steps to reduce the risk of a fire starting in your home is well worth the effort. Here are 10 tips to help you get started.
Radon In Your Home
Radon is a naturally occurring, radioactive gas that you can’t see, taste, or smell. Indoor radon is the second leading cause of lung cancer after smoking and contributes to an estimated 7,000 to 30,000 lung cancer deaths each year.
Smoke Alarms & What You Should Know
As a reputable home inspection service, we always advise installing a functional smoke alarm in your house. Also, regularly inspecting them can ensure that they are functioning correctly
Roof System: 4 Tips to Protect it in Winter
Winter is approaching, and if you want to keep your roof and your house safe from harm and damage during these cold and snowy months,
Bathroom And Kitchen Vents: Why You Should Turn Them On
Generally, the bathroom and kitchen are the most commonly used part of a house. They are known to have the latest technical equipment and are
Dryer Vents: 10 Cleaning and Safety Tips for You!
Generally, homeowners do not notice the dryers vents when it comes to our laundry appliances. Even though they remove all of our clothing’s unwanted fuzz
Radon is a naturally occurring radioactive gas that can cause lung cancer.
You can’t see or smell radon. Testing is the only way to know your level of exposure. Radon can have a big impact on your Indoor Air Quality. Which Radon Zone do you live in? Find Radon Zone and Supplemental Radon Information near you.
Mold is a fungus that grows on damp surfaces, such as the walls and floors of your home. Left unchecked, it can grow in colonies and produce allergens and irritants. It’s important to test for mold before buying or selling a home so you can remediate the issue prior to closing escrow.
There are many different types of mold that can occur in a home and lead not only to structural damage, but some health concerns as well.
Mold is difficult to find in many homes as it grows exclusively in dark and moist areas that are usually hidden somewhere in the structural areas of the home such as attics and basements.
Get more information about mold in your home from this FREE guide on mold in your home.
Find the typical life expectancy for most components that are normally found in homes
Typical life expectancies for most components found in homes are listed in this page. These life expectancies have been determined through research and testing based on regular recommended maintenance and conditions of normal wear and tear, and not extreme weather (or other) conditions, neglect, over-use, or abuse
Whether you’re a first-time homebuyer or a veteran homeowner downsizing or trading up, these valuable tips can help streamline your real estate transaction by making it go quicker and smoother, with the help of your InterNACHI-Certified Professional Inspector®
