Spring TX Real Estate: What is Earnest Money?
Earnest Money is the money that accompanies the real estate contract and is meant to show that the buyers are serious about purchasing the home. These funds are NOT in addition to the sale price.
The Earnest Money is an amount that is negotiated between the buyer and seller. There is no set minimum amount that is it has to be. The typical Earnest Money is 1% of the sales price. The higher the amount the more negotiating leverage it gives you with the seller because it shows the seller that you are serious about purchasing their Spring Texas home.
What do you do if you don’t have at least 1% of the sales price for Earnest Money? You can put down less since its a negotiation item. Although, I do think you need to ask yourself “Can I really afford this house?”.
At the time the offer is presented to the listing agent, a copy of your Earnest Money check should be included. If you and the sellers come to terms on the offer and it turns into a real estate contract, the check will be delivered to the title company. The title company will deposit the check into an escrow account until either you close on the house or the contract is terminated.
One of the main concerns that buyers have with putting up Earnest Money is the fear that they will lose it. Its a good concern. We all work very hard for our money and the last thing that we want to do is waste it. Under certain circumstances you can receive your Earnest Money back even though you don’t close on the house.
For instance, what if the inspection reveals that the house is a wreck? You try to negotiate repairs with the seller. If you are unsuccessful, terminate the contract. If you terminated the contract during the option period, you will get your Earnest Money back.
You can also get your Earnest Money back:
- If you are unable to get financing approval during the time specified in the contract. But you must inform the seller that you were unable to receive financing approval.
- If you decide to terminate the contract within three days after you received the subdivision information. This out is not used that frequently. So don’t be surprised if not too many Realtors are aware of it.
When you get ready to write an offer on that Spring Texas home, don’t leave home without your checkbook for the Earnest Money. Because the title company does not accept VISA and they do not accept American Express either.