| Home buying can be a very exciting experience, and | | | | What is the Suggested Earnest Money Deposit |
| there's no time more exciting than when you sit down | | | | Amount? |
| with your Real Estate agent to draft up an offer letter | | | | The amount you put down as your earnest money |
| on that perfect new home you've found. Question is, | | | | deposit can vary from home to home. Obviously, in a |
| how are you going to ensure that your offer to buy | | | | buyer's market, on a house that is priced very low, |
| this great new home is taken seriously? The answer, | | | | your earnest money can be on the "light side," as |
| in most cases, is by providing an earnest money | | | | opposed to when you're making an offer in a |
| deposit along with your offer. | | | | competitive market on a home that's just too good for |
| So, What is An Earnest Money Deposit? | | | | most buyers in your area to pass up. If you really want |
| In short, this type of deposit is a sum of money you | | | | the home, you'd best put down enough to be sure that |
| provide along with your offer to buy a piece of real | | | | the seller takes notice enough to accept your offer. |
| estate in order to let the seller know that you are | | | | As a rule of thumb, one (1) percent of the offer price |
| making a serious offer. Normally, this money is | | | | for your chosen home is a good place to start. |
| deposited into an escrow account - where it stays until | | | | Is it Possible to Lose My Earnest Money? |
| the purchase transaction closes. At that point, your | | | | Yes, but it is rare for this to happen. In normal situations, |
| earnest money deposit is applied toward the purchase | | | | you should be able to work in conditions that allow you |
| of the home. | | | | to exit the offer with your deposit in hand should you |
| Why Can't I Just Send in an Offer Without and | | | | find circumstances to be prohibitive to buying the |
| Earnest Money Deposit? | | | | home, it is possible to forfeit this deposit. Normally, |
| In truth, you can. However, the risk you run in doing so | | | | conditions that allow you end the transaction and |
| is that your offer will be pushed aside or will not be | | | | receive back your earnest money involve failure to |
| taken seriously by the seller, who will likely move on | | | | obtain a clean title to the property, negative items |
| another offer that has a good faith deposit attached | | | | discovered during inspection, and so on. |
| to it. Look at it this way. An offer to buy a home | | | | If you lose your earnest money, it's likely going to be |
| without any "skin" in the game, so to speak, is not | | | | because you waited until too close to the closing date |
| worth the paper it's written on. You could, in theory, go | | | | to back out of the deal. In situations like this, you will |
| around making offers on any number of homes with | | | | almost always lose your deposit. |
| little fear of any negative outcome. By putting down a | | | | Bottom line, if you're serious about buying the home |
| deposit, you are accepting some risk that your deposit | | | | you've put your offer in on, be sure to send in an |
| may be forfeited in the event that your offer is | | | | earnest money deposit to let you seller know you |
| accepted by the seller and you back out without | | | | mean business. |
| cause. | | | | |