If you are ready to being the house hunting process you will need to be prepared to have some ‘earnest funds’ available. Typically, the amount is 1-5% of the purchase price.
When does earnest money come into the picture? Once an offer is made ‘Earnest Money’ or “Earnest Funds” is money provided by the buyer as a good faith gesture to let the seller know you are serious about buying their home. The amount of earnest money is deposited into an escrow account with a title company, escrow company or the seller’s broker. Earnest money gives the seller a peace of mind to move forward with the next steps of the transaction and proves that you are sincere…. or ‘earnest’ about the purchase.
So, what happens once your earnest funds are deposited into an account? This account is called “Escrow”. This money is not a down payment for the purchase of the home, however it can be included into the purchase price.
Can Earnest Money ever be returned? Yes, however you’ll want to read and understand the purchase agreement because there are several ways you can have your earnest money deposit returned. If everything happens as it should the earnest money will be included into your closing costs. But you’ll need to be careful and read your purchase agreement because there are several ways you could lose your earnest money deposit too. You will want to make sure your agent has contingencies written into your agreement so you can get your earnest money returned if the deal does not work out.
· What if the home does not get appraised at the offered amount? Perhaps you make an offer and it is accepted by the seller however the appraisal does not come in at the agreed purchase price.
· What if the home does not pass the home inspection? The home may have significant damages that you may not be able to workout with the seller.
· What if you cannot get financing? You may encounter hiccups in the finance process.
These areas are situations that earnest funds can be returned if things do not work out. Life happens and sometimes deals fall apart for various reasons. When working with an agent, your agent should keep you aware of the dates established in the agreement to meet these conditions.
Work with a Real Estate Agent!
The best way to navigate the home buying process is with the guidance of a trusted and experienced professional. If I can help you with your home buying process, please give me a call. My goal is to always make your real estate experience exceptional by taking you through the process step-by step and ensure it’s a positive and memorable experience.
Are you thinking of buying or selling in the coastal communities of Pensacola? I have a passion for Real Estate and love to share my marketing expertise!