Would you like to know what is earnest money deposit? Here are the top 5 things you must know about earnest money deposit
Earnest money deposit is a monetary amount given to the sellers from the buyers. Therefore, it is placed in an attorney’s escrow account once the buyer and seller are under contract. It is usually estimated to be around $500-5000. Depending on the price of the home, it can be more. This lets the sellers know you are serious about buying the home. It is given in good faith, that you will follow through with the contract.
Other known names: Escrow, EMD, Good faith deposit, escrow deposit, escrow money.
In Florida, earnest money is due by default within three days of being under contract. It can be a little less or more. The buyer does this as soon as possible. Aim for the same day or next day. The title company in which the escrow deposit is held will email you wiring instructions. The preferred way to submit escrow is through a wire. Due to increased wire fraud, remember to call your Title Company to confirm wire route and account numbers before sending any wires.
Although it is not required, it’s very rare that a seller will accept an offer without a good faith deposit.
Yes. There are many contingencies that can be worked into the contract when making an offer and used to protect you and your deposit. Common contingencies are inspection contingency, appraisal contingency, finance contingencies. They are requirements needed to move on with the purchase.
If one party does not meet up with their end of the bargain, the other party is entitled to keep the deposit. Your Realtor® should work with you on this and customize the offer based upon your unique situation.
Earnest money deposit is applied towards the purchase of your home. For instance, putting $5,000 earnest money for a $250,000 home, the $5000 is deducted from the total. Therefore, you will owe $245,000, which will most likely be covered by your loan. The deposit money must be provided in cash up front and cannot be included in with the loan.
The buyer is most often entitled to their deposit, but there are instances when the seller can keep the deposit. This happens when the buyer does not do the required action within the time frames agreed upon in the contract terms.
We do not recommend placing an offer without an earnest money deposit. EMD can be as little as $500, so this may be another option for you. Also, never get out a loan for the earnest money deposit. This may stop you from closing on the house altogether or delay closing.
In conclusion, whether you are buying a home, selling a home, thinking of moving to the Orlando Area or just browsing, make sure you get the latest market updates, tips on selling, moving hacks and so much more by following Krish on YouTube, Pinterest, Facebook, and Instagram.