Did you finally accept an offer on your home that's up for sale and now need to request earnest money from the buyer? If so, you're likely to have some questions about this part of the home buying process. Here are a couple of things you need to know about earnest money.
The Earnest Money Goes Towards The Down Payment
Be aware that earnest money is not something that you keep as part of selling your home if the sale goes through. That money that is provided by the buyer will eventually go towards the price of the home as their down payment. If the buyer intends to follow through with the purchase of the home, they'll eventually get that earnest money back to use for the purchase.
The Seller Decides On How Much Earnest Money To Receive
Know that the seller is the one that gets to decide on the amount of earnest money that needs to be provided to purchase the home. While many home sellers keep this amount fairly low and attainable for buyers, others may decide to request a much higher amount. This could be due to wanting to weed out buyers that are not serious about the home, or because there were buyers that wasted your time in the past.
However, a buyer can always try to negotiate the amount of earnest money they pay if they feel like the amount is too high. A buyer can also volunteer to provide more earnest money in their offer letter if they want to show you how serious they are about the home and want to stand out above other offers.
The Buyer May Get Their Earnest Money Back If They Walk Away
There are some situations where the buyer is allowed to walk away from the home purchase and get their money back. This is usually stated in the contract from accepting the home offer and is designed to give the seller the money in situations that are out of their control. For example, if their financing fell through and they cannot get a loan, or the home inspection revealed problems with the home that they were not aware of before making an offer.
The only times that the seller gets to keep the money is if the buyer walks away from the home because they simply no longer want to buy it. They may have cold feet about purchasing a home or found another home that they liked more. Talk to a seller's agent to learn more about this process.
When you start thinking about where to buy a home, it can be really overwhelming. The right home can really brighten your life, while the wrong home can be a financial strain that causes more problems than it resolves. On this website, you will be able to find out great information about choosing the right property, and knowing what to do when it comes to starting the house hunt. After all, your home will be one of the biggest investments you can make, which is why it pays to focus seriously on making the right decisions. Check out this blog for more information.