What is an Earnest Money Deposit
Let’s say you are in the market to purchase some real estate. You contact a real estate agent and he/she shows you around. After a few weeks you find the luxury real estate you’ve always dreamed about, and you tell your agent that you want to make an offer on that property.
Your agent draws up the offer and then it is time for the earnest money deposit. Earnest money simply tells the seller that you are serious about making an offer, serious enough to put money down as a gesture of good faith.
If you think about it, it makes sense. Why would a seller take their property off the market for an offer if there is no proof that the offer is legitimate? There would be havoc in the marketplace if people just went around randomly making offers and then withdrawing them, so the concept of earnest money was thought of.
If your offer is accepted by the seller, then your earnest money will go towards paying your closing costs. If the offer is not accepted, you get your earnest money back. Plain and simple transaction.
The amount of earnest money depends greatly on what area you are looking at. Generally the earnest money deposit will be between one and three percent of the purchase price. Once the earnest money is accepted, it goes to a title company or an attorney who is working on the closing of the transaction. They will hold that money (not cash it) until the transaction is completed.
As always, work with a real estate agent you trust, and remember that if you ever have questions, make sure you ask them of your agent. Buying a home is a huge financial commitment, so arm yourself with as much information as possible.
Sports Relocation, Inc. Sports Relocation, Inc assist players/coaches of all professional sports leagues including the NBA, WNBA, NFL, MLB, NHL, and entertainers relocate nationwide by servicing their Real Estate & Relocation needs. Ikem Chukumerije is licensed to practice real estate in New York, California, Nevada, Florida, & Georgia. Sports Relocation, Inc operates nationwide and provides elite athlete relocation services in all 50 states and internationally.