Earnest Money Deposit & Your Real Estate Contract
Is an earnest money deposit really necessary when filling out a real estate contract? Many real estate professional agree that an earnest money deposit will show the seller that you are a serious buyer. Earnest money deposits are usually for 3-5% of the offer price, depending on the market, and local customs. Many buyers add a clause in real estate contracts stating that the contract is contingent upon a buyer being able to obtain financing. This way if your financing falls through, you are more likely to get your earnest money deposit back. If all goes well and your financing goes through and you get to closing, the earnest money deposit is given as a credit toward what you will owe at the closing. It is possible to loose your earnest money deposit. One example would be if all the conditions of the real estate contract were met, but the buyer decided at the last minute not to buy the home, then the seller would most likely get to keep the earnest money deposit. If there are any doubts you should contact a real estate attorney.
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