The earnest money deposit is part of the home buying process in most cases. It shows the seller you’re a committed buyer. Sellers rarely accept offers without a deposit. It is not a mandatory process and if both seller and buyer agree, then no deposit is needed. It is however, highly recommended to have an earnest money deposit to move forward with the home buying transaction.
If your offer is accepted by the seller, the earnest money will go toward the down payment and closing costs. At times, the earnest money deposit can be given back to buyers at closing. Buyers should educate themselves along with their Realtor on how the deposit will be handled, through the entire home buying process. In most circumstances, you can get all or most of your deposit back within your ten day inspection period, if you have to rescind sale over defects of home or if the sale falls through for other reasons.
In most circumstances, you can get all or most of your deposit back within your ten day inspection period, if you have to rescind sale over defects of home or if the sale falls through for other reasons.
Earnest money deposits can be any amount you chose. The seller does have a right to request a higher deposit amount if they see fit. Some areas use the 1% of sales price rule when determining the deposit amount.
If your offer is accepted and you sign the purchase agreement, you give your earnest money deposit to the listing Real Estate Agency or the title company.
By law, the funds will be held in an escrow account. The account is designed to hold deposits only and disburse escrow deposits to the correct parties at the closing.