Earnest Money and Your Offer on a Real Estate Sales Contract
While writing an offer on a real estate sales contract yesterday, my Buyers and I contemplated how much earnest money to offer. We are making a fair offer but are also asking the Seller to contribute towards the Buyer’s closing costs. In our market, earnest money amounts are expected to be approximately 1% of the sales price.
Whatever amount a Buyer pays in earnest money is credited towards his required down-payment at the time of closing. So why not write a 2% earnest money check and impress the Seller? A larger amount of earnest money seems to offer the Seller more comfort that a Buyer’s financing is solid and that he intends to proceed and successfully close this transaction.
So, on a $120,000 home, we wrote a $2,500 earnest money check. Hopefully it will show the Seller that the Buyer is truly earnest about purchasing his property and he will agree to the Seller concessions requested!
Earnest Money and your offer on a real estate contract
Earnest money is cashed when all parties are in agreement on all terms of the contract. It is NOT held until closing. It is deposited (usually in the Listing Brokerage's Escrow Account), then credited to your down payment at closing. If you have a loan that requires no down-payment, such as a VA loan, your earnest money deposit can be applied towards your closing costs at the time of closing - with these types of loans, a lower earnest money amount may be acceptable.
A large amount of earnest money is one way to make your offer appear stronger. As we transition to a Seller's market, offering a high amount of earnest money is one way you can make your offer stronger without actually spending more money.
Here's a quick video explaining earnest money - its purpose, the amount and when it is cashed.
Copyright 2013 Lori Cain All Rights Reserved - Originally Posted at: Midtown Tulsa Real Estate - Lori Cain
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Please visit my web site if you are shopping for Tulsa homes for sale or call 918-852-5036 for more information about Midtown Tulsa Real Estate. In addition to my advanced grasp of the internet to market your Tulsa home for sale, I include a home staging consultation with every listing AND professional photography - at no aditional cost to you!
Lori is a residential Realtor with eXp Realty serving the greater Tulsa area and specializing in downtown Tulsa and midtown Tulsa real estate.