Earnest Money Deposits
In a real estate transaction, you can expect some out of pocket expenses to take care. These are the expenses that are usually paid prior to closing. The list is long so I will cover that subject in another blog. -The main expense I want to cover is earnest money.
What is earnest money?
Earnest money is a good faith deposit that shows the seller you are serious about the purchase of their home. This is a negotiable deposit (buyers have the freedom to offer the amount they want). But in my experience, it typically varies between 1-3% of the price of the home. I urge my buyers to arm themselves with a generous EMD offer IF the home is exactly what they are looking for. The higher the EMD, the better the chances of you locking that contract in.
I do believe buyers often forget that the home belongs to the seller. By taking the home off of the market, the seller is risking the opportunity of getting their home sold if the buyer isn’t serious. EMDs balance out that risk and makes the offer competitive.
Is it required?
Offering an earnest money deposit is completely up to the buyer. The amount of money offered is also up to the buyer, however you want to do this with strategy. Schedule a call with me and let’s talk about how to position yourself as the obvious choice by offering the seller earnest money and other nuances that will win you the home of your dreams!
What are the benefits of Earnest Money?
Buyers:
Backing your offer with cash shows the seller that you are serious and you have liquidity
It gives you “skin in the game” or equity
It helps you beat out the other buyers who are not prepared to offer earnest money
Sellers:
Accepting earnest money will protect you against any time lost and damages or fees associated with a deal that went wrong (It happens)
It solidifies your buyer; You can definitely count on your buyer to show up to the closing table with skin in the game
It goes without saying but, you’re getting paid! This deposit goes straight into escrow, but at the point of accepting an EMD, if everything goes right, you only have until closing to reap the reward of getting your home sold and everything that comes with it.
Closing
I know that in Real Estate there are so many terms with so many similar meanings that it can be confusing. Earnest money is one of the real estate vocabulary words you will definitely run into when purchasing a home so I hope this helps you get a better understanding of what earnest money is and how it works!
If you are ready to take the first steps to homeownership, get in contact with me today! Click the link below to get started.
Comentarios