even though a home seller might have a legitimate reason and right to demand a buyer’s earnest money deposit in the event that a buyer defaults, exercising that right might not be in the seller’s best interest. generally, it is the buyer. the seller can’t really force the buyer to close escrow. any excess money on deposit is generally returned to the buyer. it may be contingent on the buyer selling another home that the buyer can’t seem to sell.
the seller could refuse and tell the buyer to cancel the deal. to take the disposition of the earnest money deposit once step further, suppose the buyer has exhausted all contingencies and released all of the contingencies. what if the buyer refuses to give the earnest money deposit to the seller? how much time and money would be lost trying to obtain the earnest money deposit? if the seller doesn’t care how long it takes to sell the home, and is willing to invest time and money to fight for the deposit, then it might be worth pursuing. that means the buyer doesn’t get the money back, but it will reduce the amount of money the buyer needs to pay at closing.
she is a licensed realtor and broker with more than 40 years of experience in titles and escrow. your earnest money deposit is an initial deposit that you make when you sign a purchase agreement. ask to see the wording in the contract that guarantees the return of your deposit, and addresses how long it will take to get your deposit back. earnest money is a good faith deposit that is part of the down payment, but it is not the same as a down payment. there is no specific earnest money deposit requirement, but potential homebuyers generally put down 1% to 5% of the purchase price as an earnest money deposit. keep in mind that the amount of your earnest money deposit depends primarily on your marketplace and local custom. in buyer’s markets, a larger earnest money deposit might entice a seller to accept a lower purchase price.
when making an offer and submitting your earnest money deposit, it pays to be informed. typically, buyers can lose their earnest money deposit if they don’t follow the terms of the purchase contract. if a buyer waits to get an inspection and then backs out of the contract after the deadline, they may lose the earnest money deposit. in california, for example, standard california association of realtors (car) purchase contracts allow for the return of the earnest money deposit to the buyer within a specified time period, should they elect to cancel the transaction. holding your earnest money deposit in an escrow account can help protect you. because your earnest money is held in the escrow account, the sellers do not yet have your money, and it could be returned to you. if the home purchase is successful, the earnest money will be claimed by the seller.
earnest money is put down before closing on a house to show you’re serious about purchasing. it’s also known as a good faith deposit. when you find a home and enter into a purchase contract, the seller may withdraw the house from the market. earnest money, or good faith deposit, is a sum the terms ‘contract deposit’ and ‘down payment’ in nyc real estate are often used interchangeably, but they do not mean the same thing., earnest money deposit in contract, earnest money deposit in contract, earnest money deposit amount, earnest money deposit vs down payment, earnest money deposit refund.
earnest money is essentially a deposit a buyer makes on a home they want to purchase. a contract is written up during the exchange of the earnest money that this is more akin to the earnest money deposit made in other states, which serves as liquidated damages if you breach the contract and pull out of the deal. when a buyer cancels the transaction, they usually have a contingency period in the contract giving them that right. a seller should always get legal advice, good faith deposit vs earnest money, how to pay earnest money without a check.
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