What is an earnest money deposit and what does it do for a buyer?
Today I’ll be covering earnest money in part four of my series on the home-buying process.
Earnest money can also be called trust money or a good faith deposit, depending on who you’re talking to. An earnest money deposit is given to the seller upfront. In some markets, people put down 5% of the purchase price, but in most markets, it’s 1% to 3%. In Spencer, it’s often $500. The more earnest money you put down, the more legitimate and serious you’ll seem to the seller because you’ll lose that deposit if you cancel the contract.
However, there are times throughout the contract when you’re eligible to get your earnest money back. One of those is after the inspection period. If you can’t come to terms on repairs, you can cancel the contract and get your earnest money back. If the home doesn’t appraise and you can’t agree with the seller on a new purchase price, you can also cancel the contract and get your earnest money back.
Stay tuned for part five where I’ll talk about home inspections and how that process works. If you have any questions, visit thinkhousesthinkholly.com and don’t hesitate to reach out to me by phone or email. I look forward to hearing from you.