According to the Wisconsin Realtors Association, “earnest
money is money paid by a buyer (held by the broker) to show the seller
that the buyer is serious.” In other words, earnest money is a deposit on a
home you want to buy. It is used to show the seller that you are earnest, or very serious, about buying
Without earnest money, a buyer could make offers on multiple
homes, basically taking them off the market, until the buyer decides which one
he/she likes best. A seller is able to accept an offer without earnest money,
but rarely does this happen.
How much should you expect to put down?
The amount of the deposit varies. Usually $500 or $1,000
will be enough. When there is more demand for a particular home, it may be in
your best interest to offer more—usually 2-3% of the offer price.
Can you get your earnest money back?
Assuming all goes well and you buy the house, the earnest
money will go toward the down payment of your home and the closing costs. You
may even get your earnest money back if you qualify for 100% financing.
If the deal falls through after binding acceptance, you
could potentially lose your earnest money deposit. To safeguard your deposit, it is wise to
put in your Purchase Agreement financial, inspection, and appraisal contingencies. That way,
if you find you cannot obtain proper financing, the inspection brings about
defects in the property that you do not want to deal with, or the appraisal
comes in too low, you have the option to back out of your offer and reclaim
your earnest money deposit. Overall, it is best to understand the earnest money terms of the
Purchase Agreement before you put in your offer!
Author:Lisa Massey Phone: 715-846-0446 Dated: February 28th 2014 Views: 1,881 About Lisa: Rorabeck Realty Group is pleased to announce that Lisa Massey has joined us as a Buyer’s Agent. L...
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Whether you are buying or selling your home, the 'Rorabeck Real Estate Group' with Keller Williams Realty Integrity WI/MN will make sure your experience is a pleasant one. We pride ourselves on our close to 30 years of experience and our superior customer service within St. Paul, MN, Hudson, WI and the surrounding Western WI areas. Contact us for your home buying & selling needs. "Who do ya know wants to buy a home?"
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